Penalty Imposed for Incorrect PAS-3 Filing in Private Placement

The Registrar of Companies, Mumbai passed an adjudication order dated 23.01.2026 under Section 454 of the Companies Act, 2013 for violation of Section 42(10) relating to private placement of securities. The proceedings arose from a suo-motu application filed by the company admitting incorrect filing of Form PAS-3 in connection with a private placement made on 18.10.2025. On examination, it was found that mandatory documents such as the valuation report, list of allottees, and private placement offer letter (PAS-4) were not attached, and the number of securities allotted was incorrectly disclosed, in contravention of Section 42 read with Rule 14(6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Although the company sought permission to make a corrected filing citing clerical errors, the adjudicating authority held that the default was established. Considering that the company qualified as a “small company” at the time of default, the benefit of Section 446B was extended. Accordingly, penalties were imposed on the company and its directors, along with directions to rectify the default by making a fresh filing of Form PAS-3 and to pay the penalties within the prescribed time, with liberty to appeal.

GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Mumbai
Registrar Of Companies, 100, Everest, Marine Drive, Mumbai, Maharashtra, India, 400002
Phone: 022-22812627,022-22812645
E-mail: roc.mumbai@mca.gov.in

Order ID: PO/ADJ/01-2026/MB/01468 | Dated: 23/01/2026

ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 42(10) OF THE COMPANIES ACT, 2013.

A. Appointment of Adjudicating Officer:

Ministry of Corporate Affairs vide its  Gazette notification number S.O. 831(E) dated 24/03/2015appointed 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, 2014for adjudging penalties under the provisions of this Act.

B. Company details:

In the matter relating to MUMBAI FURNITURE UDUOG PRIVATE LIMITED [herein after known as Company] bearing CIN U31009MH2023PTC414496, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at F-303,PLOT-2:4:6,PUSHUP SARGAM CHS LTD,SEC-19 PANVEL PANVEL RAIGARH(MH) MAHARASHTRA INDIA 410206

Individual details:

In the matter relating to SHAILESH RAMDAS ADHALGE ________________________

In the matter relating to SANDEEP SONBA GAIKWAD ________________________

C. Provisions of the Act:

Subject to sub-section (11), if a company makes an offer or accepts monies in contravention of this section, the company, its promoters and directors shall be liable for a penalty which may extend to the amount raised through the private placement or two crore rupees, whichever is lower, and the company shall also refund all monies with interest as specified in sub-section (6) to subscribers within a period of thirty days of the order imposing the penalty.

D. Facts about the case:

1. Default committed by the officers in default/noticee – Whereas the Registrar of Companies, Mumbai (hereinafter referred to as the ROC) is in receipt of a suo-motu Adjudication Application dated 05.12.2025 filed by the Company (hereinafter referred to as the Applicant) under Section 454 read with for contravention of section 42, 55 and 62(1)(c) of the Companies Act, 2013 (hereinafter referred to as the Act) and other applicable provisions for incorrect filing of e-form PAS-3 filed vide SRN AB8508408 on 24.10.2025. After examination of the Application, it has been found that the default committed is under Section 42 of the Act read with Rule 14 of the Companies (prospectus and Allotment of Securities) Rules, 2014 and punishable under Section 42(10) of the Act. Section 42(8) of the Act stipulates that:(8) A Company making any allotment of securities under this section, shall file with the Registrar a return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed, including a complete list of all allottees, with their full names, addresses, number of securities allotted and such other relevant information as may be prescribed.Whereas Rule 14 (1) and 14(6) of the Rules read as follows:(1) For the purposes of sub-section (2) and sub-section (3) of section 42, a company shall not make an offer or invitation. to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a special resolution. for each of the offers or invitations:Provided that in the explanatory statement annexed to the notice for shareholders’ approval, the following disclosure shall be made:-(a) particulars of the offer including date of passing of Board resolution;(b) kinds of securities offered and the price at which security is being offered:(c) basis or justification for the price (including premium, if any) at which the offer or invitation is being made;(d) name and address of valuer who performed valuation;(e) amount which the company intends to raise by way of such securities;(f) material terms of raising such securities, proposed time schedule, purposes or objects of offer, contribution being made by the promoters or directors either as part of the offer or separately in furtherance of objects; principle terms of assets charged as securities:(6) A return of allotment of securities under section 42 shall be filed with the Registrar within fifteen days of allotment in Form PAS-3 and with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014 along with a complete list of all the allottees containing-(i) the full name, address, permanent Account Number and E-mail ID of such security holder;(ii) the class of security held;(iii) the date of allotment of security ;(iv) the number of securities herd, nominal value and amount paid on such securities; and particulars of consideration received if tire securities were issued for consideration other than cash.Whereas as per the suo motu Adjudication application filed by the Applicants it is observed that:i.The Company has made allotment of 7000 OCPS of Rs. 100 each and E-form PAS-3 is showing allotment of 10000 OCPS. Further, the Company has not attached valuation report required for pricing of the securities under Private placement with E-form PAS-3;ii.The Company has not attached list of allottees, Private placement offer letter in PAS-4;iii.The Company has incorrectly disclosed the number of securities allotted;

Whereas the prescription of Rule 14 of the Rules is under Section 42 of the Companies Act, 2013. Accordingly, noticees are liable for default under Section 42 read with Rule 14 punishable under Section 42(10) of the Act.The Applicants are also directed to submit following information:i.Relevant resolution passed for allotment of CCPS Shares, PAS-5,ii.Valuation report, details of the v ,iii.Mode of allotment of Shares and if the mode of allotment is in cash then, Receipt of the Allotment money as mentioned E-form PAS-3iv.Whether the Company falls under the definition of a small company as prescribed under Section 2(85) of the Act and whether Section 446B is applicable during the period of default;

2. The noticee has neither responded to the notice nor requested an e-hearing. Thus, the Adjudicating officer is also of the view that no E-hearing is required in the instant case.

