The Registrar of Companies, Bangalore, imposed penalties under Section 454 read with Section 188(5)(ii) of the Companies Act, 2013 for non-compliance in related party transactions. The company carried out substantial transactions with related entities over several financial years but relied on outdated Board resolutions passed in 2015–2017 without obtaining fresh or omnibus approvals as required. Disclosures in AOC-2 were incomplete, lacking salient contract terms, and the company failed to substantiate that transactions were conducted at arm’s length despite their significant volume exceeding statutory thresholds. The absence of annual approvals and proper documentation rendered the transactions unauthorized and non-compliant with legal provisions. Additionally, the company and its directors failed to appear during adjudication proceedings, resulting in an ex-parte order. Consequently, penalties of ₹5,00,000 each were imposed on defaulting directors. The order highlights the importance of updated approvals, transparency, and strict adherence to related party transaction norms.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Bangalore
Registrar Of Companies, ‘E’ Wing, 2nd Floor, Kendriya Sadana, Kormangala, Bangalore, Karnataka, India, 560034
Phone: 080-25633105,080-25537449
E-mail: roc.bangalore@mca.gov.in
Order ID: PO/ADJ/03-2026/BL/01871 Dated: 26/03/2026
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 188(5)(ii) OF THE COMPANIES ACT, 2013.
A. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette notification number S.O. 831(E) dated 24/03/2015 appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
B. Company details:
In the matter relating to SANA LIFESTYLES LIMITED [herein after known as Company] bearing CIN U74999KA2011PLC060059, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at SY NO.16/2 AND 16/3 PART, HOSUR ROAD, VEERASANDRA VILLAGE, ATTIBELE HOBLI, ANEKAL TALUK, NA BANGALORE BANGALORE KARNATAKA INDIA 560100
Individual details:
In the matter relating to SHUBHA SUNIL ——-
In the matter relating to SUNIL SURESH ——–
In the matter relating to ABOOTHAHIR KHAN SALEEM ——-
C. Provisions of the Act:
(5) Any director or any other employee of a company, who had entered into or authorised the contract or arrangement in violation of the provisions of this section shall,?
i. in case of listed company, be liable to a penalty of twenty-five lakh rupees; and
ii. In case of any other company, be liable to a penalty of five lakh rupees.
D. Facts about the case:
1. Default committed by the officers in default/noticee – As per AOC-2 and AS-18 statement attached, the company had huge, related party transactions. On perusal of the documents, it was noted that the company has stated that all the transactions were at arms length basis by quoting resolution passed by the Board 5 years back or so. Further in AOC-2, no salient terms of the contract were given. As the Board has not given any omnibus approval, doing transactions with the related concerns by referring Board Resolution passed few years back are in violation of Section 188 r/w section 184 of the Companies Act, 2013. Since transactions are huge, the company and directors are directed to submit domestic transfer pricing Audit reports and also submit necessary supporting proofs of the transactions to show it was at arm’s length basis.
As per AS-18 statements and AOC-2 form attached to the Directors report for the year 2018-19 the company had huge, related party transactions. Few instances noticed are given below:
i. Stanley OEM Sofas Limited, Common Control – 71.19 (Amt in Lakhs) – Purchases
ii. Stanley Retail Limited, Holding Company – 3.87 (Amt in Lakhs) – Sales
iii. Stanley Retail Limited, Holding Company- 5.92 (Amt in Lakhs) – Purchases
iv. Stanley Lifestyle Limited – 482.36 (Amt in Lakhs)
In the AOC-2 form it was disclosed that the company has taken Board approval on various dates in the year 2015-16 and 2016-17 and continuing contract with said resolution even during the 2021-22. From the available records, the Board has not given omnibus approval for these huge transactions on year-on-year basis. Hence, it is apparent that the huge transactions carried out is without proper authority.
2. The company and officers in default have not replied in E-module for hearing. However, this office has provided the hearing to the company and Officers in default. The order is issued based on the non-compliance of the company, notice for adjudication and reply received.
