On 26th July 2024, the Ministry of Corporate Affairs (MCA), through the Office of the Registrar of Companies (ROC) for NCT of Delhi and Haryana, imposed a penalty on DAB Games Private Limited for the delay in issuing a private placement offer cum application letter. This penalty was adjudicated under the Companies (Prospectus and Allotment of Securities) Rules, 2014, read with Section 450 of the Companies Act, 2013. This article provides a detailed overview of the case, the facts involved, and the final order issued by the adjudicating officer.
Appointment of Adjudicating Officer The MCA, via Gazette Notification No. A-42011/112/2014-Ad.II, dated 24th March 2015, appointed the Registrar of Companies (ROC) for NCT of Delhi and Haryana as the adjudicating officer under Section 454(1) of the Companies Act, 2013. This empowers the ROC to adjudge penalties for non-compliance with the provisions of the Act.
Company Background DAB Games Private Limited was incorporated on 28th August 2023, with its registered office in Gurgaon, Haryana. The company is recognized as a startup by the Department for Promotion of Industry and Internal Trade (DPIIT). Despite the startup status, the company faced scrutiny for procedural lapses related to the issuance of private placement offer cum application letters.
Facts of the Case
1. Suo-Moto Application: On 23rd January 2024, DAB Games Pvt Ltd filed a suo-moto application for adjudication of penalty under Section 454 of the Companies Act, citing an inadvertent delay of 12 days in filing the required form with the ROC after passing a special resolution.
2. Show Cause Notice: Following the application, a Show Cause Notice (SCN) was issued on 23rd April 2024, to which the company admitted the default on 25th April 2024.
3. Request for Adjudication: The company’s authorized representative later withdrew the request for a personal hearing and asked the ROC to proceed with an appropriate adjudication order, emphasizing the company’s startup status and the non-recurring nature of the default.
Legal Provisions Involved
- Section 450 of the Companies Act, 2013: This section stipulates penalties for contraventions where no specific penalty is provided elsewhere in the Act. It mandates a penalty of ₹10,000 for the company and each officer in default, with an additional penalty of ₹1,000 per day for continuing contravention, subject to a maximum of ₹2,00,000 for companies and ₹50,000 for officers.
- Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014: This rule requires companies to issue private placement offer cum application letters only after filing the relevant special resolution with the ROC.
Adjudication of Penalty The adjudicating officer found DAB Games Pvt Ltd and its directors in violation of Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014. Given the startup status and the one-time nature of the default, the penalties imposed were as follows:
| Violation | Penalty on Company/Officer | Penalty (Section 450) | Penalty (Section 446B) |
| Rule 14(8) of Companies Rules, 2014 | DAB Games Pvt Ltd | ₹10,000 | ₹5,000 |
| Akshat Bansal (Director) | ₹10,000 | ₹5,000 | |
| Aditya Dubey (Director) | ₹10,000 | ₹5,000 |
Final Order The adjudicating officer, Pranay Chaturvedi, directed the parties to pay the penalties within 90 days via the MCA portal. An appeal against the order can be filed within 60 days with the Regional Director (NR), Ministry of Corporate Affairs. The order also warned of further action under Section 454(8) of the Act for non-compliance.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS,
OFFICE OF REGISTRAR OF COMPANIES,
NCT OF DELHI & HARYANA
4TH FLOOR, IFCI TOWER, 61, NEHRU
PLACE, NEW DELHI -110019
ORDER OF PENALTY UNDER RULES 14 (8) OF COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 R/VV SECTION 450 OF THE COMPANIES ACT, 2013 IN THE MATTER OF DAB GAMES PRIVATE LIMITED (CIN: U93190HR2023PTC114495)
1. Appointment of Adjudicating Officer: –
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 appointed Registrar of Companies, NCT of Delhi & Haryana as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter known as Act) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company namely DAB GAMES PRIVATE LIMITED (herein after known as ‘company’) was incorporated on 28.08.2023 under the Companies Act, 2013 with Registrar of Companies, NCT of Delhi and Haryana is having its registered office is situated at 704, 7th floor, Plam court Mehrauli Gurgaon road, Sector 16, Industrial Estate (Gurgaon), Industrial Estate, Gurgaon, Haryana-122007. Financials are not due, however as per records available on MCA-21 portal, other details of the subject company is stated as under:
| S. No. |
Particulars | Details |
| 1. | Paid up capital | 100000 |
| 2. | a. Revenue from operation | – |
| b. Other Income | – | |
| c. Profit for the Period | ||
| 3. | Holding Company | NO |
| 4. | Subsidiary Company | NO |
| 5. | Whether company registered under Section 8 of the Act? | NO |
| 6. | Whether company registered under any other special Act? | NO |
3. Facts about the Case: –
i. The company has filed a suo-moto application on 23.01.2024 for adjudication of penalty under the provisions of section 454 of the Act vide e form GNL-1 vide SRN F90822511 dated 23.01.2024. As per application it is stated that pursuant to the Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014, company was required to issue private placement offer cum application letter after filling of special resolution to the Registrar of Companies. However, there was an inadvertent delay of 12 days while filling the form with Registrar of Companies resulting in a noncompliance with the provisions of section 42 r/w Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014.
