Company and its officer were penalized for failing to spend CSR obligations for FY 2020-21, 2021-22, and 2023-24 within prescribed timelines. The ruling reinforces timely CSR compliance under Section 135(5) and penalty provisions under Section 135(7).
On 17th October 2025, the Registrar of Companies (ROC), Bangalore, issued an adjudication order under Section 454 of the Companies Act, 2013 against PACE DIGITEK LIMITED (CIN U31909KA2007PLC041949) and its officer in default, Venugopalrao Maddisetty (DIN 02070491), for failure to comply with the Corporate Social Responsibility (CSR) obligations prescribed under Section 135(5) of the Companies Act, 2013. The order was issued pursuant to powers conferred under Section 454 and the Companies (Adjudication of Penalties) Rules, 2014.
PACE DIGITEK LIMITED, a company registered with its office at Kumbalgodu, Bangalore, filed a suo-motu application on 8th January 2025, acknowledging non-compliance with CSR spending requirements. The company disclosed its CSR obligations for the financial years (FY) 2020-21, 2021-22, 2022-23, and 2023-24. Despite having CSR obligations, the company failed to either spend the required amounts within the stipulated timelines or transfer the unspent amounts to the fund specified in Schedule VII of the Act within six months after the end of each financial year.
Upon receipt of the application, the ROC issued a show cause notice on 19th February 2025 via the e-Adjudication portal and speed post, seeking explanations from the company and its officers in default. Replies were received on 12th March 2025. Subsequently, an e-hearing was scheduled on 2nd July 2025, attended by the company’s authorized representative, Mr. Manjunath Ganesh, a practising company secretary. During the hearing, the ROC requested detailed computations of the CSR obligations and expenditures undertaken for the four financial years under review. The company committed to transferring the pending amounts to a Schedule VII fund to rectify the shortfall.
The company submitted a detailed reply on 19th September 2025, certified by a chartered accountant, outlining the CSR obligations and spending for FY 2020-21 to FY 2023-24. The adjudication revealed the following:
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FY 2020-21: CSR obligation of ₹7,39,697 remained unspent.
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FY 2021-22: CSR obligation of ₹8,95,598 remained unspent.
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FY 2022-23: CSR obligation of ₹16,50,000 was exceeded, with actual spending of ₹30,15,000. The excess amount of ₹13,65,000 was carried forward to offset the next year’s obligation. No penalty was levied for this year.
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FY 2023-24: CSR obligation of ₹23,93,000, after adjusting the excess from FY 2022-23, left a shortfall of ₹10,28,000, which remained unspent and untransferred.
The total unspent amount for FY 2020-21, 2021-22, and 2023-24 amounted to ₹26,63,295, which was subsequently transferred to the Prime Minister’s National Relief Fund on 4th September 2025, with receipts submitted to the ROC as proof of compliance.
Since PACE DIGITEK LIMITED does not qualify as a “small company” under Section 2(85) of the Act, provisions for reduced penalties under Section 446B are not applicable. The adjudication was specifically for FY 2020-21, with separate orders issued for the other financial years.
Penalty Imposed:
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PACE DIGITEK LIMITED: ₹14,79,394 (Maximum limit: ₹1 crore)
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Venugopalrao Maddisetty: ₹73,970 (Maximum limit: ₹2 lakh)
The company and officers in default are directed to pay the penalty within 90 days of receipt of the order via the MCA e-Adjudication facility. Officers are required to pay penalties from their personal funds. Failure to comply may result in additional penal consequences as per Section 454(8) of the Act.
The order allows for an appeal to be filed in writing to the Regional Director, Hyderabad, within 60 days of receipt, using Form ADJ and accompanied by a certified copy of the adjudication order.
The adjudication highlights the importance of timely compliance with CSR obligations and establishes that both companies and their officers are personally accountable for lapses under the Companies Act, 2013.
