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It is observed that the subject company has not placed the related party transactions before the Audit Committee meeting held on 31.10.2018 for approval in compliance of section 118(1) of the Act r/w Secretarial Standard -1 (SS-1) issued by Institute of Company Secretaries of India.

Relevant provision of para 1.3.8 of secretarial standard (SS-1) issued by Institute of Company Secretaries of India.

(1.3.8) – “Each item of business requiring approval at the meeting shall be supported by a note setting out the details of the proposal, relevant material facts that enable the directors to understand the meaning, scope and implications of the proposal and the nature of concern or interest, if any, of any director in the proposal, which the director has earlier disclosed.”

The respondent accept the alleged non-compliance of the provision of section 118 of the Act, as more specifically stated in the said SCN and hereby undertake to pay the amount of penalty as may be decided/adjudicate by the adjudicating Officer (A0) for the said non-compliance(s).

The subject company and its officers who have made default in complying with the Section 118(1) of the Act r/w SS-1 are now liable for penalties under section 118 (11) of the Act and accordingly penalty been imposed on them of Rs. 55,000.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU PLACE,
NEW DELHI -110019

Order for Penalty for Violation of Section 118 (1) of the Act, 2013
IN THE MATTER OF
LAVA INTERNATIONAL LIMITED
(CIN: U32201DL2009PLC188920)

1. Appointment of AdiudicatinE Officer:

Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by Section 454(1) of the Act, 2013 (hereinafter known as ‘Act’) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Company: –

Whereas the company viz. LAVA INTERNATIONAL LIMITED (herein after known as ‘subject company’) is a registered company with this office under the provisions of Section 7 of the Act having its registered office as per MCA21 Registry at address B-14, House 2, Basement, Shivlok Commercial Complex, Karampura, Delhi-110015 IN. The fmancial & other details of the subject company for immediately preceding F.Y. as available on MCA-21 portal is stated as under.

S. No. Particulars Details
1. Paid up capital Rs. 2,73,90,48,280
2. Turnover (F.Y. 2021-22)

a. Revenue from operation

Rs. 18,22,23,60,000
b. Other Income Rs. 20,11,70,000
3. Holding Company No
4. Subsidiary Company Yes
5. Whether company registered under Section 8 of the Act? No
6. Whether company registered under any other special Act? NO

Facts about the Case:

I. Whereas, inspection of Subject Company was ordered by Ministry vide letter dated 05.03.2021 u/s 206(5) of the Companies Act, 2013 in respect of which inspection report u/s 208 of the Companies Act, 2013 submitted to RD (NR). During the Inspection, while perusing the minutes of the Board Meeting, the I.0 observed that the subject company has not placed the related party transactions before the Audit Committee meeting held on 31.10.2018 for approval in compliance of section 118(1) of the Act r/w Secretarial Standard -1 (SS-1) issued by Institute of Company Secretaries of India.

II. In terms of the provisions of Section 118 (1) r/w 454 of the Act, this office issued Show Cause Notices (SCN) vide letter no. ROC/D/Adj/2022/Section 118/Lava/2023/655-661 dated 14.02.2023 to the subject company and its officers in default who have not complied with the section 118 of the Act r/w (SS-1).

III. In response to the SCN dated 14.02.2023, Shri Hari Om Rai, MD of the subject company submitted a reply vide letter dated 16.01.2023 on behalf of the company and all the noticees and has inter-alia stated that-

(1)     The respondent accept the alleged non-compliance of the provision of section 118 of the Act, as more specifically stated in the said SCN and hereby undertake to pay the amount of penalty as may be decided/adjudicate by the adjudicating Officer (A0) for the said non-compliance(s).

(ii) Respondent further like to mention that they do not wish to make any oral submissions on their own or through their authorized representative as mentioned in the SCN and hence, request the AO to issue the adjudication order (`Order) as per rule 3(7) of the Companies (Adjudication of Penalties), Rules 2014.

4. The relevant provision of the sections 118 as on date of default are as under:

Section 118 (Minutes of Proceedings of General Meeting, Meeting of Board of Directors and Other Meeting and Resolutions Passed by Postal Ballot)

(1)    Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered “

(10) “Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.. “

(11) “If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.”

5. The relevant provision of para 1.3.8 of secretarial standard (SS-1) issued by Institute of Company Secretaries of India.

(1.3.8) – “Each item of business requiring approval at the meeting shall be supported by a note setting out the details of the proposal, relevant material facts that enable the directors to understand the meaning, scope and implications of the proposal and the nature of concern or interest, if any, of any director in the proposal, which the director has earlier disclosed.”

6. Adjudication of penalty: –

1. The subject company and its officers who have made default in complying with the Section 118(1) of the Act r/w SS-1 are now liable for penalties under section 118 (11) of the Act.

2. The subject company is public company pursuant to Section 2(71) of the Act, therefore, it does not get covered under the purview of small company as defined u/s 2(85) of the Act. Hence, the benefit of section 446B would not be applicable on the company.

3. Now in exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the reply submitted in response         to      the        notice      issued            vide           letter             no.
ROC/D/Adj/2022/Section118/Lava/2023/655-661 dated 14.02.2023 hereby impose the penalty on the subject company and its officer who are in default under section 118(11) for violation of section 118(1) of the Act r/w SS-1 which are as follows:-

Violation section Penalty imposed on company/ director(s) Calculation for penalty amount u/s 118(11) of the Act, 2013 (in Rs.)
A B C
Violation of section 134 (3) of the Act, 2013 during F.Y. 2018-19 Lava International Limited 25,000/-
Shailendra Rai (WTD) 5,000/-
Sunil Bhalla (WTD) 5,000/-
Hariom Rai (M.D) 5,000/-
Vishal Sehgal (WTD) 5,000/-
Asitava Bose (CFO) 5,000/-
Bharat Mishra (CS) 5,000/-

6. Order:

a. Names of party as mentioned in the table above are hereby directed to pay the penalty amount as per column no. ‘C’ therein. In case of parties other than directors such amount is required to be paid out of their own funds.

b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, payable at Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.

c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].

Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order.

Place: New Delhi.

(Pranay Chaturvedi, ins)
(Adjudicating Officer)
Registrar of Companies,
NCT of Delhi & Haryana

No. ROC/D/Adj/Order/Sec.118/Lava/2023/ 1061-1068

Date: 07/03/2023

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