Private placement- Separate Bank Account not opened, Delay in FIling MGT-14 & Form PAS-3 – MCA imposes penalty – The order discusses the violations committed by the company, the appointment of the adjudicating officer, facts about the case, and the factors considered while imposing penalties.
Analysis: The adjudication order reveals that Cookiejar Technologies Private Limited failed to comply with various provisions of Section 42 of the Companies Act, 2013. The company did not open a separate bank account for receipt of private placement share application money, failed to file necessary forms within the prescribed timelines, and utilized the funds before filing the return of allotment. The order considers factors such as the size and nature of the company, the absence of injury to public interest, and the inadvertent nature of the non-compliance.
Conclusion: Based on the violations committed by Cookiejar Technologies Private Limited, penalties have been imposed on the company and its officers. The order specifies the penalties for each violation and highlights that the penalty amount is commensurate with the failure. The order also provides information on the appeal process and the consequences of non-payment of the penalties within the prescribed time limit.
OFFICE OF THE
REGISTERAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY OF CORPORATE AFFIRS
GOVERNMENT OF INDIA
Order No. RoCP/ADJ/order/42/23-24/Cookiejar/PS/824 to 828 Date: 30 JUN 2023
ADJUDICATION ORDER
*****
Adjudication Order of penalties in the matter of Cookiejar Technologies Private Limited (U72900PN2016PTC166251) under Section 454(3) of the Companies Act, 2013
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Subsection (4), (6) and (10) of Section 42 of the Companies Act, 2013.
- Rule 14 of Companies (Prospectus and Allotment of Securities) Rules, 2014.
- Gazette Notification of Ministry of Corporate Affairs vide No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015)
- Companies (Amendment) Act, 2019.
- General Circular No. 1/2020 dated 02.03.2020.
In respect of:
Cookiejar ,Technologies Private Limited (U72900PN2016PTC166251) having its registered office as per MCA21 Registry at “KUMAR VASTU F-801 SR. NO-209/ 1A, BHAMBURDA, NEAR BHOSALE NAGAR, RANGE HILLS, Pune, Pune, Maharashtra, 411030, India..” and its directors/KMPs.
Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2019 is entrusted to adjudicate penalties under section 42 of the Companies ACT, 2013.
1. Company:
Cookiejar Technologies Private Limited (U72900PN2016PTC166251) (herein after referred as Company) is a registered company with this office under the provisions of section 7 of the Companies Act, 2013 having its registered office as per MCA21 Registry at address “KUMAR VASTU F-801 SR. NO-209/1A, BHAMBURDA, NEAR BHOSALE NAGAR, RANGE HILLS, Pune, Pune, Maharashtra, 411030, India..”
2. Relevant provisions of the Companies Act, 2013:
(i) As per Section 42(4) of the Act – Every identified person willing to subscribe to the private placement issue shall apply in the private placement and application issued to such person along with subscription money paid either by cheque or demand draft or other banking channel and not by cash:
Provided that a company shall not utilize monies raised through private placement unless allotment is made and the return of allotment is filed with the Registrar in accordance with sub-section (8).
(ii)As per Section 42(6) of the Act – 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.
(iii) As per Section 42(8) of the Act- A company making any allotment of securities under this section, shall file with the Registrar a return of allotment within fifteen days from the date of the allotment in such manner as may be prescribed, including a complete list of all allottees, with their full names, addresses, number of securities allotted and such other relevant information as may be prescribed
(iv)As per Section 42(9) of the Act – If a company defaults in filing the return of allotment within the period prescribed under sub-section (8), the company, its promoters and Directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.
