Registrar of Companies (ROC) Hyderabad issued an order on August 20, 2025, imposing penalties on Chiraharit Limited and its directors for a violation of Section 42(10) of the Companies Act, 2013. The company had voluntarily filed an application for adjudication, admitting to a non-compliance with Section 42(6). The violation occurred during a preferential issue of 24,00,000 equity shares in June 2016. The company failed to open a separate bank account to receive the application money, which is a mandatory requirement under the law.
Although the company argued that the non-compliance was unintentional and inadvertent, and that the funds were received in its regular bank account and properly utilized, the adjudicating authority imposed a penalty. The order details a penalty of ₹2,40,00,000 for the company and an equal amount for each of the four directors: Tejaswini Yarlagadda, Pavankumar Bang, Venkata Ramana Reddy Gaggenapalli, and Satish Kumar Cheemakurthi. This penalty, which can be up to ₹2 crore or the amount raised through the private placement, whichever is lower, was imposed as per Section 42(10). The order instructs that the company and directors must pay the penalty from their personal sources within 90 days. Additionally, the company is required to refund all raised monies with interest to the subscribers within 30 days of the order.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Hyderabad
Registrar Of Companies, 2nd Floor, Corporate Bhawan, GSI Post, Nagole, Bandlaguda, Hyderabad, Telangana, India-500068
Phone: 040-29805427/29804327, E-mail: roc.hyderabad@mca.gov.in
Order ID: PO/ADJ/08-2025/HD/00610 Dated: 20/08/2025
ORDER FOR ADJUDICATION OF PENALTY UNDER SECTION 454 OF THE COMPANIES ACT, 2013 (‘THE ACT’) FOR VIOLATION OF SECTION 42(10) OF THE COMPANIES ACT, 2013.
A. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette notification number S.O. 5459(E) dated 26/10/2018 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 CHIRAHARIT LIMITED [herein after known as Company] bearing CIN U29100TG2006PLC050818, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at Malaxmi Courtyard, Survey No. 157, Khajaguda Village, Chitrapuri Colony Pos t, NA Hyderabad Hyderabad Telangana India 500104
Individual details:
In the matter relating to TEJASWINI YARLAGADDA [herein after known as individual] having DIN 00232268 and having its address at Villa no. A-14, Lake Community, Boulder Hills Opposite Microsoft, Gachibowli, Hyderabad Hyderabad Telangana India 500032
In the matter relating to PAVANKUMAR BANG [herein after known as individual] having DIN 03614791 and having its address at Flat – 801, Block – F, Casa Rouge Jubilee Gardens, Kondapur, Hyderabad Hyderabad Telangana India 500084
In the matter relating to VENKATA RAMANA REDDY GAGGENAPALLI [herein after known as individual] having DIN 07532133 and having its address at H.No. 4-10-540, Sainagar, DVK Road, Nalgonda -508001, Telangana, India Nalgonda Telangana India 508001
In the matter relating to SATISH KUMAR CHEEMAKURTHI [herein after known as individual] having DIN 06913884 and having its address at 5/57, PLOT NO 590, SECRETARIAT COLONY, OPP. OI PLAY SCHOOL, MANIKONDA, PUPPALAG UDA hyderabad Telangana India 500089
C. Provisions 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.
D. Facts about the case:
1. Default committed by the officers in default/noticee – It is submitted that the Company has made a preferential issue of equity shares pursuant to Section 62 of the Companies Act, 2013, read with Section 42 of the Companies Act, 2013, as authorised by Special Resolution passed at the Extra-Ordinary General Meeting (EGM) of the Company held on 14th June 2016. The issue comprised of 24,00,000 (Twenty-Four Lakh) equity shares of face value of Re.1/- (Rupee One only) each, at par, aggregating to Rs.24,00,000 (Rupees Twenty-Four Lakh only) which were allotted to Malaxmi Agri Ventures Private Limited existing shareholder of the Company.
In furtherance to the preferential issue, the Company allotted 24,00,000 equity shares to M/s. Malaxmi Agri Ventures Private Limited on 23rd June, 2016 pursuant to the Board Resolution passed at the meeting of the Board of Directors held on 23rd June, 2016. The Company has filed e-Forms MGT-14 vide SRN G07088578 dated 11.07.2016 and PAS-3 vide G07088834 dated 11.07.2026.
