The Order issued by the Registrar of Companies, Madhya Pradesh, dated 18th May 2023, addresses a violation of Section 42(6) of the Companies Act, 2013 by M/s. Excel Vehicles Private Limited and its officers. The violation pertains to the failure to allot securities within the stipulated timeframe and maintain proper documentation regarding share application money.
The order begins with the appointment of an adjudicating officer by the Ministry of Corporate Affairs to handle penalties under Section 454 of the Companies Act, 2013. M/s. Excel Vehicles Private Limited, a registered company, is accused of not complying with Section 42(6) of the Act, which mandates the allotment of securities within 60 days of receiving application money. The company allegedly failed to provide evidence of payment or forfeiture of shares, indicating a potential mismanagement of funds.
Despite receiving a show cause notice and providing a response, the company’s explanation regarding the applicability of the Companies Act, 2013, is deemed unsatisfactory. Consequently, it is determined that the company and its officers have indeed violated Section 42(6) of the Act.
Subsequent to issuing notices of inquiry and conducting a hearing, it is concluded that penalties are warranted under Section 42(10) of the Companies Act, 2013. This section stipulates penalties for companies accepting monies in contravention of the Act. In this case, the penalty imposed amounts to Rs. 2 Crores, along with the directive to refund all monies to subscribers within 30 days.
The order specifies the procedures for penalty remittance, including filing necessary documents and appealing the decision if aggrieved. Non-compliance with the order within the stipulated timeframe carries additional fines or imprisonment for officers in default.
The delay in issuing the order is attributed to the complexity of the case and the time taken for responses from the respondents.
In accordance with the Companies (Adjudication of Penalties) Rules, 2014, copies of the order are dispatched to relevant parties and will be made available on the Ministry of Corporate Affairs website.
In essence, the Order outlines the adjudication process and penalties imposed on M/s. Excel Vehicles Private Limited for non-compliance with Section 42(6) of the Companies Act, 2013, emphasizing the importance of adherence to regulatory requirements in corporate governance.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
Office of The Registrar of Companies, Madhya Pradesh
Sanjay Complex, ‘A’ Block, 3rd Floor,
Jayendraganj, Gwalior —474009.
Order No. ROC-G/Adj. Pen./u/s. 42(6)/Excel Vehicle/390 to 394 Dated: 18 MAY 2023
To:
(1) M/s. Excel Vehicles Private Limited,
6, Malviya Nagar, Near IDBI Bank, Bhopal 462003, M.P.
(2) Smt. Manju Garg, Director (DIN-01792555),
(3) Sh. Rishab Garg, Director (DIN- 06528496)
(4) Sh. Beni Madhav Garg, Additional Director (DIN-01094084)
(5) Regional Director, North-Western Region, Ministry of Corporate Affairs, Ahmedabad (Gujarat).
Subject: Order under Section 454 of the Companies Act, 2013 for violation of Section 42(6) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014.
In the matter of Companies Act, 2013
And
In the matter of adjudication proceeding under sub-section (6) of
Section 42 of the Companies Act, 2013.
And
In the matter of
M/s. Excel Vehicles Private Limited
(CIN- U50400MP2012PTCO28568)
Date of hearing 3rd of May, 2023
1. Appointment of adjudicating officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II dated 24.03.2015 appointed undersigned as adjudicating officer in exercise .of the powers conferred by Section 454 of the Companies Act, 2013 (hereinafter known as “Act” ) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudicating penalties under the provisions of this Act. Company:
Whereas company M/s. excel Vehicles Private Limited (CIN- U50400MP2012PTC028568) hereinafter known as company] is a registered company with this office under the provisions of Section 7 of the Companies Act, 2013 (earlier Companies Act, 1956) having its registered office situated at 6-Malviya Nagar, Near IDBI Bank, Bhopal, M.P. 462003, as per the MCA website.
| Sl. No. | Particulars | Details |
| 1. | Paid-up Capital (F.Y. 2016-17) | 15,00,00,000 |
| 2. | Turnover (F.Y. 2016-17) | |
| a. Revenue from operation | 1,20,53,81,815 | |
| b. Other income | 69,04,024 | |
| 3. | Holding company | NO |
| 4. | Subsidiary company | NO |
| 5. | Whether company registered under Section 8 | NO |
| 6. | Whether company registered under any other Special Act | NO |
2. Facts about the case:
Whereas inquiry u/s. 206(4) of the Companies Act, 201 conducted by the ROC, Gwalior. The Directorate vide its direction dated 22.07.2022 has directed to ROC, Gwalior to take necessary action in the matter for violation of Section 42 of the Companies Act, 2013. During the inquiry u/s. 206(4) of the Companies Act, 2013. The company and directors have failed to submit the mode of payment or source of payrhent, information about the forfeiture/notice of forfeiture of shares and account details thereof. Hence, it appears that shares application money of Rs. 14.99 Crore for subscription of Rs. 15/- Lakh shares for the share allotment dated 25.02.2013 and 31.12.2013 is not paid or realised in the account of the company. Hence, allotment money was never credited in the company’s account as directors was unable to produce any documentary proof. Hence, this is a violation of Section 42(6) of the Act.
3. Subsequently, this office had issued show cause notice U/s. 42(6) to the company and its officers in default vide No. ROC-G/Adj.Pen.u/s.42(6)/Excel Vehicle/2661 to 2664 dated 30.03.2023. In response of show cause notice dated 30.03.2023, this office has received a letter dated 08.04.2023 from the company, therein the company has replied on following points:
(i) We wish to submit that the allotment of shares was made under the provisions of Companies Act, 1956. The Companies Act, 2013 cannot be applied from retrospective date and therefore, it is humbly submitted that Section 42(6) of the Companies Act, 2013 is not applicable on the share allotment dated 42(6) of the Companies Act, 2013. Hence, there is no violation of Section 42(6) of the Companies Act, 2013.
