The Registrar of Companies (ROC) Cuttack has issued an order imposing penalties on Z Estates Private Limited and its director for a violation of the Companies Act, 2013. The core of the matter revolves around a set of Fully Convertible Debentures (FCDs) that the company issued in 2007. According to the terms of the issue, these debentures were scheduled to be converted into Compulsorily Convertible Preference Shares (CCPS) by November 6, 2014. The company, however, failed to complete this conversion by the due date, an act that was deemed a contravention of Section 71(8) of the Act.
In response to the show-cause notice, the company submitted a reply explaining its position. Z Estates Private Limited argued that it had not violated the law because it had modified the terms and conditions of the debenture redemption prior to the original conversion date. The company stated that it had passed a Board Resolution on October 10, 2014, to “roll over” the debentures for an additional five years, setting a new conversion date of November 5, 2019. This resolution was subsequently ratified and approved by the debenture holders in a meeting held on November 5, 2014. The company contended that by modifying the terms with the debenture holders’ consent, it had complied with the spirit of the law and avoided a default.
After reviewing the company’s submission, the adjudicating officer did not find the explanation satisfactory. The order concludes that the company’s actions still constitute a violation. As a result, penalties were imposed under Section 450 of the Act, which provides for penalties for general non-compliance where no specific penalty is defined elsewhere. The order imposes a penalty of Rs. 2,00,000 on the company and Rs. 50,000 on the director, Tapan Kumar Mohanty. Both the company and the director have been directed to pay the penalties within 90 days, with the option to file an appeal with the Regional Director within 60 days.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Cuttack
ROC-cum-Official Liquidator, Ministry Of Corporate Affairs, Corporate Bhawan, 2nd & 3rd Floor, Plot No-9(P), Sector-1,CDA,
Cuttack, Odisha, India, 753014
Phone: 0671-2366952 |
E-mail: roc.cuttack@mca.gov.in
Order ID: PO/ADJ/08-2025/CT/00602 Dated: 28/08/2025
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 450 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 Z ESTATES PRIVATE LIMITED [herein after known as Company] bearing CIN U45201OR2007PTC009579, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at M/4 – 34 ACHARYA VIHAR NA BHUBANESWAR Orissa India 751013
Individual details:
In the matter relating to TAPAN KUMAR MOHANTY [herein after known as individual] having DIN 00931315 and having its address at JHANJIRI MANGALA GADA BADAM BADI CUTTACK Orissa India 753009
C. Provisions of the Act:
If a company or any officer of a company or any other person contravenes any of the provisions of this Act or the rules made thereunder, or any condition, limitation or restriction subject to which any approval, sanction, consent, confirmation, recognition, direction or exemption in relation to any matter has been accorded, given or granted, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other person shall be 1[liable to a penalty of ten thousand rupees, and in case of continuing contravention, with a further penalty of one thousand rupees for each day after the first during which the contravention continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default or any other person]
D. Facts about the case:
1. Default committed by the officers in default/noticee – The Company issued 15.75% Fully Convertible Debentures (FCD) on 07.11.2007.. As per the terms and conditions of the issue, these were to be converted to Compulsorily Convertible Preference Shares (CCPS) on or before 7 years from the date of issue and allotment i.e. by 06.11.2014 . However, the debentures were not converted within the due dates.
Therefore, the Company has violated the provisions of Section 71(8) of the Companies Act, 2013.
2. N. A.
E. Order:
1. Facts about the case : The Company issued 15.75% Fully Convertible Debentures (FCD) on 07.11.2007. As per the terms and conditions of the issue, these were to be converted to Compulsorily Convertible Preference Shares (CCPS) on or before 7 years from the date of issue and allotment i.e. by 06.11.2014. However, the debentures were not converted within the due dates. Therefore, the Company has violated the provisions of Section 71(8) of the Companies Act, 2013.SCN : The Show Cause Notice (SCN) was issued on 08.07.2025, through e-mail as well as Speed Post, to (1) the company ? Z Estates Private Limited, (2) Shri Tapan Kumar Mohanty, Managing Director. Reply of the Company : The company has submitted its reply vide petition dated 01.08.2025, wherein the company has stated that :-1.It is submitted by the Applicants that the Company has not contravened the provisions of Section 71(8) of the Companies Act, 2013. 2.Section 71(8) of the Companies Act, 2013 provides that ?A company shall pay interest and redeem the debentures in accordance with the terms and conditions of their issue?. 