The Registrar of Companies, Pune passed an adjudication order under Section 454 of the Companies Act, 2013 in relation to alleged violation of Section 42(10) read with Rule 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 by Innoctive Technologies Private Limited and its directors. The company had issued 226 Compulsorily Convertible Preference Shares (CCPS) through private placement to one identified investor pursuant to resolutions passed in January and February 2022. The company admitted that Form PAS-5 filed with the Registrar did not mention the date of circulation of the private placement offer letter, resulting in procedural non-compliance. The company argued that all lapses related to a single integrated private placement transaction and that Section 42(10) did not contemplate separate penalties for each procedural deviation. Accepting the submissions and noting that another adjudication order had already been passed in the matter, the ROC held that no separate penalty was required and imposed nil penalty on the company and directors.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Pune
PCNTDA Green Building, BLOCK A, 1st & 2nd Floor , Near Akurdi Railway Station, Akurdi, Pune, Maharashtra, India,
411044
Phone: 020-27651375,020-27651378
E-mail: roc.pune@mca.gov.in
Order ID: PO/ADJ/05-2026/PU/02108 Dated: 08/05/2026
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 24/03/2015 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 INNOCTIVE TECHNOLOGIES PRIVATE LIMITED [herein after known as Company] bearing CIN U72900PN2017PTC171480, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at S. NO. 232/1, WING NO. A1 LALWANI VASTU, SAKORE NGR. NA PUNE PUNE MAHARASHTRA INDIA 411014
Individual details:
In the matter relating to VIDYADHAR SHINDE ——–
In the matter relating to RAJU SALVE ——–
In the matter relating to DEEPESH KURUPPATH ——
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 – The company has filed a suo-motto application u/s 454 of the Companies Act, 2013 for adjudication of default under section 42 of the Act r/w Rule 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 . In the application it is submitted that the company had passed a Special Resolution by convening EoGM dated 27.01.2022 to offer & issue 226, 0.01% Compulsorily Convertible Preference Shares (CCPS) through Private Placement on preferential basis, in accordance with the provisions of Section 42, 55,62 and other applicable provisions of the Companies Act, 2013. Furthermore, the company has passed a board resolution by convening a Board Meeting dated 04.02.2022 to allot 226 CCPS to the identified investor.
Rule 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires that the company shall maintain a complete record of private placement offers in Form PAS-5. However, the company in its application submitted that in Form PAS-5, the Company was required to mention the date of circulation of the private placement offer letter and the Company has not mentioned the date of circulation of the private placement offer letter in Form PAS-5 (Record of Keeping Private Placement Offer) filed with the Registrar, and therefore, contravening the provisions of Rule 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
Hence, there is violation of section 42 of the Companies Act, 2013 read with Rule 14(4) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the company and director who are in default are liable for penal action u/s 42(10) of the Companies Act, 2013 and are hereby called upon to show cause as to why penal action under Section 42 (10) of the Companies Act, 2013 should not be initiated for the alleged violation of the aforesaid provisions of the said acts, who may submit objections/ reply, if any.
2. Adjudicating Officer is also of the view that the e-hearing is not required in the instant case.
E. Order:
1. (A) The company has filed a suo-motto application u/s 454 of the Companies Act, 2013 for adjudication of default under section 42 of the Companies Act, 2013. In the application it is submitted that the company had passed a Special Resolution by convening EoGM dated 27.01.2022 to offer & issue 226, 0.01% Compulsorily Convertible Preference Shares (CCPS) through Private Placement on preferential basis, in accordance with the provisions of Section 42, 55,62 and other applicable provisions of the Companies Act, 2013. In the application the company had pointed out separate procedural non-compliances relating to the same issue. Accordingly, adjudication notices were issued to the company and officers in default, who, pursuant to the notice, have submitted their replies.
(B) Submissions of the company:
a. The company in the reply has submitted that all the violations pertain to one single offer and allotment of securities. There was no second offer, no multiple allotments, no repeated violations, no investor grievance, and no wrongful gain or loss to any party.
b. It has also been submitted by the company that the Company internally identified certain procedural lapses in the conduct of the private placement and, on its own initiative, filed the Adjudication Application suo moto and voluntarily without any inspection, inquiry, or prosecution having been initiated.
c. All the alleged procedural lapses, if any, arose within the framework of a single private placement offer made to one identified investor. The transaction pertains to one integrated offer and allotment process.
d. Section 42(10) provides for penalty in respect of a ?contravention of this section? and does not contemplate contravention of each sub-section independently as a separate penal event. The statutory ceiling of penalty is computed transaction-wise, with reference to the ?amount involved in the offer or invitation,? and not sub-section-wise.
e. It is respectfully submitted that the legislature has consciously not employed language such as ?for each such failure,? ?for every default,? or ?for each sub-section? ? phraseology which it has expressly used in other provisions where multiplicative or continuing penalties are clearly intended (for instance, Sections 17(2), 53(3), 92(5), 117(2), 137(3), 140(3) and 159 of the Companies Act, 2013, each of which specifically prescribes a per-day or per-default accruing penalty structure).
f. The company has further relied on Additional Commissioner of Income Tax v. I.M. Patel & Co., the Gujarat High Court, drawing from Supreme Court decisions in Hindustan Steel Ltd. v. State of Orissa and Khemka & Co., wherein it is held that courts must not enlarge penal liability by implication. Where the legislature has prescribed a particular penalty structure, courts must apply it as framed and should not expand the scope of penal consequences beyond what the statute expressly provides. In such circumstances, the unit of contravention is the statutory provision as a whole, unless the legislature has clearly indicated otherwise.g. Imposing separate penalties for separate procedural lapses, all arising from one integrated private placement transaction, would result in disproportionate penal consequences entirely inconsistent with the legislative intent of Section 42(10) and the principles of proportionality and fairness.
h. Accordingly, the company has prayed for passing a single consolidated adjudication order covering all alleged defaults under Section 42, thereby imposing a single consolidated penalty, and not multiplicative penalties for each procedural deviation.
(C) On perusal of the reply of the company and the legal precedents quoted therein, I find merit in the submissions of the company. All the alleged procedural lapses, if any, arose within the framework of a single private placement offer made to one identified investor. The transaction pertains to one integrated offer and allotment process. One adjudication order bearing number PO/A /05-2026/PU/02106 arising out of Show cause notice no. SCN/ADJ/01-2026/PU/03366 has already been passed in this matter.
(D) Now, in exercise of the powers conferred on the undersigned vide Notification dated 24th March 2015 and having considered the replies submitted in response to the notice issued, no penalty is imposed on the company and the officers in default for default.
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 | INNOCTIVE TECHNOLOGIES PRIVATE LIMITED having CIN as U72900PN2017P TC171480 | 0 | 0 | 20000000 | |
| 2 | VIDYADHAR SHINDE having DIN as 02418420 | 0 | 0 | 20000000 | |
| 3 | RAJU SALVE having DIN as
02437002 |
0 | 0 | 20000000 | |
| 4 | DEEPESH KURUPPATH having DIN as 07856662 | 0 | 0 | 20000000 |
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 Navi 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.
Parvez Naikwadi,
Registrar of Companies
ROC Pune