(v)As per Section 42(10) 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
3. Facts about the Case:
I. The Company has made suo motto application with complete application on 22/08/2022 followed by further submissions on 30/01/2023, for adjudication for Section 42(6) of the Companies Act, 2013 in respect of allotment(s) of 666 equity shares of Rs.10 each at a premium of Rs.11,245 each to Clayfin Technologies Private Limited as Private Placement offer by passing a special resolution in the Extra Ordinary General Meeting held on 21st August 2020. The Investor had applied for the said shares and remitted Rs.74,95,830 to the Company in three tranches on September 16, 2020 and September 18, 2020 as share application money, to the existing Current Bank Account of the Company. The Company allotted 666 equity shares of Rs.10 each to the Investor vide a resolution passed by the Board of Directors in their meeting held on October 20, 2020, which is well within the prescribed timeline for allotment i.e. 60 days from the date of receipt of funds. Post allotment, the Applicant Company filed the return of allotment in form PAS-3 on December 7, 2021 vide SRN T62254958. As a condition subsequent of the investment, the investor, M/ s Clayfin Technologies Private Limited, has appointed a nominee Director, Mr. Rajesh Bhaskar Laxmi Narasimha on the Board of the Applicant Company with effect from 18th October 2021.
II. The Applicant Company was unable to comply with following provisions of Section 42 of the Act:-
1. Opening of Separate Bank Account for receipt of private placement share application money.
2. Filing of Form MGT-14 before circulation of private placement offer letter and within 30 days from the date of passing special resolution for issue of shares on private placement basis.
3. Filing of Form PAS-3 within 15 days from the date of allotment.
The management inadvertently failed to adhere with the said provisions on account of following reasons.
i. Lack of expert knowledge and awareness about the Companies Act, 2013.
ii. Non-routine nature of the corporate action.
iii. Urgency of investment and Outbreak of Covid-19 pandemic.
In view of the foregoing facts, the Company inadvertently failed to comply with the provisions of Section 42 of the Companies Act, 2013.
III. Accordingly, the adjudication officer has issued adjudication notice vide notice No. ROCP/ADJ/PP/2022/1518 to1526 dated 09.11.2022 (herein after referred as Adjudication Notice) under Section 454(4) read with 42 of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to the company and its officers in default.
IV. A reply to the Adjudication notice has been received on 24.11.2022 from the company stating that being an NBFC-AA required approval of the Reserve Bank of India to commence its business activities. Pursuant to the provision of the Reserve Bank of India Act, 1934, a company is required to have a minimum net worth of Rs.2,00,00,000 before applying to RBI for registration as an NBFC-AA , the Company received investment from Clayfin Technologies Private Limited and allotted 666 equity shares to the Investor on 20-10-2020 by way of Private Placement . Due to the embryonic stage of the Company, the management was still in process of gaining detailed knowledge of the Compliances required for issue and allotment of shares under private placement u/ s 42 of the Act., the directors of the Company did not have any legal knowledge or awareness, in the infant stage with nil revenue to recruit competent professional to handle its legal and secretarial work, inadvertently resulted in noncompliance of various provisions of section 42 of the Act. Further at the time of the placement in 2020, due to covid-19 pandemic which had caused considerable disruption in the functioning of companies and banks, employees were working form home for safety reasons, considering the urgency of funding requirement of NBFC registration, the management obtained the fund in their existing current bank account maintained with ICICI bank.
a) Furthermore, under section 454(4) of the Act read with Rule 3(5) of the Companies (Adjudication Of Penalties) Rules, 2014, Noticee(s) were given an opportunity to be heard by issuing a Notice vide ROCP/ADJ/PP/22-23/ 1848 -1851 dated 20-12-2022 (herein after referred as Hearing Notice) to appear before Adjudicating Authority through Virtual Hearing on 18.01.2023.
b) The Directors of the Company, Viz. Mr. Munish Bhatia, Mr.Manoj Ajit Alandkar, 8v Ms. Kishori Prabhu, appeared before Adjudicating Authority through Virtual Hearing on 18.01.2023 and submitted that :-
Pursuant to section 42(6) of the Act, if a company fails to repay the application money within 60 days, it is liable to repay that application money with interest at the rate of 12 per cent per annum from the expiry of the sixtieth day. As the Company has allotted equity shares within prescribed time period of 60 days, it is not liable to repay the application money received from Clayfin Technologies Pvt Ltd and section 42(10) is applicable to the extent of monetary penalty only and not for refund .Further they informed that the Investor, Clayfin Technologies Private Limited has submitted its no objection for non-refund of the share application money duly signed by its Director.