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/10-2025/BL/00801 Dated: 17/10/2025
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 135(7) 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 PACE DIGITEK LIMITED [herein after known as Company] bearing CIN
U31909KA2007PLC041949, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at PLOT # V 12, INDUSTRIAL ESTATE, KUMBALGODU, BANGALORE MYSORE HIGHWAY, PLOT # V 12, INDUSTRIAL ESTATE, KUMBALGODU, BANGALORE MYSORE HIGHWAY, NA BANGALORE KARNATAKA INDIA 560074
Individual details:
In the matter relating to VENUGOPALRAO MADDISETTY [herein after known as individual] having DIN 02070491 and having its address at
C. Provisions of the Act:
If a company is in default in complying with the provisions of sub-section (5) or sub-section (6), the company shall be liable to a penalty of twice the amount required to be transferred by the company to the Fund specified in Schedule VII or the Unspent Corporate Social Responsibility Account, as the case may be, or one crore rupees, whichever is less, and every officer of the company who is in default shall be liable to a penalty of one-tenth of the amount required to be transferred by the company to such Fund specified in Schedule VII, or the Unspent Corporate Social Responsibility Account, as the case may be, or two lakh rupees, whichever is less
D. Facts about the case:
1. Default committed by the officers in default/noticee – The company has filed a suo-motu application on 08.01.2025 regarding non- compliance of section 135(5) of the Act wherein it was submitted that the company had CSR obligation for the FY-2020-21 of Rs.7,39,696.50. The company has failed to spend this CSR obligations within the prescribed time and also did not transfer it to fund specified in Schedule VII within 6 months of end of financial year.
2. The company and officers in default asked for a hearing and same was provided. The order is issued based on the application, notice for adjudication, replies received and submission made at the time of hearing.
E. Order:
1. The company has filed a suo-motu application on 08.01.2025 regarding non-compliance of section 135(5) of the Act wherein it was submitted that the company had CSR obligations for the FY 2020-21, 2021-22, 2022-23 and 2023-24 which the company has failed to spend within the prescribed time, and also did not transfer it to fund specified in Schedule ? VII within 6 months of end of financial year.
Pursuant to the adjudication application filed by the company, show cause notice dated 19.02.2025 was sent to the company and its officers in default through e-Adjudication module and through speed post on 20.02.2025. The company and officers in default have submitted their reply dated 12.03.2025 on e-Adjudication portal. Subsequently, e-hearing notice dated 30.06.2025 was sent to the company and its officers in default through e-Adjudication module. The hearing was scheduled on 02.07.2025 which was attended by Mr. Manjunath Ganesh, practising company secretory and authorized representative of company and officers in default who made the submissions as per the adjudication application filed.
During the hearing, the authorised representative was directed to provide the details of the computation of CSR obligation and the expenditure undertaken by the company during FY-2020-21, 2021-22, 2022-23 and 2023-24. Further, it was noted that there was a shortfall in the CSR spending of the company, and the authorized representative, on behalf of the company, undertook that the company would be transferring the pending amount into a Schedule VII fund.
Thereafter, a reply has been received from the company on 19.09.2025 submitting the CSR obligations of the company (i.e. 2% of average net profit of 3 preceding FYs) and its CSR spending during FY-2020-21, 2021-22, 2022-23 and 2023-24, certified by a chartered accountant.
It is seen that for the FY 2020-21 and 2021-22, the company had CSR obligations of Rs. 7,39,697 and Rs. 8,95,598 respectively which the company failed to spend in the prescribed timelines. Hence, there is violation of section 135(5) of the Act for FY 2020-21 and 2021-22 for which the company and its officers in default are liable for penalty under section 135(7) of the Act.
For the FY 2022-23, the company had a CSR obligation of Rs. 16,50,000. However, it ended up spending Rs. 30,15,000 in this year and the excess spending of Rs. 13,65,000 was adjusted against the CSR obligation of next year. Thus, there is no violation of section 135(5) of the Act for FY 2022-23, and no penalty is levied for this financial year.
For the FY 2023-24, the company had a CSR obligation of Rs. 23,93,000, out of which Rs. 13,65,000 was adjusted against the excess spending of previous year, leaving a shortfall of Rs. 10,28,000 which was neither spent nor transferred to a Schedule VII fund for which the company and its officers in default are liable for penalty under section 135(7) of the Act.
Further, as per the directions in the e-adjudication hearing to transfer the unspent amount into Schedule VII fund, the company has transferred the unspent amount of Rs. 26,63,295 (7,39,697 + 8,95,598 + 10,28,000) to the Prime Minister?s National Relief Fund on 04.09.2025 and attached the receipts along with its reply.
It is seen from records that the company does not 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 not be applicable in the case.
This violation is being adjudicated for the 4 financial years viz. 2020-21, 2021-22, 2022-23 and 2023-24 on this day. However, in the e-Adjudication module, this Order pertains to the FY 2020-21, and the other financial years are dealt with in separate orders.
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 | PACE DIGITEK LIMITED having CIN as U31909KA2007P LC041949 | 1479394 | 0 | 10000000 | |
| 2 | VENUGOPALRA O MADDISETTY having DIN as 02070491 | 73970 | 0 | 200000 |
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 Hyderabad 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.
Simhachalam Naidu,
Registrar of Companies
ROC Bangalore
