The Registrar of Companies, Mumbai passed an adjudication order under Section 454 of the Companies Act, 2013, holding that violations of private placement norms under Section 42 constitute substantive breaches punishable under Section 42(10) and not merely procedural lapses attracting a general penalty. The company had issued a private placement offer before filing the requisite resolutions with the Registry and utilised subscription money prior to filing the return of allotment, contrary to Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the proviso to Section 42(4). Rejecting the contention that these were technical defaults covered by Section 450, the adjudicating officer ruled that rules prescribed under Section 42 form an integral part of the section itself. Accordingly, a collective penalty of ₹24.58 lakh was imposed under Section 42(10), proportionately apportioned between the company and its directors, while exempting a director who had resigned prior to the default period.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Mumbai
Registrar Of Companies, 100, Everest, Marine Drive, Mumbai, Maharashtra, India, 400002
Phone: 022-22812627,022-22812645
E-mail: roc.mumbai@mca.gov.in
Order ID: PO/ADJ/12-2025/MB/01283 Dated: 24/12/2025
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 CAPCHEM ELECTRICALS LIMITED [herein after known as Company] bearing CIN U42202MH2010PLC206771, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at UNIT NO 1401 & 1402, 14TH FLOOR, ORIANA BUSINESS PARK, ROAD NO. 22, WAGLE I.E. THANE THANE MAHARASHTRA INDIA 400604
Individual details:
In the matter relating to ANKUSH SHESHRAO CHAVAN ——-
In the matter relating to SHRIKISHAN CHUNNILAL SHRIRANGAM ——-
In the matter relating to RAMCHANDRA VITTHAL SATRE——-
In the matter relating to ANAND ANANT GALGALI ———
In the matter relating to RAJAN PRATAPSINGH THAKUR ——-
In the matter relating to NISHA VISHWAS GUJAR———
In the matter relating to AMEYA ANAND GALGALI ———
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 22.09.2025 filed by the Company, Mr. Anand Anant Galgali, Director (DIN: 030405963), Mr. SHRIKISHAN CHUNNILAL SHRIRANGAM Director (DIN: 09625673), Mr. RAJAN PRATAPSINGH THAKUR, Director (DIN: 07158192), Mr. RAMCHANDRA VITTHAL SATRE, Director (DIN: 00634991), Mrs. NISHA VISHWAS GUJAR , Director (DIN: 09820146) and Mr. ANKUSH SHESHRAO CHAVAN Director (DIN: 08530934) (hereinafter referred to as the Applicants) under section 454 of the Act for default under Section 42 read with Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (hereinafter referred to as the Rules). In this regard, certain clarification were sought from the Applicants vide letter dated 12.11.2025 and reply to which was received vide letter dated 03.12.2025. After examination of the reply, it has been found that the default committed each under Section 42 of the Act read with Rule 14(8) of the Rules and punishable under Section 42(10) of the Act.
Whereas Rule 14(8) of the Rules read as follows:
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 179
Whereas as per the filings available on MCA portal and as per submission made by the Applicants in the suo motu Adjudication Application it is observed that:
i. Board of Directors during board meeting held on 27.01.2024 and Shareholders during General meeting held on 30.01.2024 approved the issue and offer of 1,70,000/- Equity Shares of Rs. 10/- each at premium of Rs. 26.15/- aggregating to Rs.61,45,500/-.
ii. The Applicant Company issued a Private Placement Offer cum Application Letter in PAS-4 on 30.01.2024 and E-form MGT-14 was filed vide SRN AA6957020 on 08.03.2024. Thus, the Applicant Company circulated Private Placement Offer letter before filing relevant resolution with the Registrar in contravention of Rule 14(8) of the Rules.
iii. The Applicant Company made allotment of Equity shares on 30.01.2024 and received application money on 30.01.2024 and 31.01.2024 respectively. However, the Company utilized the said money before filing Return of Allotment in E-form PAS-3 with the Registrar in contravention of Section 42 of the Act.
