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The Ministry of Corporate Affairs (MCA) appointed an Adjudicating Officer (AO) under Section 454 of the Companies Act, 2013, in conjunction with the Companies (Adjudication of Penalties) Rules, 2014. The case in question involves Curebay Technology Private Limited, a private company incorporated in Odisha on December 25, 2020 and Violation of provisions of Section 42(6) & 42(8) of Companies Act i,e. for for delay in filing PAS-3 & For utilizing the subscription money before the allotment date.

Case Details:

The case arose from an application submitted by Curebay Technology Private Limited on November 21, 2023, and filed in e-form GNL.1 on September 27, 2023. The company admitted to violating Section 42(8) of the Companies Act, 2013 by not filing the allotment in e-form PAS-3 within 15 days from the date of allotment, specifically regarding a share subscription money amount of Rs. 80,64,383/- received on June 18, 2022. The company filed the PAS-3 on July 14, 2022, resulting in an 11-day delay.

Additionally, the company raised Rs. 50,00,00,000/- through private placement on October 19, 2022, for the issuance and allotment of Series A Compulsorily Convertible Preference Shares and Equity shares. However, they failed to deposit the subscription money in a separate bank account, utilizing the funds before the allotment date, thus violating Section 42(4) of the Companies Act, 2013.

Legal Provisions:

  • Section 42(4): Requires subscription money for private placements to be paid via cheque, demand draft, or banking channels, not by cash, and mandates that this money be kept in a separate bank account.
  • Section 42(6): Requires securities to be allotted within 60 days from the receipt of the application money, failing which the money must be repaid within 15 days, with interest applicable if repayment is delayed.
  • Section 42(8): Mandates that a return of allotment be filed with the registrar within 15 days of the allotment.
  • Section 42(9): Imposes penalties for failure to file the return of allotment within the prescribed period.
  • Section 42(10): Prescribes penalties for contraventions of the private placement provisions.
  • Section 446B: Specifies reduced penalties for start-up companies and other specified entities, capping the penalty for companies at Rs. 2 lakh and for officers at Rs. 1 lakh.

Findings:

Based on the facts and the company’s response, the AO found the company in violation of:

  • Section 42(6): For utilizing the subscription money before the allotment date.
  • Section 42(8): For the delay in filing PAS-3.

Penalties Imposed:

  • For the delay in filing PAS-3 (11 days):
    • Curebay Technology Private Limited: Rs. 5,500
    • Sobhan Mahapatra (Director): Rs. 5,500
    • Priyadarshi Mohapatra (Director): Rs. 5,500
  • For utilizing subscription money before the allotment date:
    • Curebay Technology Private Limited: Rs. 2,00,000
    • Sobhan Mahapatra: Rs. 1,00,000
    • Priyadarshi Mohapatra: Rs. 1,00,000

Directions: The company and its directors are instructed to rectify the defaults immediately if not already done. They are required to pay the penalties within 90 days of receiving the order through the MCA portal. A receipt of the payment (Challan/SRN) must be forwarded to the office of the AO.

Appeal: An appeal against this order can be filed within 60 days with the Regional Director, Eastern Region, Ministry of Corporate Affairs, Kolkata, in Form ADJ, accompanied by a certified copy of this order.

Notification: A copy of this order is sent to Curebay Technology Private Limited and its directors, Sobhan Mahapatra and Priyadarshi Mohapatra.

****

BEFORE THE ADJUDICATING OFFICER

ROC -cum- OL, ODISHA, CUTTACK

ADJUDICATION ORDER NO. ROC/CTC/AO/35200/2024) 214(4)

ORDER

UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH THE COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014

CUREBAY TECHNOLOGY PRIVATE LIMITED

CIN : U851100R2020PTC035200

Appointment of Adjudicating Officer :-

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A­42011/112/ 2014-Ad. II dated 24.03.2015 appointed the undersigned as Adjudicating Officer (hereinafter referred to as “the A.0”) in exercise of the powers conferred under Section 454 of the Companies Act, 2013 (herein after known as The Act) read with Companies (Adjudication of Penalties) Rules, 2014.

Company : –

02 CUREBAY TECHNOLOGY PRIVATE LIMITED (hereinafter referred to as “the Company”) was incorporated in the State of Odisha as a Private Company Limited by shares under the Companies Act, 2013 on 25.12.2020 bearing Corporate Identification Number U85 1 1 00R2 0 2 OPTC035 2 00 and having its registered office at Plot No.A-98, Budha Nagar, Laxmi Sagar NA, Bhubanewar-75 1 006, Odisha as per the records maintained by this office in online registry.