3.As per the terms of issue of debentures, these were to be converted to CCPS on or before 7 years from the date of issue and allotment i.e. by 06.11.2014. It is submitted that as per the provisions of Section 71(8) of the Companies Act, 2013, the Company had modified the terms and conditions of debentures. The Company had rolled over the conversion of debentures into CCPS for a further period of Five (5) years instead of converting the debentures into CCPS prior to the date of its conversion by passing necessary resolutions in the meeting of the Board of Directors and the same being ratified and approved by the Debenture holders of the Company. In the Board of Directors meeting dated 10th October 2014, it was categorically mentioned that as the project of the Company was not complete the Company wants to rollover the Debentures for a period of five (5) years. The resolution passed in the said meeting is reproduced herein below: Rollover of 68,000 No of Debentures for another period of Five Years: The Chairman informed to the board of directors that the company had issued 68,000 no of Fully Convertible Debentures of Rs. 10/- each on 07th November, 2007 to M/s. Badetos Green Limited and M/s. Z- Harshpriya, debentures of 34,000 each, which would be convertible to Compulsory Convertible Preference Shares after a period of seven years. The conversion date for those debentures is 06th November, 2014. But now the project of the Company has not completed so the company wants to rollover those debentures for a period of five years. Then the board of directors of the company discussed the matter and passed the following resolution: “RESOLVED THAT subject to necessary approvals of the debenture holders and to such statutory approvals as necessary to extend the period of conversion of 68,000 no of Fully Convertible Debentures issued by the Company and held by M/s. Badetos Green Limited and M/s. Z- Harshpriya (“The said institutional Debenture holders’) be and is hereby rollover for another period of 5 years and shall be converted into Compulsory Convertible Preference Shares on or before 05th November, 2019 and that the rate of interest, the amount of premium and/or fees and other payments to be made thereupon to the said institutional debenture holders and other terms and conditions (financial or otherwise) on which the period of conversion be extended, shall continue to be the same as currently applicable. “RESOLVED FURTHER THAT the terms and conditions of the Investment Agreement entered with the institutional debenture holders and the Company along with applicable resolutions shall be read, constructed and applied together with and as amended or modified by this resolution.”4.That in the meeting of the Debenture holders held on 5th November 2014, the proposal of the Board of Directors to Roll over 68,000 Debentures was ratified and approved by the Deb ture holders. The resolution passed in the meeting of the Debenture holders held on 5th November 2014, is reproduced herein below: Rollover of 68,000 no. of Debentures for another period of Five Years: “RESOLVED THAT the Board of Directors of the Company be and is hereby accorded to extend the period of conversion of 68,000 no of Debentures issued by the Company and held by M/s. Badetos Green Limited and M/s. Z- Harshpriya (“The said institutional Debenture holders) be and is hereby rollover for another period of 5 years and shall be converted into Compulsory Convertible Preference Shares on or before 05th November, 2019 and that the rate of interest, the amount of premium and/or fees and other payments to be made thereupon to the said institutional debenture holders and other terms and conditions (financial or otherwise) on which the period of conversion be extended, shall continue to be the same as currently applicable. “RESOLVED FURTHER THAT the terms and conditions of the Investment Agreement entered with the institutional debenture holders and the Company along with applicable resolutions shall be read, constructed and applied together with and as amended or modified by this resolution.”5.The aforesaid resolution of the Board of Directors held on 10th October 2014, and the resolution passed in the meeting of the Debenture holders held on 5th November 2014, have pursuant to Section 71(8) of the Companies Act 2013 modified the terms and conditions of the redemption of such Debentures and therefore there is no violation of Section 71(8) of the Companies Act, 2013. 6.It is humbly submitted that the Company has modified the Terms and Conditions of the redemption of Debentures prior to the date of the redemption of Debentures fixed as per the initial Terms and Conditions and therefore there is no violation of Section 71(8) of the Companies Act, 2013. The detail of the rollover of Debentures is mentioned as below: FCD Number Date of Issue Date of Board Meeting Date of Debenture Holders Meeting Original Date of Redemption Rolled over till001 to 3400007.11.200710.10.201405.11.201406.11.201405.11.201934001 to 6800007.11.200710.10.201405.11.201406.11.202405.11.20197.From the aforesaid it is clear that the Company has modified the Terms and Conditions of the Redemption of Debentures prior to the date of the redemption and therefore there is no violation of Section 71(8) of the Companies Act, 2013. The copies of the minutes of the meeting of the B
Directors and the Debenture holders held on 10th October 2014 and 5th November 2014 respectively are attached as Annexure-A. 8.Therefore, it is humbly submitted that the company has not violated any provisions of the Companies Act as mentioned in the Show Cause Notice ref: SCN/ADJ/03-2025/CT/00816 vide dated 08/07/2025.Order : The submissions made by the company has not been found satisfactory. Hence, the A.O. do hereby impose penalty upon the company and its Directors/Officers in default for the relevant period under the provisions of Section 450 of the Companies Act, 2013 for violation of Section 71(8) of the Companies Act, 2013.
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 | Z ESTATES PRIVATE LIMITED having CIN as U45201OR2007P TC009579 | 200000 | 0 | 200000 | |
| 2 | TAPAN KUMAR MOHANTY having DIN as 00931315 | 50000 | 0 | 50000 |
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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 Kolkata 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.
Sudhir Kapoor,
Registrar of Companies
ROC Cuttack
