The Registrar of Companies, Gujarat, imposed a penalty on V.L. Infraprojects Limited for violating Section 42 of the Companies Act, 2013. The company failed to open a separate bank account for the share application money received for allotment of equity shares, violating provisions under Section 42(6) of the Act. The company received share application money in its regular bank account between December 28, 2015, and January 13, 2016, without following proper procedures. During the audit conducted for an Initial Public Offer, this non-compliance was discovered. Despite rectifying the issue by filing a return of allotment, the company was still penalized as the breach occurred over 16 days. The penalty imposed amounted to ₹29,00,000 for the company and its directors. The adjudicating officer highlighted the importance of compliance with procedural requirements and directed the company and its officers to rectify the default or face further action under Section 454A of the Companies Act, 2013. The company has 60 days to appeal this order. Failure to pay the penalty within 90 days will result in additional fines.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
GUJARAT, DADRA & NAGAR HAVELI
ROC Bhavan, Opp. Rupal Park,
Nr. Ankur Bus Stand, Na-anpura, Ahmedabad (Gujarat) – 380013.
Tel. No.: 079-27438531, Fax : 079-27438371
Website : www.mca.govin E-mail : [email protected]
BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI
Order No. ROC-al/ADJ. ORDER/64(1)/UNIPHOS ENVIROTRONIC/ Sec.454/ 2023-24 Dated: 08 AUG 2024
ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION 42 READ WITH SECTION 62 OF THE COMPANIES ACT, 2013.
IN THE MATTER OF
V.L. INFRAPROJECTS LIMITED
(U45200GJ2014PTC081602)
Date of hearing -31.07.2024
PRESENT:
1. Shri Keerthi Thej N. (ROC), Adjudicating Officer
2. Shri Indrajit Vania (DROC), Presenting Officer
Company/ Officers/Directors/KMP/Authorized Representative:
Shri Vinit Nagar, PCS – Authorized representative of the Company/Director of the company present before the Adjudicating Authority.
Appointment of Adjudication Authority: –
1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 (hereinafter known as Act)
Company:
2. WHEREAS, V.L. INFRAPROJECTS LIMITED (herein after referred to as “company”) is a company registered under the provisions of the Companies Act, 1956/2013 in the State of Gujarat, having CIN: U4520002014PTC081602 and presently having its registered office situated at “716, Shivalik Satyamev, Near Vakil Saheb Bridge, Bopal, Ahmedabad-380058, Gujarat, India”.
Capital Structure of the applicant Company:
The Authorized Share Capital of the Company as on the date of this application is Rs. 17,00,00,000/- (Rupees Seventeen Crore Only) divided into 1,70,00,000/-(One Crore Seventy Lakhs) Equity Shares of Rs.10/- (Rupees Ten only) each. The issued, subscribed called and paid up capital of the company as on the date of this application is Rs.11,30,25,000/-( Rupees Eleven Crore Thirty Lakhs Twenty Five Thousand Only) divided into 1,13,02,500 (One Crore Thirteen Lakh Two thousand Five Hundred) Equity Shares of Rs.10/- (Rupees Ten Only) each.
3. Fact of the case:
That in terms of provisions of Section 42 & 62 of the Companies Act, 2013, every issue of share capital is required to be made in terms of Section 42 read with Section 62 of the Act and accordingly any issue of Share Capital to person other than existing shareholders shall be required to be made on preferential basis and in terms of Section 42 of the Act, the amount of the share application money shall be required to be kept in a separate Bank account and that the amount so received shall not be utilized before the allotment of shares in the favour of the allotee.
That the company made an allotment of 2,90,000 Equity Shares of Rs.10/- each on January 13, 2016, to a person other than the existing shareholder of the Company. The allotment in respect of the above shares of the Company was although made on preferential basis in accordance with the provisions of Section 42(5) of the Act, the Company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013.
That pursuant to the aforementioned allotment, the share application money was received on different dates between December 28, 2015 till January 12, 2016 but which
4. Ground of making an application: –
The fact that the Company was under non-compliance of the procedural part of the Capital structure was not known to the Company and that the same has been brought to the notice of the Company during the audit of the Company during the course of due diligence conducted for the purpose of the proposed Initial Public Offer. That no show cause notice has been issued or a penalty has been levied against the company in respect of the above non-compliance. The default commenced from December 28, 2015 and continued till January 13, 2016 i.e. the date of allotment and that the default hereunder has been made good by filing of return of allotment.
The company has filed suo-moto application under Section 454 of the Companies Act, 2013 before the Adjudicating Officer for violation under Section 42 (4) read with Section 62 of the Companies Act, 2013 for penal provision of Section 42 (10) of the Companies Act, 2013.
5. WHEREAS, Sub-section (10) of Section 42 of the provides 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”.
6. WHEREAS, the Company has failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013.. The default commenced from December 28, 2015 and continued till January 13, 2016 i.e. the date of allotment and that the default hereunder has been made good by filing of return of allotment.
