BackAdani Power to challenge RoC penalty
The RoC had in an order issued on 16 May imposed penalty on three senior executives of Adani Power, including chairman Gautam Adani.
PremiumNEW DELHI : Adani Power Ltd will contest an order issued by the Registrar of Companies (RoC), Ahmedabad, imposing penalty on three senior executives for alleged breaches connected to related party transactions over three years till FY20.
The RoC had in an order issued on 16 May imposed penalty on three senior executives of Adani Power, including chairman Gautam Adani.
The three officials have been asked to pay ₹75,000 each in penalty within three months out of own resources, but have the chance to contest the same within 60 days, showed the order posted in the website of the ministry of corporate affairs.
A spokesperson for Adani Group said the company is in the process of filing an appeal.
“Being aggrieved by the impugned ROC’s order of 16th May 2023, the Company is in the process of filing an appeal before the Regional Director to set aside the said impugned order," the spokesperson said in response to emailed queries.
The company also rejected the charges levelled by the regulator.
The order alleged that RoC has reasonable cause to believe that the company and ‘its officers in default’ have violated the provision of “section 189 of Companies Act read with section 188" of the Act. These sections deal with the maintenance of registers regarding contracts and arrangements in which directors are interested and the requirement of board consent and conditions the board can impose on related party transactions.
“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 Adani Group spokesperson said.
The Companies Act mandates that except with the consent of the board of directors given at a board meeting and subject to the conditions attached, related party transactions are not to be undertaken.
Related party transactions include arrangements and deals between a company and any of the persons defined as related parties, such as a director, a key managerial personnel or their relative and entities in which a director, manager or his relative is a partner or director.
The order came following an inquiry initiated in 2018 under a provision dealing with RoC probe into compliance breaches and investor grievances not getting addressed.
The order alleged citing financial statements of the company for the FY18 to FY20 period that the company has not maintained the register of contracts as mandated under the Companies Act. For the contravention, every director who fails to comply with the provisions, shall be liable to a penalty, the order said.
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