E. Order:
1. During the course of Inquiry under section 206(4) of the Companies Act, 2013 it is reported that as per AOC-2 and AS-18 statement attached, the company had huge, related party transactions. On perusal of the documents, it was noted that the company has stated that all the transactions were at arm?s length basis by quoting resolutions passed by the Board 5 years back so. Further in AOC-2, no salient terms of the contract were given. As the board has not given omnibus approval, transactions with related concerns by referring Board Resolution passed few years back are in violation of Section 188 r/w section 184 of the Companies Act,2013. Since transactions are huge, the company and directors are directed to submit domestic transfer pricing Audit reports and also submit necessary supporting proofs of the transaction to show it was at arm?s length basis.As per AS-18 statement and AOC-2 form attached to Directors report for the year 2018-19, 2019-20, 2020-21 and 2021-22, the company had huge, related party transactions few instances are given below:1. Stanley OEM Sofas Limited being an entity under common control, recorded purchase transaction amounting to Rs.17.19 lakhs during the financial year 2018-19 and Rs.17.29 lakhs during 2019-20.2. Stanley Retail Limited, the holding company, reported sales transactions amounting to Rs.3.87 lakhs in the financial year 2018-19 and Rs. 17.22 lakhs in 2020-2021.3. Stanley Retail Limited, the holding company also recorded purchase transaction of Rs 5.92 lakhs in 2018-19, Rs 3.29 lakhs in 2019 -20, Rs 59.36 Lakhs in 2020-21, and Rs 49.12 lakhs in 2021-22. 4. Company had transactions with Mr. Saleem Khan, the director of the company, in respect of advances and availing of services, amounting to Rs.4 lakhs in the financial year 2020-21 and Rs.13.07 lakhs in 2021-22.5. Company had transactions aggregating to Rs.482.36 lakhs in 2018-19, Rs.384.2 lakhs in 201920, and 319.3 in 2020-21 with Stanley Lifestyle Limited where the director Mr. Sunil Suresh is holding more than 2% of the paid-up share capital.In AOC-2 form it was disclosed that the company has taken Board approval on various dates in the year 2015-16 and 2016-17 and continuing contract with the said resolution even during 2021-22. As per the provisions of Companies Act 2013, directors are required to disclose their interest at the beginning of every financial year and also whenever there is any change in such interest in form MBP-1 along with DIR-8.On perusal of the reply of the company, they did not obtain annual approvals for these transactions after the initial resolutions passed in 2015-2017. This oversight is critical because continuous or substantial related party transactions necessitate updated approvals to ensure compliance and accountability. The lack of annual approvals for significant transactions in 2018-19 and 2019-20 is a procedural lapse. While the company asserts these were arm?s length transactions, their volume exceeding 10% of the turnover i.e. for the financial year 2018-19 (Rs.5,98,23,401/-), 2019-20 (Rs.4,77,87,000/-), 2020-21 (Rs.5,29,33,131/-) which implies a need for formal resolutions to maintain transparency and regulatory adherence. Hence the transactions carried out were without proper authority and not in full compliance with the applicable legal provisions. The company has failed to comply with these provisions rendering the company and its officers in default liable for penalty under section 188(5) of the Act Pursuant to the above stated violation, show cause notice dated 12.08.2025 was sent to the company and its officers in default through e-Adjudication module, and also through speed post on 12.08.2025. Subsequently, e-hearing notice dated 13.01.2026 was sent to the company and its officers in default through e-Adjudication module. E- Hearing was scheduled on 29.01.2026. None appeared for the hearing, viz., neither the directors nor the authorised representatives of the company / directors, who were offics in default during the period. Despite giving intimation regarding hearing and directions to appear before the Adjudication officer, none appeared or represented the matter. Hence the undersigned has no option except to issue an ex- parte order in accordance with the provisions of Rule-3 (11) Companies (Adjudication of Penalties) Rules, 20 states that if any person fails to reply or neglects or refuses to appear as required under sub-rule (5) or sub-rule (10) before the adjudicating officer, the adjudicating officer may pass an order imposing the penalty, in the absence of such person after recording the reasons for doing soIt is seen from records that the company does not fall under the definition of small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provision of imposing lesser penalty as per the section 446B of the Act shall not be applicable in the case.
2. The details of penalty imposed on the company, officers in default and others are shown in the table below:
| (A) | Name of person on whom penalty imposed (B) | Rectification of Default required
(C) |
Penalty Amount
(D) |
Additional Penalty (E) (*Per day of continuing default i.e. date of rectification of default less order issue date) | Maximum limit for Penalty (F) |
| 1 | SHUBHA SUNIL having DIN as
01363687 |
500000 | 0 | 500000 | |
| 2 | SUNIL SURESH having DIN as
01421517 |
500000 | 0 | 500000 | |
| 3 | ABOOTHAHIR KHAN SALEEM having DIN as 03561887 | 500000 | 0 | 500000 |
3. The notified officers in default/noticee shall rectify the default mentioned above and pay the penalty, so applicable within 90 days of receipt of the order.
4. The notified officers in default/noticee shall pay the penalty amount via ‘e-Adjudication’ facility which can be accessed through the respective login IDs on the website of Ministry of Corporate Affairs and upload the copy of paid challan / SRN of e-filing (if applicable) on the ‘e-Adjudication’ portal itself. It is also directed that the penalty so imposed upon the officers in default shall be paid from their personal sources/income.
5. Appeal against this order may be filed in writing with the Regional Director, RD Bangalore within a period of sixty days from the date of receipt of this order, in Form ADJ setting for the grounds of appeal and shall be accompanied by a certified copy of this order [Section 454 (5) & 454 (6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014].
6. For penal consequences of non-payment of penalty within the prescribed time limit, please refer Section 454(8) of the Companies Act, 2013.
Manoj Bang,
Registrar of Companies
ROC Bangalore
