The Registrar of Companies (ROC) in Gujarat, Dadra & Nagar Haveli, imposed a penalty on V.L. Infraprojects Limited for violating Sections 42 and 62 of the Companies Act, 2013. The company failed to open a separate bank account for share application money received for the allotment of equity shares, which is mandatory under Section 42(6) of the Act. The funds were instead deposited into the company’s regular bank account, leading to a breach of the legal requirements. Although the company rectified the issue by filing a return of allotment, it was penalized under Section 454(10) of the Companies Act, 2013. The penalty amounted to Rs. 31 lakh for the one-day default period. The company’s directors, Mr. Rajagopal Reddy Annam Reddy and Mrs. Mydhili Rajagopal Reddy, were also penalized individually for their roles in the non-compliance. The ROC has ordered the company and its officers to pay the penalty within 60 days, warning that failure to comply could result in further legal action, including fines or imprisonment. This order highlights the importance of adhering to regulatory requirements for companies raising capital.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES,
GUJARAT, DADRA & NAGAR HAVELI
ROC Bhavan, Opp. Rupal Park.
Nr. Ankur Bus Stand, Nwanpura, Ahmedabad (Gujarat) – 380013.
Tel. No.: 079-27438531, Fax : 079-27438371
Website : www.mca.gov in E-mail : [email protected]
Dated: 08 AUG 2024
BEFORE THE ADJUDICATING OFFICER
REGISTRAR OF COMPANIES, GUJARAT, DADRA & NAGAR HAVELI
No. ROC-GJ/ADJ. ORDER/64(1)/UNIPHOS ENVIROTRONIC/ Sec.454/ 2023-24
ORDER FOR PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014 FOR VIOLATION OF SECTION 42 READ WITH SECTION • 62 OF THE COMPANIES ACT, 2013.
IN THE MATTER OF
V.L. INFRAPROJECTS LIMITED
(U45200GJ2014PTC081602)
Date of hearing -31.07.2024
PRESENT:
1. Shri Keerthi Thej N. (ROC), Adjudicating Officer
2. Shri Indrajit Vania (DROC), Presenting Officer
Company/ Officers/Directors/KMP/Authorized Representative:
Shri Vinit Nagar, PCS – Authorized representative of the Company/Director of the company present before the Adjudicating Authority.
Appointment of Adjudication Authority: –
1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under section 454 of the Companies Act, 2013 (hereinafter known as Act)
Company:
2. WHEREAS V.L. INFRAPROJECTS LIMITED (herein after referred to as “company”) is a company registered under the provisions of the Companies Act, 1956/2013 in the State of Gujarat, having CIN: U45200GJ2014PTC081602 and presently having its registered office situated at “716, Shivalik Satyamev, Near Vakil Saheb Bridge, Bopal, Ahmedabad-380058, Gujarat, India”.
Capital Structure of the applicant Company:
The Authorized Share Capital of the Company as on the date of this application is Rs. 17,00,00,000/- (Rupees Seventeen Crore Only) divided into 1,70,00,000/-(One Crore Seventy Lakhs) Equity Shares of Rs.10/- (Rupees Ten only) each. The issued, subscribed called and paid-up capital of the company as on the date of this application is Rs.11,30,25,000/-( Rupees Eleven Crore Thirty Lakhs Twenty Five Thousand Only) divided into 1,13,02,500 (One Crore Thirteen Lakh Two thousand Five Hundred) Equity Shares of Rs.10/- (Rupees Ten Only) each.
3. Fact of the case:
That in terms of provisions of Section 42 & 62 of the Companies Act, 2013, every issue of share capital is required to be made in terms of Section 42 read with Section 62 of the Act and accordingly any issue of Share Capital to person other than existing shareholders shall be required to be made on preferential basis and in terms of Section 42 of the Act, the amount of the share application money shall be required to be kept in a separate Bank account and that the amount so received shall not be utilized before the allotment of shares in the favour of the allotee.
That the company made an allotment of 3,10,000 Equity Shares of Rs.10/- each on December 01, 2017, to a person other than the existing shareholder of the Company. The allotment in respect of the above shares of the Company was although made on preferential basis in accordance with the provisions of Section 42(5) of the Act, the Company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013.
That pursuant to the aforementioned allotment, the share application money was received on different dates between November 28, 2017, till November 29, 2017 but which was utilized soon before the allotment of shares on December 01, 2017, thus
4. Ground of making an application: –
The fact that the Company was under non-compliance of the procedural part of the Capital structure was not known to the Company and that the same has been brought to the notice of the Company during the audit of the Company during the course of due diligence conducted for the purpose of the proposed Initial Public Offer. That no show cause notice has been issued or a penalty has been levied against the company in respect of the above non-compliance. The default commenced only on November 30, 2017, i.e. the date of withdrawal due to dire need of funds. Whereas the allotment was made on December 01, 2017, i.e. the very next date of the default and that the default hereunder has been made good by filing of return of allotment.
The company has filed suo-moto application under Section 454 of the Companies Act, 2013 before the Adjudicating Officer for violation under Section 42 (4) read with Section 62 of the Companies Act, 2013 for penal provision of Section 42 (10) of the Companies Act, 2013.
