The Registrar of Companies, Mumbai-I, issued an adjudication order dated 25 June 2026 under Section 454 of the Companies Act, 2013 for violation of Section 450 arising from contravention of the proviso to Section 179(3). The company filed a suo motu adjudication application stating that, under a Memorandum of Understanding dated 30 November 2024, it agreed to convert a loan of ₹8,34,30,000 from its holding company into 69,525 equity shares, but the Board and shareholders approved the conversion only on 8 December 2025. The company stated that the omission to obtain approvals at the relevant stage was inadvertent, subsequently regularised the transaction, and requested lenient consideration. After considering the application, written submissions and e-hearing, the adjudicating officer held that the delay constituted a contravention of Section 179(3), treated the default period as 374 days, and noted that no E-form GNL-3 had been filed to establish responsibility of a single officer in default. The order imposed a penalty of ₹2,00,000 on the company and ₹50,000 each on two directors under Section 450, directed payment within 90 days, and provided for an appeal before the Regional Director.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Mumbai I
100, Everest, Marine Drive, Mumbai, Maharashtra, India, 400002
Phone: 022-22812627
E-mail: roc.mumbai@mca.gov.in
Order ID: PO/ADJ/06-2026/MH/02430 | Dated: 25/06/2026
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.
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 COVERFOX INSURANCE BROKING PRIVATE LIMITED [herein after known as Company] bearing CIN U66000MH2013PTC243810, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at C WING, 5100-5110, 5TH FLOOR OBEROI GARDEN ESTATE, CHANDIVALI FARM ROAD,CHANDIVALI, ANDHERI (EAST) MUMBAI MUMBAI MUMBAI MAHARASHTRA INDIA 400072
Individual details:
In the matter relating to ANURAG MEHROTRA
In the matter relating to SANJIB KUMAR JHA
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 l[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 – Whereas the Registrar of Companies, Mumbai – I (hereinafter referred to as the ROC) is in receipt of a suo-motu Adjudication Application on 12.01.2026. The instant Adjudication Application filed by the Company and Mr. Sanjib Kumar Jha, Director (DIN:02277191) (hereinafter referred to as the Applicants) under Section 454 of the Companies Act, 2013 (hereinafter referred to as the Act) on account of delay on the part of the board to exercise its power to pass necessary resolution for obtaining approval for conversion of loan into Equity shares, in contravention of the proviso to the Section 179(3) of the Act.
Whereas Section179(3) of the Act reads as follows:
(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely: ?
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;]
(g) to approve financial statement and the Boards report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed:
Whereas the applicants have stated that the Applicant Company took advance loan from the holding Company viz. COVERSTACK TECHNOLOGIES PRIVATE LIMITED on various dates and as per Memorandum of Understanding signed on 30.11.2024 whereby the terms for conversion of Rs. 8,34,30,000/- into 69,525 equity shares of Rs. 10 at premium of Rs. 1190/- per share was agreed. Later on the Applicant Company obtained approval of the Board of Directors and shareholders on 08.12.2025 and filed E-form MGT-14 vide SRN AB9692613 on 09.12.2025. Thus, the Company and officers in default are liable for penal action under Section 450 of the Act for on account of delay on the part of the board to exercise its power to pass necessary resolution for obtaining approval for conversion of loan into Equity shares.
2. The Noticee requested for an E- hearing. Acceding to the request, an opportunity of being heard was granted by the Adjudicating Officer under the provisions of Section 454(4) of the Act on 18.06.2026.
E. Order:
1. A. Show Cause notice bearing ID: SCN/ADJ/04-2026/MH/04226 dated 27.04.2026 was issued to the Company and its Officer in default viz. Mr. ANURAG MEHROTRA, Director (DIN: 01950688) and Mr. SANJIB KUMAR JHA Director (DIN: 02277191) (hereinafter referred to as the Noticees) under Section 454 read with Section 450 for default under the proviso of the Section 179(3) of the Act on account of delay on the part of the board to exercise its power to pass necessary resolution for obtaining approval for conversion of loan into Equity shares. B.A reply of the noticees to the said Show Cause Notice was received on the E-adjudication portal on 11.05.2026, and submitted that:i.While implementing the arrangement related the terms for conversion of the aggregate loan amount of Rs.8,34,30,000/- taken from holding Company, into 69,525 equity shares of Rs. 10 at premium of Rs. 1190/- per share, the secretarial team inadvertently omitted placing the matter before the Board and shareholders at the relevant stage for formal approval under Section 62(3) read with Section 179(3) of the Companies Act, 2013. The omission was neither deliberate nor intended to bypass statutory compliance requirements.
ii. That the present matter is purely procedural in nature. The underlying transaction itself was lawful, genuine and fully documented. The only noncompliance pertains to absence of contemporaneous shareholder approval and Board approval required for conversion arrangements under Section 62(3) and Section 179(3) of the Act. a. The funding itself was legitimate and traceable. b. The transaction occurred between holding company and wholly owned subsidiary. c. There was complete commercial justification for the transaction. d. There was no change in beneficial ownership or management control. e. There was no prejudice caused to any shareholder or creditor. f. No public money or investor funds were involved. g. No complaint or dispute has arisen in relation to the transaction. h. The transaction was subsequently ratified and regularized through proper approvals.