Further they informed that the intent behind the definition of officer in default is to identify the person involved in a transaction and who has defaulted by not acting in the best interest of the Company. Further, the definition stresses on the word ‘officer of the Company’, Thus, a person would be an officer in default in his individual capacity and not be considered as separate individual because of his dual designation. Hence they are requesting that the promoter and director being the same individuals, Mr. Munish Bhatia, Mr.Manoj Alandkar and Mrs. Kishori Prabhu should be liable for penalty in their individual capacity and not in dual designation capacity.
Further Company has requested to Adjudicating officer that considering the low capital and turnover, recently initiated business activities and new business concept, to levy minimum penalty on the Company and the officers in default.
4. Following was mentioned in the notice dated 09.11.2022:
Whereas, this office has received suo moto application from the Company for adjudication of penalties under section 454 of the Companies Act, 2013 and Rules made thereunder for violation of Section 42(6) of the Companies Act, 2013. And as per the application, it is noticed that the Company has failed to comply with the provisions of Section 42(6) of the Companies Act, 2013. Therefore the undersigned in exercise of power conferred under subsection 3 of section 454 of the Companies Act, 2013 has issued notice for hearing to the Company and Officers in default asking them as to, why adjudication proceeding shall not be initiated for violation of Section 42 of the Companies Act, 2013. The Company and its directors/officer in default were given an opportunity of being heard on 18the January, 2023 at 3.00P.M through video conference .
5. Section 42(6) are reproduced as under:-
“42(6) of the Act – 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 utilized 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.
6. Factors to be taken into account by the Adjudicating Officer:-
While adjudicating quantum of penalty following factors taken into consideration:-
a) Size of the Company – Paid up capital Rs. 1,47,410/- and Turnover Rs.10,17,210/-
b) Nature of business carried on by the Company-Related to information technology driven 85 NBFC
c) Injury to public interest – None
d) Nature of default – Non-compliance of section 42(6) of the Companies Act, 2013.
e) Repetition of the default – No
f) The amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default- None
g) The amount of loss caused to an Investor or group of investor or creditor, as a result of the default- None
h) The Company filed suo-motto adjudication application
i) The investor has willingly given its NOC for not receiving a refund
j) Company is a small Company in terms of section 2(85).
a) ORDER:
a. The applicant company and its officers, who have defaulted the provisions of section 42(4), 42(6) 8s 42(8) of the Act for not opening separate bank account, not filing the eform PAS-3 (Return Of Allotment) Within 15 days of allotment and utilization of money before filing return of allotment with the Registrar; are liable for penalties under section 42(9) 85 42(10) of the Act. Thus if a Company defaults in filing the return of allotment within the period prescribed under sub section (8), the Company, its promoters and Directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty five lakh rupees.
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 crores 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.
As per provisions of Section 446B, the Companies Act 2013 : Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One person Company, Small Company, start-up Company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified n such provisions subject to a maximum of two lakh rupees in case of a Company and one lakh rupees in case of an officer who is in default or any other person, as the case may be .
b. 1) As per MCA records, it is seen that the promoters and Directors are same individuals. Further the investor, Clafin Technologies Private Limited intends to stay invested in the Company and thus has given an NOC dated 09.08.2022 which is signed by Mr.Rajesh Bhaskar Laxmi Narasimha , Chief Executive Officer of the Company mentioning that they ‘do not intend to receive their investment back and give their consent and no objection for non-refund of share application money and interest thereon . Therefore no order is passed for refund as required u/s 42(10) and no separate penalty is being levied on the defaulters in dual capacity.