Whereas the prescription of Rule 14 of the Rules is under Section 42 of the Companies Act, 2013. Accordingly, noticees are liable for default under Section 42 read with Rule 14 punishable under Section 42(10) of the Act.
2. The Noticees requested for an E- hearing. Acceding to the request, an opportunity of being heard was granted to them by the Adjudicating Officer under the provisions of Section 454(4) of the Act on 24.12.2025 at 11:30 AM (IST). In this regard, a notice bearing ID: EH/ADJ/12-2025/MB/00987 dated 20.12.2025 was issued.
E. Order:
1. A.A Show Cause notice bearing ID: SCN/ADJ/12-2025/MB/03019 dated 04.12.2025 was issued to the Company, Mr. ANKUSH SHESHRAO CHAVAN (Director), Mr. SHRIKISHAN CHUNNILAL SHRIRANGAM(Director), Mr. RAMCHANDRA VITTHAL SATRE (Director), Mr. ANAND ANANT GALGALI (Director), Mr. RAJAN PRATAPSINGH THAKUR (Director), Mr. NISHA VISHWAS GUJAR(Director), Mr. AMEYA ANAND GALGALI (Director) (hereinafter referred to as the noticees) under section 454 read with Section 42(10) of the Act for defaults committed under Section 42 of the Act and Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.
B. The reply received from the noticees on the E-adjudication portal on 04.12.2025 and submitted as under:
i. All other substantive requirements under Section 42 of the Act, including identification of allottees, receipt and utilization of funds, timeline for allotment, and filing of return of allotment, have been strictly fulfilled.
ii. The lapse pertains to disclosure requirements arising under Rule 14(8) of the Rules and does not relate to nor comprise any substantive condition or mechanism prescribed under Section 42 of the Act. On plain reading of penal provisions of Section 42(9) and 42(10) of the Act affirms penalty on Company, its promoters and officers in default for violation of Section 42 of the Act. Thus, contravention fall within contours of Section 42 covering substantive provision/compliance/ non compliance in section itself.
iii. The default for delay in filing E-form MGT-14 in contravention of Rules, is not expressed/addressed explicitly in Section 42 of the Act. The Section 42 and Rule 14 are interlinked for operationalizing private placements, Section 42(3) does not itself statutorily encode the sequencing of PAS-4 and MGT-14 filing, which is a matter of delegated rule.
iv. The delay in filing of MGT 14 does not amount to a breach of substantive requirements under Section 42(2) to Section 42(8) of the Act. The specific instance of delayed furnishing of filing MGT 14. does not fall within any of substantive compliance/non-compliances contemplated / envisaged by Section 42 of the Act.
v. Section 450 of the Companies Act, 2013 expressly provides for a general penalty where an act or omission, in contravention of the Act or Rules, is found and no penalty or punishment is provided elsewhere in this Act. Ruie 14(8) does not declare any specific penalty or impute its violation to Section 42(10) of the Act.
vi. The Company situation is analogous to other regimes (notably, Companies (Acceptance of Deposits Rules), 2014) in which penalty is imposed only where prescribed in primary or delegated legislation. The absence of a penalty in Rule 14(8) underscores the legislature intent that such technical/procedural lapses are residual in nature and fall under Section 450 of the Act. Thus, it is a settled principle that mere procedural lapse which neither causes prejudice nor results in any wrongful gain, ought not to attract substantive penal consequences. Thus, in light of settled principles-including the doctrine of strict construction of penal p and of proportionality in regulatory enforcement-the Company humbly pray that the admitted lapse be adjudicated only under Section 450, with due consideration for the absence of investor loss or any unfair advantage.
vii. Rule 14(8) is a procedural requirement under delegated legislation, and since neither Rule 14 nor Section 42 prescribes a penalty for breach of sequencing, the only legality tenable penalty is under Section 450 and E-form MGT-14 is filed for intimation, not investor protection; offer was NOT invalidated by the delay, as no such inference could be found, neither in section, nor in rules, making it all the more residuary in nature, being addressed as per Section 450 itself.
viii. The admitted default did not result in any prejudice to investors or gain to company officers.
