The Registrar of Companies, Mumbai I, passed an adjudication order under Section 454 of the Companies Act, 2013 imposing penalties under Section 42(10) for contraventions relating to a private placement by Basant Nutrifoods Private Limited. The company had filed a suo motu adjudication application admitting defaults, including failure to open a separate bank account for application money, issuing the private placement offer-cum-application letter before filing the special resolution with the Registrar, and receiving application money before shareholders’ approval, in contravention of Section 42(6) and Rules 14(1) and 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. The company requested leniency, stating that the defaults were procedural and that it qualified as a small company. The Adjudicating Officer held that the company was a small company under Section 2(85) during the period of default and applied Section 446B. Penalties of ₹2,00,000 were imposed on the company and ₹1,00,000 each on three directors, with directions to pay the penalties within 90 days and information regarding the right of appeal.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Mumbai I
100, Everest, Marine Drive, Mumbai, Maharashtra, India, 400002
Phone: 022-22812627
E-mail: roc.mumbai@mca.gov.in
Order ID: PO/ADJ/07-2026/MH/02518 Dated: 09/07/2026
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. 698(E) dated 10/02/2026 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 BASANT NUTRIFOODS PRIVATE LIMITED [herein after known as Company] bearing CIN U46309MH2023PTC400932, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at 23, FLOOR-3, PLOT NO. 101/109 GAYA BUILDING, YUSUF MEHERALI ROAD, MASJID, MANDVI, MUMBAI MUMBAI MUMBAI MUMBAI MAHARASHTRA INDIA 400003
Individual details:
In the matter relating to MANOJ BASANTLAL AGRAWAL —————
In the matter relating to ALKESH BASANTLAL AGRAWAL ——————
In the matter relating to RUCHIR MANOJ AGRAWAL ——-
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) received a suo-motu Adjudication Application dated 05.02.2026 filed by the Company, Mr Manoj Basantlal Agarwal, Director (DIN: 00140749), Mr Alkesh Basantlal Agarwal, Director (DIN: 00147045) and Mr Ruchir Manoj Agrawal, Director (DIN: 09604121(hereinafter referred to as the Applicants) under section 454 read with Section 42(10) for various defaults made under Section 42 of the Act. Whereas the Applicants have stated that the Board of Directors and Members of the Company approved issuance of 17,21,000 equity shares of face value of Rs.10 each through private placement on 19.02.2024 and 22.04.2024 respectively. Whereas the Applicants have submitted that during the said private placement, the Company had made various defaults under provisions of Section 42 of the Act related to the aforementioned private placement made on 29.05.2024, which are mentioned as under:
i. The Company failed to open of separate bank account for receiving application money in contravention of Section 42(6) of the Act.
ii. The Company filed E-form MGT-14 vide SRN AB6568960 for submission of Special Resolution on 17.09.2025. However, the Private Placement offer cum application letter was issued on 29.05.2024. Thus, the Company failed to file the special resolution with the Registrar before issuing Private Placement offer cum application letter and thus contravened the Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred to as the Rules).
iii. The Company received an application money of Rs.1,71,80,000/- before obtaining approval of the Shareholders in contravention of Rule 14(1) of Companies (prospectus and Allotment of Securities) Rules, 2014 read with Section 42(6) of the Act. Whereas Section 42(6) of the Act read as follows: XXX(6) A company making an offer or invitation under this section shall allot its securities within sixty days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within fifteen days from the expiry of sixty days and if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum from the expiry of the sixtieth day:*Provided that monies received on application under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than?(a) for adjustment against allotment of securities; or(b) for the repayment of monies where the company is unable to allot securities. Rule 14(1) and 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred to as 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: XXX(8) A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in the Registry: Provided that private companies shall file with the Registry copy of the Board resolution or special resolution with respect to approval under clause (c) of subsection (3) of section 179Whereas the Applicants have further stated that the said procedural lapses occurred due to inadvertent lapse on the part of the professional engaged by the Company and for the reasons beyond the control of the Applicants. The Applicants further stated that the Company was a start-up Company during the period of default. Whereas the Applicants have violated the provisions of Section 42 of the Companies Act, 2013 and rules made the er. Therefore, the Applicants are liable for penal action under Section 42(10) for various defaults made under Section 42 of the Act. Whereas the Company is also required to clarify whether the Company was a Small Company in terms of Section 2(85) of the Act on the date of default made under Section 42 of the Act.
2. An opportunity of being heard was granted to the Applicants under the provisions of the section 454(4) of the Act and an E-hearing notice bearing ID: EH/ADJ/06-2026/PU/01740 dated 30.06.2026 was issued
E. Order:
A. A Show Cause notice bearing ID: SCN/ADJ/06-2026/MH/04641 dated 03.06.2026 was issued to the Applicants under Section 454 read with Section 42(10) of the Act via E-adjudication module for various defaults made under Section 42 of the Act.