5. WHEREAS, Sub-section (10) of Section 42 provides 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”.
6. WHEREAS, the Company has failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013. The default commenced from November 30, 2017 and continued till December 01, 2017 i.e. the date of allotment and that the default hereunder has been made good by filing of return of allotment.
[Date extended up to November 30, 2017, for 1 day)
7. The following Officer in defaults were the KMP of the company during the period of default i.e. up to November 30, 2017, for 1 day.
Submission of the Presenting Officer
8. The Presenting Officer submitted that the company has violated under Section 42 read with Section 62 of the Companies Act, 2013. The said company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company thus violating the provisions of Section 42(6) of the Companies Act, 2013. The default commenced from November 30, 2017, and continued till December 01, 2017. The company has filed suo-moto application under Section 454 of the Companies Act, 2013 before the Adjudicating Officer for violation under Section 42 read with Section 62 of the Companies Act, 2013 for penal provision of Section 42 (10) of the Companies Act, 2013.
The Presenting Officer has further submitted that it is observed from the Annual Return up to 30.09.2023 the paid-up capital of the company is Rs. 7,53,50,000/- and Turnover is Rs.45,55,69,500/-. Hence, as per the Ministry’s Notification No. G.S.R. 700(E) dated 15.09.2022, in the light of Companies (Specification of definition details) Amendment Rules, 2022 with respect to the provisions of Section 2(85) of the Companies Act, 2013, the company does not fall under the ambit of “small company”. Therefore, the provisions of imposing lesser penalty as per the provisions of Section 4468 of the Companies Act, 2013 shall not be applied to the company. Therefore, the penalty may be levied as per Provision of Section 42 (10) of the Companies Act, 2013.
ORDER:
9. While adjudging quantum of penalty under section 42 (10) of the Companies Act, 2013, the Adjudication Officer shall have due regard to the following factors, namely:
(a) The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.
(b) The amount of loss caused to an investor or group of investors as a result of the default.
(c) The repetitive nature of default.
10. With regard to the above factors to be considered while determining the quantum of penalty, it is noted that the disproportionate gain or unfair advantage made by the notice or loss caused to the investor as a result of the delay on the part of the notice to redress the investor grievance are not available on the record. Further, it may also be added that it is difficult to quantify the unfair advantage made by the notice or the loss caused to the investors in a default of this officer(s) in default(s) have violated the provision of section 42 of the Companies Act, 2013 by the company failed to open a separate bank account in respect of the Share Application Money and the same was received in the regular bank account of the Company. I hereby imposed penalty on the Company and its Officer(s) in default u/s 42 of the Companies Act, 2013 for penal provisions of section 42(10) of the Companies Act, 2013 as per Table below: –
Default period up to November 30, 2017, for 1 day
| Nature of Default | Violation under Section 42 of the Companies Act, 2013 |
Company/ Directors/Officers | No. of Days for default and Amount involved for allotment | Maximum Penalty for Violation under Section 42(10) of the Companies Act, 2013 (Rs) |
Penalty To be Imposed for allotment amount (Rs.) |
| The company failed to open a separate bank account in respect of the Share Application Money received for allotment of equity shares. |
Sec. 42 | V.L.
INFRAPROJECTS LIMITED |
1-day Rs.31 lacs | Rs.2,00,00,000/- | Rs. 31,00,000 |
| Mr. Rajagopal Reddy Annam Reddy, Director | 1-day Rs.31 lacs | ||||
| Mrs. Mydhili Rajagopal Reddy Director | 1-day Rs.31 lacs |
AO is of the opinion that penalty is commensurate with the aforesaid default committed by the Noticees:
12. The company/ Officer is further directed to rectify the default failing which this office shall proceed further in the matter pursuant to Section 454A of the Companies Act, 2013 for the non-compliance of the aforesaid provisions of the Companies Act, 2013.
13. The noticee shall pay the amount of penalty individually for the company and its officers from their personal sources/ income by way of e-payment available on Ministry Website www.mca.gov.in under “Pay Miscellaneous fees” category in MCA fee and payment Services under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 within 60 days from the date of receipt of this order and copy of this adjudication order and Challan/SRN generated after payment of penalty through online mode shall be filed in INC-28 under the MCA portal without further reference.
14. Appeal if any, against this order may be filed in writing with the Regional Director, North Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019).
15. Please note that as per the provisions of section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudication officer or the Regional Director within a period of Ninety days (90 days) from the date of the receipt of the copy or order, the company shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakhs rupees. Further as per section 454(8)(ii) of the Companies Act, 2013, where an officer of a company who is in default does not pay the penalty within a period of Ninety days (90 days) from the date of receipt of the copy of the order, such officers shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
16. Your attention is also invited to section 454(8) of the Companies Act, 2013 in the event of noncompliance of this order which provides that in case of default in payment of penalty, prosecution will be filed u/s. 454(8)(ii) of the Companies Act, 2013 at your own costs without any further notice.
The adjudication notice stands disposed of with this order.
Registrar of Companies
& Adjudicating Officer
Gujarat, Dadra Nagar Haveli