(ii) We wish to submit that the allotment of shares was made under the provisions of Companies Act, 1956. The Companies Act, 2013 cannot be applied from retrospective date and therefore, it is humbly submitted that Section 42(10) of Companies Act, 2013 is not applicable. Hence, there is no violation of Section 42(6) of the Companies Act, 2013.
The reply of the company is not satisfactory. Thus, the company and its officers in defaults have violated the provisions of Section 42(6) of the Companies Act, 2013. Hence, the company and is officers are liable for penal action under Section 42(10) of the Companies Act, 2013.
4. Thereafter, “Notices of Inquiry” vide No. ROC-G/Adj. Pen./42(6)/ NOI /Excel Vehicle/159 to 162 dated 19.04.2023 were issued to the company and its officers in default. As per [Rule 3(3), companies (Adjudication of Penalties) Rules, 2014 and the date of hearing was fixed on 05.2023 at 11.00 A.M. in the office of Registrar of Companies, Madhya Pradesh, Sanjay Complex, A-Block, 3rd Floor, Jayendraganj, Gwalior.
5. On the date of hearing i.e. 03.05.2023 Ms. Manju Garg, director of the company has authorised vide authorization letter dated 03.05.2023 to Sh. Rajeev Shrivastava, Manager Account and Sh. Ravinder Singh, Manager Account of the company were authorised for attending the hearing which was fixed on 03.05.2023 at 11.00 A.M. and both persons have attended the hearing.
6. As per section 42(6) of the Companies Act, any company making an offer or invitation under this section shall allot its securities within 60 days from the date of receipt of the application money for such securities provided that monies received on application under this section shall be kept in a separate bank account in a scheduled bank.
7. The company and directors of the company have failed to submit the mode of payment or source of payment,. Information aboue the forfeiture/notice of forfeiture of share and account details thereof. Hence, it appears that shares application money of Rs. 14.99 Crore for subscription of 15 Lakh shares for the share allotment dated 25.02.2013 and 31.12.2013 not paid or realized in the account of the company.
8. Order:
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that the company and its officers in default are liable for penalty as prescribed under Section 42(10) of the Act for default is made in complying with the requirements of Section 42(6) of the Act of the company viz. Excel Vehicles Private Limited.
9. As per provisions of Section 42(10) of the Companies. Act, 2013, 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 involved in the offer or invitation or two crore rupees, whichever is lower and the company shall also refund all monies to subscribers within a period of thirty days of the order imposing the penalty.
10. Accordingly, I am inclined to impose a penalty as prescribed under Sub-section 10 of section 42 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:
| Si. No. |
Name of the company/Director | Amount of penalty |
| 01. | M/s. Excel Vehicles Private Limited | Rs. 2,00,00,000/- |
a. The company is directed to refund all the monies to the complainants alongwith interest at the rate of twelve per cent per annum as per the provisions of Section 42(6) of the Act, within 30 days from the date of order as per the provisions of section 42(10) of the Act.
b. The penalty amount shall be remitted by the company through MCA-21 portal within 60 days from the date of order. The company needs to file INC-28 as per the provisions of the Act, attaching the copy of adjudication order alongwith payment challan.
c. Any person aggrieved by the order of Adjudicating Authority under sub-section (3) of Section 454 may prefer an appeal to the Regional Director having jurisdiction in matter.
d. Every appeal under sub-section (5) of Section 454 shall be filed within 60 days from the date on which the copy of order made by the Adjudicating Authority is received by the aggrieved person and shall be in such form, manner and be accompanied by such fee as may be prescribed.
e. As per Section 454(8)(i) where a company fails to comply with the order made under sub-Section (3) of sub-section (7) as the case may be within a period of 90 days from the date of receipt of the copy for the order, the company shall be punishable with fine which shall not be less than twenty five thousands, but which may extend to five lakh rupees.
f. Where an officer of a company or any other person who is in defaults fails to comply with the order made under ‘sub-section (3) or sub-section (7) as the case may be within a period 90 days from the date of receipt of the order, such officer shall be punishable with imprisonment which may extend to six months or with the fine which shall not be less than twenty five thousands rupees but which may extend to one lakh or with both.
g. This order is without prejudice to the rights available to this office to initiate separate actions including but not limited to the penal actions for contraventions of related, incidental and/or continuing offence/ contraventions.
h. The delay for issuance of the order if any is due to complexity of the issue and time taken by the respondents to submit their replies and examinations of the issues involved.
11. In terms of the provisions of sub-rule 3 of the Companies (Adjudication of Penalties) Rules, 2014 copy of the order is being sent to Excel Vehicles Private Limited, c, Malviya Nagar, Near IDBI Bank, Bhopal 462003, M.P., Smt. Manju Garg, Director (DIN- 01792555), Sh. Rishab Garg, Director (DIN-06528496), Sh. Beni Madhav Garg, Additional Director (DIN-01094084) and Regional Director, North-Western Region, Ministry of Corporate Affairs, Ahmedabad and will also be uploaded on MCA website
The adjudication notice stand disposed off with this order.
(Mukesh Kumar Soni) ICLS
Adjudicating Officer/Registrar of companies,
Madhya Pradesh, Gwalior.