B. The Applicants replied to the Show Cause notice vide letter dated 10.06.2026 on E-adjudication portal and submitted as under:
i. The Company has been in default of certain provisions of section 42 of the Companies Act, 2013 (the Act), read with the rules framed thereunder, as more particularly set out in the adjudication application. Accordingly, the instant application was preferred Suo-motu under section 454 of the Act, read with section 42 thereof.
ii. That at the time of occurrence of the default, that is, at the time of allotment of equity shares, the Company qualified as a small company within the meaning of section 2(85) of the Act and is also recognised as a start-up company and registered as an MSME. Hence, the penal provisions applicable to the present case are those prescribed under sub-section (10) of section 42 of the Act, read with section 446B of the Act.
iii. The Company further requested to take a lenient view in the matter, considering the suo-motu application made by the Company, its closely held nature, the fact that defaults were purely technical and procedural in nature, absence of any mala fide intention, and that the defaults did not result in any unlawful raising of funds, public invitation, misutilisation of application money or prejudice to any investors, creditors or any stakeholder. Private placement was made for identified persons, and the securities were duly allotted. It is further submitted that neither the Company nor any of its directors derived any disproportionate gain or unfair advantage from the aforesaid procedural lapses. Further no prejudice or loss has been caused to any shareholder, subscriber, creditor or stakeholder on account of the said non-compliances.
iv. The Company respectfully submits that in the Show Cause Notice received, the names of the applicants to whom the notice is addressed appear to have been repeated twice. It is also observed that the penalty amount mentioned in the said notice appears to have been duplicated. The Company requested to kindly take the same on record while considering the matter.
C. An opportunity of being heard was granted to the Applicants under the provisions of the section 454(4) of the Act and an E-hearing notice bearing ID: EH/ADJ/06-2026/PU/01740 dated 30.06.2026 was issued. The said E-hearing was scheduled on 08.07.2026 at 12:10 PM (IST).
D. Mr. Ketan Sahani, Practicing Company Secretary appeared on behalf of the noticees during the E-hearing and reiterated his written reply. On being asked whether he has confirmed that the Company was not a start up Company during the period of default. He replied in affirmative. However, the provisions of Section 2(85) of the Act will be applicable to the Company during the period of default for being a small company perusal of the documents filed and submissions made by the applicants, it is observed that the Board of Directors and Members of the Company approved issuance of 17,21,000 equity shares of face value of Rs.10 each through private placement on 19.02.2024 and 22.04.2024 respectively Whereas the Applicants have submitted that during the said private placement made on 29.04.2024, the Company had made various defaults as mentioned at para D of this order.
F. 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 penal .
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 period of default. In the instant case, the default commenced on 29.04.2024 that is the date of issue of Private Placement Offer and in absence of any remedial rectification, it continued till 17.09.2025. On the date of commencement of the default, the Applicant Company stated that it was a small company under Section 2(85) of the Act.
H. The period of default is considered as the date of the private placement offer that is 29.04.2024. During the period of default the paid up share capital of the Company was Rs.30,000/- and its turnover was Rs. 6,33,720/- for the financial year ended on 31.03.2024. Thus, the Company and its directors and promoters falls under the provisions of Section 2(85) of the Act.
I. Further, the noticees have provided the copy of certificate of recognition as start up Company issued by Central Government in the Department for Promotion of Industry and Internal Trade. The Certificate of Start-up bearing No. DIPP225287 is valid from 11.10.2025 to 16.04.2033.
J.. Thus, the Company and its directors and promoters are liable from penalty under Section 42(10) subject to the provisions of Section 446B of the Act.
K. Had it not been a Small Company, the Company and its directors and promoters would have been collectively liable to a penalty of upto Rs. 1,72,10,000/- that is the amount raised through a private placement. 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.
L. 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 MANOJ BASANTLAL AGRAWAL (Director), Mr ALKESH BASANTLAL AGRAWAL (Director), Mr RUCHIR MANOJ AGRAWAL (Director) (the maximum permissible penalty under Section 42(10) read with Section 446B of the Act for default under Section 42(6) of the Act read with rule 14(1) and rule 14(8) 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:
| (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 | BASANT NUTRIFOODS PRIVATE LIMITED having CIN as U46309MH2023P TC400932 | NA | 200000 | 0 | 20000000 |
| 2 | MANOJ BASANTLAL AGRAWAL having DIN as 00140749 |
NA | 100000 | 0 | 20000000 |
| 3 | ALKESH BASANTLAL AGRAWAL having DIN as 00147045 |
NA | 100000 | 0 | 20000000 |
| 4 | RUCHIR MANOJ AGRAWAL having DIN as 09604121 | NA | 100000 | 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 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 I