E.Order:

1. A.A Show Cause notice bearing ID: SCN/ADJ/01-2026/MB/03411 dated 06.01.2026 was issued to the Applicants under Section 454 read with Section 42(6) of the Act via E-adjudication module on account of incorrect filing E-form PAS-3 filed vide SRN AB8508408 on 24.10.2025 with respect to the Private placement made on 18.10.2025.B.The Applicants replied on the E-adjudication portal on 07.01.2026 and submitted as under:i.The Company had filed E-form PAS-3 (SRN AB8508408) on 24.10.2025. Due to inadvertent clerical and procedural errors, certain mandatory documents, including the Valuation Report, List of Allottees, and PAS-4, were not attached, and an incorrect number of securities was disclosed.ii.Allow the Company to file a fresh, corrected Form PAS-3 without further penalty, considering the proactive suo-motu disclosure made by the Company. C.The Applicants did not request for E-hearing and the Adjudicating officer is of the view that no E-hearing is required in the instant case.D.On perusal of the E-form PAS-3 filed by the Company with the Registrar vide SRN AB8508408 on 24.10.2025, it is observed that the Company raised amount of Rs.10,00,000/- through the relevant private placement offer. Further, on perusal of the documents filed and submission made by the applicants, it is observed that the Company admittedly failed to attach valuation report required for pricing of the securities under Private placement with E-form PAS-3, list of allottees, Private placement offer letter in PAS-4 and incorrectly disclosed number of securities allotted in contravention of Section 42 of the Act read with Rule 14(6) of the Companies (prospectus and Allotment of Securities) Rules, 2014. E.Whereas Section 42(10) of the Act stipulates that:Subject to sub-section (11), if a company makes an offer or accepts monies in contravention of this section, the company, its promoters and directors shall be liable for a penalty which may extend to the amount raised through the private placement or two crore rupees, whichever is lower, and the company shall also refund all monies with interest as specified in sub-section (6) to subscribers within a period of thirty days of the order imposing the penalty.F.Unlike the other penal provisions such as Section 92(5) and 137(3) of the Act, penalty under Section 42(10) of the Act is not fastened on each Director/officer in default but on the Company, its Directors and Promoters collectively. However, the E-adjudication portal is designed in such a manner that it does not allow collective imposition of penalty. Since the penalty amount has to be imposed collectively on the Company, its Promoters and Directors for sake of clarity, the amount to be imposed shall be proportionally apportioned between the Company, its Promoters and Directors, so that personal liability of directors become determinable and Director(s) pay from their own funds. Accordingly, the noticees namely Mr SHAILESH RAMDAS ADHALGE (Director), and Mr. SANDEEP SONBA GAIKWAD (Director) have been held liable for penalty.G.Default under Section 42 of the Act is with respect to offer and acceptance of money through Private Placement. Accordingly, the period of offer for the Private Placement and period of acceptance thereof is the default. In the instant case, the private placement was made on 18.10.2025, which shall be considered as the default period. On the date of commencement of default, the Company was a Small Company as its paid-up share capital was Rs. 1,00,000/- and its turnover for the immediately preceding financial year 2024-2025 was Rs. 0/- which is within the threshold under Section 2(85) of the Act as it was then. Thus, the benefit of Section 446B while levying penalty shall be extended to the noticees for the said default. H.Had it not been a small Company, the Company and its directors and promoters would have been collectively liable to a penalty of upto the amount raised through a private placement or Rupees Two Crores, hichever is lower. However, given the fact that the Company is small Company under provisions of Section 2(85) of the Act, the penalty shall be imposed in terms of Section 446B of the Act. I.Now, in exercise of the powers conferred on the Adjudicating Officer vide Notification dated 24th March 2015, having considered the facts and circumstances of the case, I hereby impose penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) on the Company (the maximum permissible penalty under Section 446B of the Act for the Company) and Rs. 1,00,000/- (Rupees One Lakhs only) on Mr SHAILESH RAMDAS ADHALGE (Director), and Mr. SANDEEP SONBA GAIKWAD (Director) (the maximum permissible penalty under Section 446B of the Act) under the penal provisions of Section 42(10) of the Act for default under Section 42 of the Act read with Rule 14(6) of the Companies (prospectus and Allotment of Securities) Rules, 2014.

2. The details of penalty imposed on the company, officers in default and others are shown in the table below:

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 Mumbai 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.

Chandan Kumar,
Registrar of Companies
ROC Mumbai