C. The Noticees have also submitted a reply vide physical letter dated 16.12.2025. However, he same is not taken on record in pursuance to Rule 3A (1) of the Companies (Adjudication of Penalties) Rules, 2014.
D. The Noticees requested for an E- hearing. Acceding to the request, an opportunity of being heard was granted to them by the Adjudicating Officer under the provisions of Section 454(4) of the Act on 24.12.2025 at 11:30 AM (IST). In this regard, a notice bearing ID: EH/ADJ/12-2025/MB/00987 dated 20.12.2025 was issued. E.Ms. Ashita Kaul, Practicing Company Secretary attended the scheduled E-Hearing and admitted the defaults on behalf of the Noticees. She adverted to her written reply and reiterated her submissions. In addition to her written reply, she submitted that:
i. The Company has raised the amount of Rs. 61,45,500/- during the private placement offer.
ii. During the relevant period of default Mr. Ameya Galgali was not a director as he has resigned from directorship on 17.04.2023.
iii. The Company was not a startup nor a small Company and it was converted to public limited Company in the year 2022, thus the Company does not fall under the definition of Small Company.
F. On perusal of the Suo motu adjudication application and submissions made, it is observed that the Board of Directors and members of the Company approved issuance of 1,70,000/- Equity Shares of Rs. 10/- each at premium of Rs. 26.15/- aggregating to Rs.61,45,500/- on 27.01.2024 and 30.01.2024 respectively.
G. Under the provisions of Rule 14(8) of the Rules, 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. However, The Applicant Company issued a Private Placement Offer cum Application Letter in PAS-4 on 30.01.2024 and relevant resolution was filed in E-form MGT-14 vide SRN AA6957020 on 08.03.2024, in contravention of Rule 14(8) of the Rules prescribed under provisions of section 42 of the Act. Further, the Company utilized the application money before filing Return of Allotment in E-form PAS-3 with the Registrar in contravention to the proviso to the Section 42(4) of the Act.
H. The arguments of the Applicants that the defaults committed by them fall under Rule 14(8) of the Rules and does not relate to substantive condition and mechanism prescribed under Section 42 of the Act, and therefore, the default is punishable under Section 450 of the Companies Act, 2013 is completely fallacious and misreading of provisions of section 42 of the Act. It is emphasized that Section 42 of the Act is a self-contained Section and Section itself explicitly provides that company making Private placement shall issue Private Placement Offer in application in such form and manner as may be prescribed. Thus, what is given in prescription is nothing but the description of what has already been provided in relevant provisions of Section 42 of the Act. Prescriptions (rules) are integral part of provisions of Section 42 of the Act, and they cannot be read in isolation and independent of Section 42 of the Act. Disclosure requirements are basic and fundamental requirements of the law which have been provided in Section 42 of the Act and prescriptions are mere description and elaboration of the same. Attention is also drawn to Section 469 of the Act. Sub-section (2) of the Section 469 provides:
(2) Without prejudice to the generality of the provisions of sub-section (1), the Central Government may make rules for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provision is to be or may be made by rules. So, the rules made under Sub-section (2) of Section 469 read with any of the provisions of the Companies Act, 2013. The law does not envisage imperative penal provisions for the violation of such rules. If the rules are made under prescription of Section 42, violations of provisions of Section 42 and the rules made thereunder shall be deemed as violation of section 42 and shall be punishable with theel vant penal provisions provided under the said section. Accordingly, the defaults of the Applicants/noticees are under Section 42 of the Act read with Rule 14(8) of the Rules are punishable under Section 42(10) of the Act.
I. 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 penalty.
J. Further, as per the signatories of the Company available on the MCA21 portal, Mr Ameya Galgali was not a director during the default period as he has resigned on 17.04.2023. The Company has also filed E-form DIR-12 vide SRN AA2008061 on 19.04.2023 with the MCA. Thus, no penalty shall be imposed on Mr Ameya Galgali (Director).
