The Registrar of Companies (RoC) in Gujarat has fined Adani Power and its officials Rs. 75,000 each for not reporting related-party contracts and transactions in the register of contract. The company and its directors have said they will appeal the fine.
It has been reported that the Registrar of Companies (Gujarat), in a ruling earlier this month, has held that Adani Power and its officials had violated provisions of the Companies Act, 2013, by not reporting related-party contracts and transactions in the register of contract.
The adjudicating officer imposed a penalty of Rs. 75,000 each on Gautam Adani, chairman and director of Adani Power, Rajesh Shantilal Adani, managing director, and Vineet S Jain, whole-time director.
“The company has made adequate disclosures in the Financial Statements for FYs 2017-18, 2018-19 and 2019-20. All the related-party transactions were entered at arms’ length basis and in ordinary course of business and thus, not covered under the provisions of Section 188 of the Companies Act, 2013,” the company’s spokesperson said, ET reported on May 22, 2023.
“The company is in the process of filing an appeal against the RoC’s order dated May 16, 2023, imposing a penalty against the directors of the company without sufficient technical grounds,” the spokesperson added.
The RoC ruled the company had entered into related-party contracts and transactions in financial years 2017-18, 2018-19 and 2019-20, but did not enter the details in the register of contract u/s 189 of the Companies Act, 2013. Every company is required to maintain disclosures about contracts and arrangements its enters into with the register of contract.
“Having considered the facts and circumstances of the case… has reasonable cause to believe that the company and its officers in default had violated the provisions of section 189 r.w. 188 the Companies Act, 2013,” RV Mishra, adjudicating officer of RoC-Gujarat said in his order.
The Ministry of corporate affairs had in April 2018 ordered an inquiry under Section 206(4) of the Companies Act.
Determining the quantum of penalty, the RoC noted that the disproportionate gain or unfair advantage made by the notice or loss caused to the investors as a result of the delay to redress the investor grievance were not available on record.
“Further, it may be added that it is difficult to quantify the unfair advantage made by the notice or the loss caused to the investors in a default of this nature,” it said.
According to the order dated May 16, the presenting officer – who presents the case with evidence and witnesses before the adjudicating authority – submitted that the company “had not furnished documentary evidence related to transactions in ordinary course of business and arm’s length basis to the inquiry officer”.
The officer, in his submission, had said every director of the company should be liable for a penalty for each FY separately.
(Source: ET)
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