The Registrar of Companies, Mumbai, imposed a collective penalty of ₹45 lakh on a company and its directors under Section 42(10) of the Companies Act, 2013, for violating Section 42(6) related to private placement of shares. The company failed to maintain the application money received in a separate bank account, contrary to statutory requirements, for the private placement offer conducted from 12th July 2019 to 31st December 2019, aggregating Rs. 1.17 crore. The company filed a suo-moto application admitting the default, highlighting its small company status, negative net worth, and that no investors were prejudiced. Considering mitigating circumstances, the adjudicating officer apportioned penalties equally among the company, Managing Director, and Director, imposing Rs. 15 lakh each. Payment must be made within 90 days via the MCA e-Adjudication portal, with personal liability on directors. The case underscores the importance of statutory compliance for small companies in private placements, proper segregation of investor funds, and director accountability under the Companies Act.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
ROC Mumbai
Registrar Of Companies, 100, Everest, Marine Drive, Mumbai, Maharashtra, India, 400002
Phone: 022-22812627,022-22812645
E-mail: roc.mumbai@mca.gov.in
Order ID: PO/ADJ/11-2025/MB/00844 | Dated: 02/12/2025
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. 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 JUSTO REALFINTECH LIMITED [herein after known as Company] bearing CIN U67190MH2019PLC323318, is a company registered with this office under the Provisions of the Companies Act, 2013/1956 having its registered office situated at 801/802, 8TH FLOOR, EL TARA BUILDING, POWAI, OFF. ORCHARD AVENUE, HIRANANDANI GARDENS NA MUMBAI MUMBAI CITY MAHARASHTRA INDIA 400076
Individual details:
In the matter relating to PUSPAMITRA DAS _______________
In the matter relating to RAHUL PANDE _______________
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 – Whereas this office is in receipt of adjudication application on 13.05.2025 filed by the subject Company under section 454 read with section 42(6) of the Companies Act,2013 vis-a-vis the failure of the applicant Company to keep the application money received in a separate bank account in a scheduled bank. Whereas Section 42(6) of the Act reads as follows:
A company making an offer or invitation under this section shall allot its securities within sixty days from the date of receipt of the application money for such securities and if the company is not able to allot the securities within that period, it shall repay the application money to the subscribers within fifteen days from the expiry of sixty days and if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of twelve per cent. per annum from the expiry of the sixtieth day:
Provided that monies received on application under this section shall be kept in a separate bank account in a scheduled bank and shall not be utilised for any purpose other than-
(a) for adjustment against allotment of securities; or
(b) for the repayment of monies where the company is unable to allot securities.
Whereas the Company has stated that it had received application money received for the private placement offer made on 06.07.2019 with respect to 83,000 equity shares of face value of Rs.10 and premium of Rs.131 aggregating to Rs.1,17,03,000. However, it failed to keep the said money in a separate bank account in contravention of section 42(6) of the companies Act, 2013.
Further the Company vide its clarification letter 12.08.2025 provided details of the said private placement offers made along with bank statement indicating receipt of application money amounting to Rs.1,17,03,000 on various dates. Further, the Company has admitted the default under Section 42(6) of the Act and sought adjudication of penalties under the provisions of Section 42(10) of the Act.
2. An opportunity of being heard was granted by the Adjudicating officer under the provisions of the section 454(4) of the Act to further examine the contentions raised by the Applicants. An E-hearing notice bearing ID: EH/ADJ/10-2025/MB/00854 dated 15.10.2025 was issued and the said E-hearing was scheduled on 29.10.2025 at 03:35 PM (IST).
E. Order:
1. A.A Show Cause notice bearing ID: SCN/ADJ/08-2025/MB/02437 dated 28.08.2025 was issued to the Applicants under Section 454 read with Section 42(6) of the Act with respect to failure of the Applicant Company to keep the application money received in a separate bank account in a scheduled bank.B.The Applicants replied on the E-adjudication portal on 04.09.2025 and submitted as under:i.That the default was an inadvertent lapse. The said account was not a routine business operating account and it was used exclusively for receipt of share application money, collection of funds, and unsecured loans etc;ii.The Company is not a public company and was neither a holding company nor a subsidiary company, nor registered under section 8, nor governed by any special Act. Accordingly, the Company, qualifies as a Small Company under Section 2(85) of the Act. iii.That at the time of default and as per last audit held on 31.03.2020, the Capital of the Company was Rs. 9,30,000/- and turnover of the Company was Rs. 1,18,61,159/-.iv.Non opening of separate account, has not caused any prejudice to any member/creditor or investor. There is no gain or unfair advantage derived by the Appellant Company.v.Except for Mr. Puspamitra Das, all other Directors of the Company were Non-Executive Directors and were not involved in the day-to-day management or execution of affairs of the Company. We therefore request your good office to kindly not impose penalty on the remaining Non-Executive Directors.vi.The Company qualifies as a Small Company within a meaning of Section 2(85) of the Act, as it was company other than public Company and having paid up share capital and turnover not exceeding the