K. Unlike the other penal provisions such as Section 92(5) and 137(3) of the Act, penalty under Section 42(10) of the Act is not fastened on each Director/officer in default but on the Company, its Directors and Promoters collectively. However, the E-adjudication portal is designed in such a manner that it does not allow collective imposition of penalty. Since the penalty amount has to be imposed collectively on the Company, its Promoters and Directors, for sake of clarity, the amount to be imposed shall be proportionally apportioned between the Company, its Promoters and Directors, so that personal liability of Directors become determinable, and Director(s) pay from their own funds. Accordingly, the Company, its Directors and Promoters have been held liable.
L. 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 30.01.2024 that is the date of issue of Private Placement Offer and in absence of any remedial rectification, it continued till 08.03.2024 that is date of filing E-form MGT-14. On the date of commencement of the default, the Applicant Company was not a small company nor a start up Company, therefore, Section 446B of the Act is not applicable in the instant case.
M. I have carefully examined the facts of the case, applicable laws thereon and thought through the mitigating circumstances adverting to Rule 3(12) of the Companies Adjudication of Penalties Rules, 2014 for levying the penalty for the aforesaid default. Factoring in the mitigating circumstances and Rule 3(12) the Companies Adjudication of Penalties Rules, 2014, I am of the view that a collective penalty amount of Rs. 24,58,200 /- (Rupees Twenty-Four Lakhs Fifty-Eight Thousand Two Hundred only) shall be commensurate to the nature of default. The collective penalty amount of Rs. 24,58,200 /- (Rupees Twenty-Four Lakhs Fifty-Eight Thousand Two Hundred only) has been approximately apportioned between the Company, its Promoters and Directors. Thus, the Company is liable for penalty of Rs.3,51,174/- (Rupees Three Lakhs Fifty-One Thousand One Hundred Seventy-Four only) and its Promoters and Directors are liable for penalty of Rs. 3,51,171/- (Rupees Three Lakhs Fifty-One Thousand One Hundred Seventy-One only) each.
N. 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.3,51,174/- (Rupees Three Lakhs Fifty One Thousands One Hundred Seventy Four only) on the Company and Rs.3,51,171/- (Rupees Three Lakhs Fifty One Thousands One Hundred Seventy One only) each Mr. ANKUSH SHESHRAO CHAVAN (Director), Mr. SHRIKISHAN CHUNNILAL SHRIRANGAM (Director), Mr. RAMCHANDRA VITTHA SA RE (Director), Mr. ANAND ANANT GALGALI (Director), Mr. RAJAN PRATAPSINGH THAKUR (Director) and Ms NISHA VISHWAS GUJAR (Director) penalty under Section 42(10) for default under proviso to Section 42(4) of the Act and Rule 14(8) of the Rules.
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 | CAPCHEM ELECTRICALS LIMITED having CIN as U42202MH2010P LC206771 | NA | 351174 | 0 | 20000000 |
| 2 | ANKUSH SHESHRAO CHAVAN having DIN as 08530934 | NA | 351171 | 0 | 20000000 |
| 3 | SHRIKISHAN CHUNNILAL SHRIRANGAM having DIN as 09625673 | NA | 351171 | 0 | 20000000 |
| 4 | RAMCHANDRA VITTHAL SATRE having DIN as 00634991 | NA | 351171 | 0 | 20000000 |
| 5 | ANAND ANANT GALGALI having DIN as 03040593 | NA | 351171 | 0 | 20000000 |
| 6 | RAJAN PRATAPSINGH THAKUR having DIN as 07158192 | NA | 351171 | 0 | 20000000 |
| 7 | NISHA VISHWAS GUJAR having DIN as 09820146 | NA | 351171 | 0 | 20000000 |
| 8 | AMEYA ANAND GALGALI having DIN as 07158173 |
NA | 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 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