The Company, without any mala-fide intention and purely inadvertently, overlooked the requirement of opening a separate bank account to receive the application monies which is non-compliance of Section 42 Sub-section 6 of the Companies Act, 2013.
In this regard, the Company has voluntarily filed an application for Adjudication of penalties for non-compliance under Section 42(6) of the Companies Act, 2013 with respect to not opening of separate bank account for receipt of application monies.
2. The company as well as the OID have opted for no e-hearing. Hence the Order is issued.
E. Order:
1. The SCN was issued company on 31.07.2025 and Company has replied to the said SCN on 01.08.2025 stating that the non-compliance of not opening of separate Bank Account for the Preferential Allotment of 24.00 Lakhs Equity Shares made by the Company on 23.06.2016 under the provision of Section 42(6) of the Companies Act, 2013 was not intentional and without any mala-fide intention. The company and OID have opted for no e-hearing.
The Company has made a preferential issue of equity shares pursuant to Section 62 of the Companies Act, 2013, read with Section 42 of the Companies Act, 2013, as authorised by Special Resolution passed at the Extra-Ordinary General Meeting (EGM) of the Company held on 14th June 2016. The issue comprised of 24,00,000 (Twenty-Four Lakh) equity shares of face value of Re.1/- (Rupee One only) each, at par, aggregating to Rs.24,00,000 (Rupees Twenty-Four Lakh only) which were allotted to M/s Malaxmi Agri Ventures Private Limited existing shareholder of the Company.
In furtherance to the preferential issue, the Company allotted 24,00,000 equity shares to M/s. Malaxmi Agri Ventures Private Limited on 23rd June, 2016 pursuant to the Board Resolution passed at the meeting of the Board of Directors held on 23rd June, 2016. The Company has filed e-Forms MGT-14 vide SRN G07088578 dated 11.07.2016 and PAS-3 vide G07088834 dated 11.07.2026.
The Company in its reply as well as in application has submitted that the non-compliance was inadvertent and unintentional, and the company had complied with all the procedural requirements in relation to the preferential issue. Furthermore, that the Company received the application money on 15.6.2016 in its current account maintained with Axis Bank, a Scheduled Bank, and subsequently allotted the equity shares on 23.6.2016, i.e., within 8 days. Accordingly, the application money was adjusted against the allotment of equity shares. While there was a technical non-compliance is not maintaining a separate bank account, the company fully honoured the underlying intent of the law – by ensuring timely allotment, segregation of funds and proper end-use of funds without any diversion or delay.
The violation of section 42(6) occurred without any mala-fide intention and purely inadvertently, overlooked the requirement of opening a separate bank account to receive the application monies which is non-compliance of Section 42 Sub-section 6 of the Companies Act, 2013.
That the company has violated the proviso to Section 42 (6) of the Companies Act, 2013. The said company has failed to open a separate bank account in respect of the Share Application Money received 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 company is not an small company as per the definition of small company given in the Section 2(85) of the Companies Act, 2013. However, the company has filed suo-moto application under Section 454 of the Companies Act, 2013 before the Adjudicating Officer for violation under Section 42 of the Companies Act, 2013 for penal provision of Section 42 (10) of the Companies Act, 2013.
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 | CHIRAHARIT LIMITED having CIN as U29100TG2006P LC050818 | 2400000 | 0 | 20000000 | |
| 2 | TEJASWINI YARLAGADDA having DIN as 00232268 | 2400000 | 0 | 20000000 | |
| 3 | PAVANKUMAR BANG having DIN as 03614791 | 2400000 | 0 | 20000000 | |
| 4 | VENKATA RAMANA REDDY GAGGENAPALLI having DIN as 07532133 | 2400000 | 0 | 20000000 | |
| 5 | SATISH KUMAR CHEEMAKURTHI having DIN as 06913884 | 2400000 | 0 | 20000000 |
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.
Parvinder Singh,
Registrar of Companies
ROC Hyderabad