prescribed limit of Rs. 4 Crores and Rs. 40 Crores respectively. vii.In view of the voluntary disclosure and proactive bonafide action on part of the Company, it is requested that a lenient view may be taken and minimum penalty may be imposed. C.Further, the Applicants also submitted a reply vide a physical letter dated 12.08.2025. However, the same is not taken on record in pursuance to Rule 3A (1) of the Companies (Adjudication of Penalties) Rules, 2014. D.The Applicants requested for E-hearing. Accordingly, an opportunity of being heard was granted by the Adjudicating officer under the provisions of the section 454(4) of the Act on 29.10.2025 at 03:35 PM (IST). In this regard, a notice bearing ID: EH/ADJ/10-2025/MB/00854 dated 15.10.2025 was issued.E.Mr. Ronak Kalathiya, Practicing Company Secretary appeared on behalf of the Applicants during the E-hearing and submitted as follows:i.That the Applicants admit that the Company failed to keep the application money received in a separate bank account in a scheduled bank in contravention of Section 42(6) of the Act. ii.That the Company was a small Company at the time of default and they did not have knowledge that law requires to open a separate bank account for deposit of the application money in terms of provisions of Section 42(6) of the Act. Further, the Company did not have secretarial staff. iv. That the during the private placement offer dated 06.07.2019, the Company raised an amount of Rs. 1,17,03,000/-F.On perusal of the documents filed and submissions made by the applicants, it is observed that the Company admittedly failed to keep the application money received in a separate bank account in a scheduled bank in contravention of Section 42(6) of the Act. G.Whereas Section 42(10) of the Act stipulates 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. H.Unlike the other penal provisionsu h as Section 92(5) and 137(3) of the Act, penalty under Section 42(10) of the Act is not fastened on each Director/officer in default but on the Company, its Directors and Promoters collectively. However, the E-adjudication portal is designed in such a manner that it does not allow collective imposition of penalty. Since the penalty amount has to be imposed collectively on the Company, its Promoters and Directors, for sake of clarity, the amount to be imposed shall be proportionally apportioned between the Company, its Promoters and Directors, so that personal liability of directors become determinable and Director(s) pay from their own funds.I.Further, with respect to submission of applicants imposition of penalty on non-executive directors, it is pertinent to note that Section 42(10) of the Act unequivocally makes Promoters and Directors liable unlike certain other penal Sections where officers in default as defined under Section 2(60) of the Act are held liable for penalty. Accordingly, the noticees namely Mr PUSPAMITRA DAS (Managing Director) and Mr Rahul Pande (Director) have been held liable.J.Default under Section 42 of the Act is with respect to offer and acceptance of money through Private Placement. Accordingly, the period of offer for the Private Placement and period of acceptance thereof is the period of default. In the instant case, the Application money against the Private Placement offer was received from 12.07.2019 to 31.12.2019, which shall be considered as the default period. Regardless of the fact that the Applicant Company was a small Company or not during such period, it is emphasized that prior to the commencement of the Companies (Amendment) Act, 2020 on 22.01.2021, the benevolent provision of Section 446B of the Act was applicable only to the defaults under Sections 92(5), 117(2) and 137(3) of the Act. Thus, the benefit of Section 446B while levying penalty may not be extended to the noticees for default under Section 42(10) during the relevant period.K.However, it is observed that the during the relevant period the Applicant Company was a newly incorporated small sized Company with a negative net worth of Rs. (-66,69,995/-). Further, the Applicants have acted in a bonafide manner and filed a suo-motu Application seeking adjudication of penalties for the said default. I am of the view that the default committed has not impaired the public interest nor engendered material loss to the investors. L.I have carefully examined the facts of the case, applicable laws thereon and thought through the mitigating circumstances adverting to Rule 3(12) of the Companies Adjudication of Penalties Rules, 2014 for levying the penalty for the aforesaid default. Had it not been the case of mitigating circumstances weighing in favour of the noticees, they would have been subject to a penalty upto the amount raised through the Private Placement or Rupees Two Crores, whichever is lower. Factoring in the mitigating circumstances and Rule 3(12) the Companies Adjudication of Penalties Rules, 2014, I am of the view that collective penalty amount of Rs.45,00,000/-(Rupees Forty-Five Lakhs only) shall be commensurate to the nature of default.M.Now, in exercise of the powers conferred on the Adjudicating Officer vide Notification dated 24th March 2015, having considered the facts and circumstances of the case, I hereby impose penalty of Rs. 15,00,000 (Rupees Fifteen Lakhs only) each on the Company, Mr. PUSPAMITRA DAS, Managing Director and Mr Rahul Pande (Director) aggregating to Rs. 45,00,000 /- (Rupees Forty Five Lakhs only) under Section 42(10) for default under Section 42(6) 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 | JUSTO REALFINTECH LIMITED having CIN as U67190MH2019P LC323318 | NA | 1500000 | 0 | 20000000 |
| 2 | PUSPAMITRA DAS having DIN as 01643973 | NA | 1500000 | 0 | 20000000 |
| 3 | RAHUL PANDE having DIN as 06880681 | NA | 1500000 | 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 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
To,
1. JUSTO REALFINTECH LIMITED ______
2. PUSPAMITRA DAS ______
3. RAHUL PANDE ______
