The Registrar of Companies, Bangalore, imposed penalties under Section 450 of the Companies Act, 2013 for violation of Section 42(4), which prohibits utilization of funds raised through private placement before allotment and filing of return of allotment. The company had raised funds through issuance of preference shares but utilized a portion of the money before completing allotment and filing Form PAS-3, resulting in a 17-day period of non-compliance. The company admitted the default as inadvertent and filed a suo motu application for adjudication. Considering that the company qualified as a small company and the default was non-repetitive with no public harm, reduced penalties were imposed under Section 446B. Accordingly, ₹13,000 penalty was levied on the company and each defaulting director. The order highlights that even temporary or unintentional premature utilization of funds violates statutory provisions and attracts penalties.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Bangalore
Registrar Of Companies, ‘E’ Wing, 2nd Floor, Kendriya Sadana, Kormangala, Bangalore, Karnataka, India, 560034
Phone: 080-25633105,080-25537449
E-mail: roc.bangalore@mca.gov.in
Order ID: PO/ADJ/03-2026/BL/01898 Dated: 27/03/2026
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 450 OF THE COMPANIES ACT, 2013.
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 TURTLE SHELL TECHNOLOGIES PRIVATE LIMITED [herein after known as Company] bearing CIN U72200KA2015PTC083256, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at #40, CITY CENTRE, GROUND AND MEZZANINE FLOOR CMH ROAD, INDIRANAGAR NA BENGALURU BANGALORE KARNATAKA INDIA 560038
Individual details:
In the matter relating to GAURAV PARCHANI ——-
In the matter relating to MUDIT DANDWATE —–
C. Provisions of the Act:
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 1[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]
D. Facts about the case:
1. Default committed by the officers in default/noticee – The company has filed a suo-motu adjudication application for violation of provision of section 42(4) of the Act wherein it has been submitted that the company had issued 795 Series A2 Compulsorily Convertible Preference Shares through preferential offer vide private placement. Pursuant to the issue of letter of offer, receipt of funds and subsequent allotment of shares on 03.10.2023, the company filed the return of allotment in PAS-3 on 12.10.2023 vide SRN AA5853147.
However, as submitted in the application, the company utilised a part of the said amount before the allotment was made and return of allotment was filed. The bank statement has been provided as documentary evidence for the same wherein it can be seen that such part amounts were utilized earliest on 25.09.2023.
As per the proviso to section 42(4) of the Act, a company shall not utilise 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).
In view of the above, since the return of allotment under subsection (8) was filed only on 12.10.2023, the company and its officers in default have violated the above-mentioned proviso for a duration of 17 days i.e. from 25.09.2023 to 12.10.2023, rendering them liable for penalty under section 450 of the Act.
As the company is a small company as per the provisions of section 2(85) of the Act, the provisions of section 446B of the Act regarding lesser penalties for certain companies shall be applicable.
2. The company and officers in default have not asked for a hearing and same was not provided. The order is issued based on the application, notice for adjudication and replies received.
E. Order:
1. The company has filed a suo-motu adjudication application for violation of provision of section 42(4) of the Act wherein it has been submitted that the company had issued 795 Series A2 Compulsorily Convertible Preference Shares through preferential offer vide private placement. Pursuant to the issue of letter of offer, receipt of funds and subsequent allotment of shares on 03.10.2023, the company filed the return of allotment in PAS-3 on 12.10.2023 vide SRN AA5853147.
However, as submitted in the application, the company utilised a part of the said amount before the allotment was made and return of allotment was filed. The bank statement has been provided as documentary evidence for the same wherein it can be seen that such part amounts were utilized earliest on 25.09.2023.
As per the proviso to section 42(4) of the Act, a company shall not utilise 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).
In view of the above, since the return of allotment under subsection (8) was filed only on 12.10.2023, the company and its officers in default have violated the above-mentioned proviso for a duration of 17 days i.e. from 25.09.2023 to 12.10.2023, rendering them liable for penalty under section 450 of the Act.
Pursuant to the adjudication application filed by the company, show cause notice dated 23.01.2026 was issued to the company and its officers in default through e-Adjudication module and through speed post on 23.01.2026. The Company and Officer in default have submitted reply on the e-Adjudication portal on 04.02.2026 stating, inter alia, that ? the Company admits the contravention as stated in the Show Cause Notice and said non-compliance was unintentional and inadvertent, and occurred due to oversight.
Further, the company and its officers in default have opted for no hearing in the matter and hence, the same has not been provided. This order is issued based on the application, notice for adjudication, and the replies received.
It is seen from records that the company fall under the definition of small company as per the provisions of section 2(85) of the Companies Act, 2013. Therefore, the provision of imposing lesser penalty as per the section 446B of the Act shall be applicable in the case.
Therefore, having considered the facts and circumstances of the case and the submissions made by the director through his authorised representative as detailed above, and in exercise of the powers vested under section 454(3)(a) of the Companies Act 2013, I do hereby impose the penalty in the following manner on the director considering the nature of default, its non-repeating nature and no injury caused to public interest in accordance with provisions of Rule 3(12) of the Companies (Adjudication of Penalties) Rules, 2014.
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 | TURTLE SHELL TECHNOLOGIES PRIVATE LIMITED having CIN as U72200KA2015P TC083256 | 13000 | 0 | 200000 | |
| 2 | GAURAV PARCHANI having DIN as 07300857 |
13000 | 0 | 50000 | |
| 3 | MUDIT DANDWATE having DIN as 07309945 |
13000 | 0 | 50000 |
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 Bangalore 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.
Manoj Bang,
Registrar of Companies.
ROC Bangalore