iii. The default does not involve any illegality affecting stakeholder rights. It merely concerns timing and procedural sequencing of approvals under the Act. Immediately upon noticing the omission during internal secretarial review, the Applicants initiated corrective steps voluntarily and proactively.
iv. The present proceedings therefore arise out of voluntary disclosure and not due to detection pursuant to inspection, inquiry, investigation or stakeholder complaint. This conducts itself establishes the sincere and compliance-oriented approach adopted by the Applicants.
v. There was no participation from public shareholders, retail investors, deposit holders or unrelated third parties. No shareholder rights were diluted in a prejudicial manner because the entire shareholding was already held by the Holding Company itself. The transaction therefore did not alter economic ownership, control structure or voting dynamics in the Company. The entire matter therefore falls squarely within the category of procedural and venial noncompliance deserving lenient consideration.
vi. The financial position of the Company has not been sound due to Covid impact and subsequent change in promoter group, resulting into frequent working capital requirement for the day-to-day operations and corresponding dependency on its shareholders for meeting such requirement. The promoters have been pumping the capita — —- – Company and no dividends were paid to them for last 4 years and therefore the Authority is requested to confident view and while imposing the waive the penalty as described in the above said show cause notice.
vii. the notice of the Authority that the applicant Company has appointed Mr. Sanjib Jha as officer in default for the purpose of Compliances with the provision of the Companies Act & therefore the Authority is requested to consider him for the purpose of inadvertent procedural error as outlined above do not impose penalty on any other director(s).
C. The Noticee requested for an Shearing. Acceding to the request, an opportunity of being heard was granted by the Adjudicating Officer under the provisions of Section 454(4) of the Act on 26.05.2026 and on rescheduled date on 18.06.2026 at 12:41 PM (1ST). In this regard, a notice bearing ID: EH/ADJ/05-2026/PU/01642 dated 26.05.2026 was issued. D. The E-hearing was attended by Advocate Vimal Kishor on behalf of the noticees and he reiterated the written reply. During the E-hearing an Authorised representative made a submission that the applicant Company has appointed Mr. Sanjib Jha as officer in default for the purpose of Compliances with the provision of the Companies Act. In this regard, an Authorised Representative was asked whether the Company has filed E-form GNL-3 to declare or record the particulars of Mr. Sanjib Jha with the responsibility of complying with statutory provisions. In reply, the Authorised representative submitted that he was not aware about such filing. E. On perusal of the Application, submissions made during the E-hearing and considering the facts, it is observed that pursuant to Section 179(3) of the Act, the Board of the Company was required to exercise its power on behalf of the company by passing a necessary resolution with respect to conversion of loan into Equity shares. In the present case the Company took advance/loan from the holding Company by exercising Memorandum of understanding on 30.11.2024 and took approval of Shareholders and board during the meeting held on 08.12.2025 with a delay resulting in contravention of Section 179(3) of the Act. The period of default is considered from 30.11.2024 (date of signing Memorandum of Understanding) till 08.12.2025 (the date of passing Special Resolution) that is total of 374 days. Thus, the company and every officer of the company who is in default are liable for penalty under the provisions of Section 450 of the Act.
F. The noticees have not provided details/ proof of filings of
E. form GNL-3 establishing the responsibility of Mr. Sanjib Jha as a officer in default. Further, e-filing record on MCA21 portal also suggests that the Company has not filed E-form GNL-3 as required under Section 2(60) read with Rule 12(3) of the Companies (Registration offices and Fees) Rules, 2014. Ergo, the Company and its every officer in default viz; Mr. Anurag Mehrotra (Director) (DIN: 01950688) and Mr. Sanjib Kumar Jha, Director (DIN: 02277191) shall be liable to a penalty of Rs.10,000/- for first default and Rs.1000/- per day for continued default of 373 days that is Rs. 3,73,000 /(Rupees Three Lakhs Seventy-Three Thousand only) aggregating to Rs. 3,83,000/- (Rupees Three Lakhs Eighty-Three Thousand only) subject to maximum penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) for the Company and Rs.50,000/-(Rupees Fifty Thousand only) for its every Officer in default under provisions of Section 450 of the Act. G.Being a Subsidiary Company, the Company does not fall within purview of Section 2(85) of the Companies Act, 2013. H.Now, in exercise of the powers conferred on the Adjudicating Officer vide Notification dated 24th March 2015, having considered the facts and circumstances, I hereby impose a penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) on the Company and Rs.50,000/-(Rupees Fifty Lakhs only) on its every officer in default viz; Mr. Anurag Mehrotra (Director) (DIN: 01950688) and Mr. Sanjib Kumar Jha, Director (DIN: 02277191) under the penal provisions of Section 450 for default under section 179(3) of the Act.
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 | COVERFOX INSURANCE BROKING PRIVATE LIMITED having CIN as U66000MH2013P TC243810 | NA | 200000 | 0 | 200000 |
| 2 | ANURAG MEHROTRA having DIN as 01950688 |
NA | 50000 | 0 | 50000 |
| 3 | SANJIB KUMAR JHA having DIN as 02277191 | NA | 50000 | 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 Mumbai 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.
Chandan Kumar,
Registrar of Companies
ROC Mumbai I