FACTS OF THE CASE:

3. The application submitted by the company with this office on 21.11.2023 and also filed in e-form GNL.1 vide SRN F65307290 dated 27.09.2023 stating that the company has violated the proviso to section 42(8) of the Companies Act, 2013 by not filing the allotment in e-form PAS-3 of received share subscription money of Rs.80,64,383/- on 18.06.2022, within 15 days from the date of allotment. It is seen that the company has filed the PAS-3 on 14.07.2022 vide SRN F15187503 which is a delay of 11 days. Further the company also received securities subscription money of Rs.50,00,00,000/- towards issue and allotment of 8,85,216 nos. of Series A Compulsorily Convertible Preference Shares and 100 nos. of Equity shares but failed to deposit the said securities subscription money in a separate bank account and violated the proviso to section 42 (4) of the Companies Act, 2013 by utilizing the securities subscription money before allotment date i.e. 19.10.2022 at one instance, each of which constitute a separate default and needs to be penalized individually, the details of which are as tabulated below:

Sl. No. Date of

Allotment

Amount raised through private placement Corresponding PAS-3

for filed for allotment

01 27.09.2023 Rs.80,64,383/- F15187503
02 19.10.2022 Rs.49,99,99,917/- F32098584

i) Based on the aforesaid application a show cause notice was issued to the company and its directors vide this office notice No. ROC/Sec.454/ 35200/2024/64(3) dated 17.04.2024.

ii) The company has submitted its reply vide letter dated 29.04.2024 and following defaults were observed on the part of the company.

a) The company has violated the provisions of Section 42(4) of the Companies Act, 2013 in respect of utilization of share subscription money is concerned before allotment.

b) The company has violated the proviso to section 42(8) of the Companies Act

Provisions of the Companies Act, 2013 :

4. AND WHEREAS, the Section 42(4) of the Act which inter-alia state that:

“Every identified person willing to subscribe to the private placement issue shall apply in the private placement and application issued to such person alongwith subscription money paid either by cheque or demand draft or other banking cannel and not by cash”.

AND WHEREAS, the Section 42(6) of the Act which inter-alia state that:

“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”.

AND WHEREAS, the Section 42(8) of the Act which inter-alia state that:

“A company making any allotment of securities under this section, shall file with the registrar a return of allotment within fifteen dates 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.”

AND WHEREAS, the Section 42(9) of the Act which inter-alia state that:

“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.”

AND WHEREAS, the Section 42(10) of the Act which inter-alia state that:

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

AND WHEREAS, the Section 446B of the Act which inter-alia state that:

“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 in 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”.

ORDER

5. Having considered the facts, circumstances and documentary evidence of the case, and after taking into account of the factors above, the A.O. is of the considered view that the company has violated the provisions of section 42(6) of the Companies Act, 2013 and Section 42(8) of the Companies Act, 2013. Hence, the A.O do hereby impose penalty on the Company and its Directors/Officer-in-Default as per table below for violating the provisions of section 42(6) of the Companies Act, 2013 and Section 42(8) of the Companies Act, 2013 keeping in view that the company is registered as” start­up company” [as per the documents filed by the company (vide e-form GNL.1 bearing SRN F65307290), which contains certificate No. DIPP75879 (issued on 11.03.2021 and valid up to 24.12.2030) of Ministry of Commerce & Industry, DIPP; indicating the company to be a start-up ).

6. For the purpose of determination of penalty, under section 42(9) the following table is to be considered.

Period of violation No of days Total days Name of the defaulter Default continues Maximum penalty Penalty payable Actual penalty payable in terms of Section 446B of the Act.
04.07.2022 to 14.07.2022 11 11 1.Curebay Technologies Pvt Ltd. 11×1000 25,00,000 11,000 5,500
2.Sobhan Mahapatra 11×1000 25,00,000 11,000 5,500
3.Priyadarshi Mohapatra 11×1000 25,00,000 11,000 5,500

7. For the purpose of determination of penalty, under section 42(10) the following table is to be considered.

Sl. No. Name of the Defaulter Amount of Share application money received Maximum penalty Actual penalty payable in terms of Section 446B of the Act.
1. Curebay Technologies Pvt Ltd. 50,00,00,000 2,00,00,000 2,00,000
2 Sobhan Mahapatra 50,00,00,000 2,00,00,000 1,00,000
3 Priyadarshi Mohapatra 50,00,00,000 2,00,00,000 1,00,000

8. The company and its directors are hereby directed to rectify the default immediately, if not done earlier.

9. The notice(s) shall pay the said amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment (available on Ministry website mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment services within 90 days of receipt of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this Office Address.

10. Appeal if any against this order may be filed in writing with the Regional Director, Eastern Region, Ministry of Corporate Affairs, Nizam Palace, 3rd Floor, 234/4, A.J.C. Bose Road, Kolkata : 700 020 within a period of sixty days from the date 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 Companies Act, 2013 read with the Companies (Adjudicating of Penalties) Rules, 2014].

11. Attention is also invited to Section 454(8) of the Act regarding consequences of non­payment of penalty.

12. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, a copy of this order is being sent to (1) Curebay Technologies Private Limited, Plot No. A 98, Budha Nagar, Laxmisagar, Bhubaneswar-751006. (2) Sobhan Mahapatra (3) Priyadarshi Mohapatra.

(HIMANSHU SHEKHAR )
Adjudicating Officer, Odisha
ROC -cum- OL, Odisha

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