[Date extended up to 28.12.2015 to 12.01.2016 for 16 days)
7 The following Officer in defaults were the KMP of the company during the period of default i.e. up to 28.12.2015 to 12.01.2016.
| Sr. No. | Name of Officers & their DIN | Designation |
| 1. | Mr. Rajagopal Reddy Annam Reddy,
DIN : 07039573 |
Director. |
Submission of the Presenting Officer
8 The Presenting Officer submitted that the company has violated under Section 42 read with Section 62 of the Companies Act, 2013. The said company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013. The default commenced from December 28, 2015, and continued till January 13, 2016. The company has filed suo-moto application under Section 454 of the Companies Act, 2013 before the Adjudicating Officer for violation under Section 42 read with Section 62 of the Companies Act, 2013 for penal provision of Section 42 (10) of the Companies Act, 2013.
The Presenting Officer has further submitted that it is observed from the Annual Return up to 30.09.2023 the paid-up capital of the company is Rs. 7,53,50,000/- and Turnover is Rs.45,55,69,500/-. Hence, as per the Ministry’s Notification No. G.S.R. 700(E) dated 15.09.2022, in the light of Companies (Specification of definition details) Amendment Rules, 2022 with respect to the provisions of Section 2(85) of the Companies Act, 2013, the company does not fall under the ambit of “small company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 4468 of the Companies Act, 2013 shall not be applied to the company.
Therefore, the penalty may be levied as per Provision of Section 42 (10) of the Companies Act, 2013.
ORDER:
9 While adjudging quantum of penalty under section 42 (10) of the Companies Act, 2013, the Adjudication Officer shall have due regard to the following factors, namely:
(a) The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.
(b) The amount of loss caused to an investor or group of investors as a result of the default.
(c) The repetitive nature of default.
10 With regard to the above factors to be considered while determining the quantum of penalty, unfair advantage made by the notice or the loss caused to the investors in a default of this nature.
11 The undersigned considered the submission made by the representative of the Company. Having considered the facts and circumstances of the case and after taking into account the factors above, the undersigned has reasonable cause to believe that the company and its officer(s) in default(s) have violated the provisions of section 42 of the Companies Act, 2013. By the company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company. I hereby imposed penalty on the Company and its Officer(s) in default u/s 42 of the Companies Act, 2013 for penal provisions of section 42(10) of the Companies Act, 2013 as per Table below: –
Default period from 28.12.2015 to 13.01.2016 (16 days)
| Nature of Default | Violation under Section 42 of the Companies Act, 2013 | Company/ Directors/ Officers | No. of Days for default and Amount involved for allotment | Maximum Penalty for Violation under Section 42(10) of the Companies Act, 2013 (Rs) | Penalty To be Imposed for allotment amount (Rs.) |
| The company failed to open a separate bank account in respect of the Share Application Money received for allotment of equity shares. | Sec. 42 | V.L. INFRAP-ROJECTS LIMITED | 16 days
Rs.29 lacs |
Rs. 2,00,00,000 | Rs. 29,00,000 |
| Mr. Rajagopal Reddy Annam Reddy, Director | 16 days
Rs.29 lacs |
||||
| Mrs. Mydhili Rajagopal Reddy Director | 16 days Rs.29 lacs |
AO is of the opinion that penalty is commensurate with the aforesaid default committed by the Noticees:
12 The company/ Officer is further directed to rectify the default failing which this office shall proceed further in the matter pursuant to Section 454A of the Companies Act, 2013 for the non-compliance of the aforesaid provisions of the Companies Act, 2013.
13 The noticee shall pay the amount of penalty individually for the company and its officers from their personal sources/ income by way of e-payment available on Ministry Website www.mca.gov.in under “Pay Miscellaneous fees” category in MCA fee and payment Services
14 Appeal if any, against this order may be filed in writing with the Regional Director, North Western Regional, Ministry of Corporate Affairs, ROC Bhavan, Opp. Rupal Park, Nr. Ankur Bus stand, Naranpura, Ahmedabad (Gujarat) 380 013 within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. (Section 454 of the Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019).
15 Please note that as per the provisions of section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudication officer or the Regional Director within a period of Ninety days (90 days) from the date of the receipt of the copy or order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakhs rupees. Further as per section 454(8)(ii) of the Companies Act, 2013, where an officer of a company who is in default does not pay the penalty within a period of Ninety days (90 days) from the date of receipt of the copy of the order, such officers shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
16 Your attention is also invited to section 454(8) of the Companies Act, 2013 in the event of noncompliance of this order which provides that in case of default in payment of penalty, prosecution will be filed u/s. 454(8)(ii) of the Companies Act, 2013 at your own costs without any further notice.
The adjudication notice stands disposed of with this order.
Registrar of Companies &
Adjudicating Officer
Gujarat, Dadra Nagar Haveli