2)However, the Company has not opened separate Bank Account as per proviso of section 42(6) which is penalized u/s 42(10). The Company has not filed the return of allotment as required u/s 42(8) which is to be penalized u/s 42(9). Also, finally, the Company utilized the money before filing of returns of allotment which is not as per proviso of section 42(4) which is to be penalized u/s 42(10).
c. Therefore, In exercise of the powers conferred on the undersigned vide Notification dated 24th March, 2015 and having considered the facts and circumstances of the case besides oral submissions made by the representative of Noticee(s) at the time of virtual/physical hearing and after taking into account the factors mentioned herein above, I do hereby impose the penalty on the company and its officers in default pursuant to Rule 3(12) of Companies (Adjudication Of Penalties) Rules, 2014 and the proviso of the said Rule and Rule 3(13) of Companies (Adjudication Of Penalties) Rules, 2014 r/w General Circular No. 1/2020 dated 02.03.2020; as per table below for violation of section 42(4) , (6) 86 (8) of the Act. Further, the delay is passing the order is due to complexity of the matter and other administrative work .
Accordingly, the following penalty is levied:-
i) Penalty u/s 42(10) :- For not opening separate Bank Account as per section 42(6) of the Companies Act, 2013.
|
Particulars |
Designation | Penalty | Reduced Penalty u/s 446B |
| COOKIEJAR TECHNOLOGIES PRIVATE LIMITED | Company | 74,95,830/- | 2,00,000/- |
| MANOJ AJIT ALANDKAR | Director | 74,95,830/- | 1,00,000/- |
| KISHORI PRABHU | Director | 74,95,830/- | 1,00,000/- |
| MUNISH BHATIA | Director | 74,95,830/- | 1,00,000/- |
(ii)Penalty u/s 42(9) :- For not filing return of allotment within time as per section 42(8) of the Companies Act, 2013
( Due date was 04/11/2020 and filed on 07/12/2021)
| Particulars | Designati on | Penalt y per day |
No. of days | Total | Reduced Penalty u/s 446B |
| COOKIEJAR TECHNOLOGIES PRIVATE LIMITED |
Company | 1000 | 397 | 3,97,000/- | 2,00,000/- |
| MANOJ AJIT ALANDKAR | Director | 1000 | 397 | 3,97,000/- | 1,00,000/- |
| KISHORI PRABHU |
Director | 1000 | 397 | 3,97,000/- | 1,00,000/- |
| MUNISH BHATIA |
Director | 1000 | 397 | 3,97,000/- | 1,00,000/- |
(iii)Penalty u/s 42(10):- Utilization of money without filing the return of allotment as per section 42(4) of the Companies Act, 2013
| Particulars | Designation | Penalty | Reduced Penalty u/ s 446B |
| COOKIEJAR TECHNOLOGIES PRIVATE LIMITED | Company | 74,95,830/- | 2,00,000/- |
| MANOJ AJIT ALANDKAR | Director | 74,95,830/- | 1,00,000/- |
| KISHORI PRABHU | Director | 74,95,830/- | 1,00,000/- |
| MUNISH BHATIA | Director | 74,95,830/- | 1,00,000/- |
d. I am of the opinion that penalty so imposed is commensurate with the aforesaid failure committed by the notice(s).
e. The Noticee(s)/applicant(s) shall pay the penalty so imposed through Ministry of Corporate Affairs portal only as per rule 3(14) of Companies (Adjudication of Penalties) Rules, 2014.
f. Appeal against this order may be filed under section 454(5) of the Act, in writing with the Regional Director (Western Region), Ministry of Corporate Affairs100, Everest, 5th Floor, Netaji Subhash Road, Marine Drive, Mumbai-400002, 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 a certified copy of this order. [Section 454 of the Act read with Companies (Adjudication of Penalties) Rules, 2014 as emended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
g. Your attention is also invited to section 454(8)(ii) of the Act regarding consequences of non-payment of penalty within the prescribed time limit of 90 days from the date of the receipt of copy of this order in terms of the provisions of section 454(8)(i) of the Act.
h. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to Cookiejar Technologies Private Limited and all directors/officers in default mentioned herein above and also to Office of the Regional Director (Western Region) and Ministry of Corporate Affairs at New Delhi.
(Mangesh a hav, ICLs)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