ii. Accordingly, an SCN was issued on 23.04.2024 to the company and its directors, in response to which a reply was received through mail on 25.04.2024 wherein the default was admitted.
iii. Further, vide email dated 18.06.2024, Authorised Representative has withdrawn request for personal hearing in the said matter and requested this office to pass an appropriate adjudication order as deem fit in the case and to consider that company is a small company as defined under the Companies Act, 2013 and also recognized as a startup by the Department for Promotion of Industry and Internal Trade. Further, it is requested to consider this as one time default as this doesn’t have any ongoing characteristics.
4. The relevant provisions of Section 450 of the Companies Act and Rulesl4 (8) of Companies (Prospectus and Allotment of Securities) Rules, 2014 as on date of default as under:
Section 450 (Punishment where no specific penalty or punishment is provided
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 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.
Rules14 (8) of Companies (Prospectus and Allotment of securities) Rules, 2014
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.
5. Adjudication of penalty: –
i. As per Rule 14(8) of Companies (Prospectus and Allotment of Securities) Rules, 2014, a company shall not issue private placement offer cum application letter without filing relevant Special Resolution or Board Resolution of MCA-21. In this case default is that the company has issued private placement offer cum application letter without filing of the requisite form in the registry. Accordingly, there is a violation of the provisions of Rule 14 (8) of Companies (Prospectus and Allotment of Securities) Rules, 2014 and the same has been admitted by the company and its officers. Since, there is no penal provision specified for said non-compliance. Hence, company and its officers in default are liable for penalties in terms of provisions of section 450 of the Act.
ii. The subject company is registered as Startup company with DPIIT vide DIPP153352. Hence, the benefit of section 446B is applicable on the company.
iii. Now in exercise of the powers conferred on me vide Notification dated 24th March 2015 and having considered the replies submitted in the matter, I do hereby impose the following penalty: –
TABLE-I
| Violation and period of default |
Penalty imposed on Company/officer | Calculation of penalty under section 450 of the Act (in Rs.) | Penalty imposed as per Section 446B of Act (in Rs.) |
| A | B | C | D |
| Under Rule 14 (8) of Companies (Prospectus and Allotment of securities) Rules, 2014 | Dab Games Private Limited (Company) | 10000 | 5,000 |
| Akshat Bansal (Director) | 10000 | 5,000 | |
| Aditya Dubey (Director) | 10000 | 5,000 |
6. Order:
a. Names of parties as mentioned in the table above are hereby directed to pay the penalty amount as per column no. ‘D’ therein. In the case of parties other than the company, such amount is required to be paid out of their own funds.
b. The said amount of penalty shall be paid through online by using the website mca.gov.in (Misc. head) in favor of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi, within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
c. Appeal against this order may be filed with the Regional Director (NR), Ministry of Corporate Affairs, B-2 Wing, 2nd Floor, Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi-110003 within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order. [Section 454(5) & 454(6) of the Act read with Companies (Adjudicating of Penalties) Rules, 2014].
d. Your attention is also invited to section 454(8) of the Act in the event of noncompliance of this order.
(Pranay Chaturvedi, ICLS)
(Adjudicating Officer)
Registrar of Companies
NCT of Delhi & Haryana
No. ROC/D/Adj/Order/Dab Games/2943-2946
Date: 26/07/2024
