ROC Bengaluru imposed Penalty of 1.5 Crore for violation of Section 42 of the Companies Act 2013
The Registrar of Companies(ROC) Karnataka Imposes Penalty of Rs.1.50 Crore for violation of Section 42 of the Companies Act, 2013 on Valley Monks Private Limited and its two promoters.
According to Sub-Section (10) of Section 42 of the Companies Act, 2013, if a company makes an offer or accepts monies in violation of this section, the company, its promoters, and directors are liable for a penalty of up to the amount involved in the offer or invitation, or two crore rupees, whichever is less, and the company must also refund all monies to subscribers with interest as specified in sub-section (6) within thirty days.
VALLEY MONKS PRIVATE LIMITED was incorporated on 12.07.2017 under the jurisdiction of Registrar of Companies, Bangalore. It is classified as Non-govt company and is registered at Registrar of Companies, Bangalore. Its authorized share capital is Rs.595,000 and its paid up capital is Rs.105,780. It is involved in Other computer related activities [for example maintenance of websites of other firms/ creation of multimedia presentations for other firms etc.]
As per sub-section (1) of Section 42 of Companies Act, 2013, a company, may, subject to the provisions of this section, make a private placement of securities.
In the above matter, the Company had submitted its adjudication application on 05.02.2021.
According to the application, the company has allotted 50,000 compulsorily convertible debentures (CCDs) of Rs.103/- each to Shri Sampath Kumar Srinivas, Shri Pratha Jayadevappa, Shri Nailmothu Venkata Avilash, and Shri knit Saxeria on a private placement basis for a total of Rs.50 lakhs under Section 42 of the Companies Act, 2013. According to PAS 3 submitted on 9.1.2019, the firm received shareholder approval for allotment on November 27, 2018.
According to the adjudication application, the corporation has failed to comply with the following provisions of Section 42 of the Companies Act, 2013:-
1. Though the company complied with all other provisions of the Companies Act, 2013 and Rules promulgated thereunder, it neglected to mention Section 42 in the extracts of Board Resolutions and extraordinary general meeting resolutions, as well as the disclosures required by Rule 14(1) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and the Companies (Share capital and debentures) Rules, 2014.
2. According to Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, a special resolution must be passed before a private placement offer or application letter can be issued. The corporation, on the other hand, has taken a long time to file a special resolution for the issuance of CCDs. Following the issuance of the private placement offer turn application letter, the Form MGT 14 was filed.
3. The firm should have received the application money on account of private placement on a separate bank account, according to Section 42(6) of the Companies Act. In a regular bank, The corporation, on the other hand, has not established a separate bank account.
4. Due to the Covid-19 Pandemic, the hearing was place by videoconference on August 24, 2021. The Director, Shri Ashwin Bedre Vijay Kumar, was present at the hearing. The company’s default was admitted by the Representative.
5. In exercise of the powers vested under Section 454(3) of Companies Act 2013 considering the violation of section 42 of Companies Act, 2013, which attract penal provision of sub-section (10) of Section 42 of Companies Act, 2013, the penalty imposed on VALLEY MONKS PRIVATE LIMITED, ASHWIN KUMAR BEDRE VIJAY KUMAR, WHOLE TIME DIRECTOR-CUM-PROMOTER & SWAMI MOHAMMAD, DIRECTOR- CUM-PROMOTER is Rs.50 Lakh for each parties.
6. Furthermore, because the corporation has not followed the method given out under Section 42 read with rules imposed thereon, the company is required to restore all payments to the subscribers, including any interest owed, within 30 days.
7. Within 60 days of receiving the order, the penalty money must be remitted from their own sources through MCA 21 ports. The corporation must file an INC-28 form in accordance with the Act’s requirements, including a copy of the adjudication order and payment challans.
8. Whereas, under section 454 of the Companies Act, 2013, any party aggrieved by an adverse order issued by the adjudicating officer under sub-section (3) may appeal to the Regional Director with jurisdiction in the matter.
9. Every appeal under Subsection (5) must be lodged within sixty days after the date on which the aggrieved person receives a copy of the adjudicating officer’s ruling, and must be filed in the form, manner, and with the fees provided.
10. Please note that under Section 454(8):
(i) if a corporation fails to comply with an order made under sub-section (3) or sub-section (7), as the case may be, within ninety days of receiving a copy of the order, the company will be fined not less than 20,000 rupees but not more than five lakh rupees.
ii) If an officer of a company or any other person who is in default fails to comply with an order issued under sub-section (3) or (7), as the case may be, within ninety days of receiving a copy of the order, such officer shall be punished with imprisonment for up to six months or a fine of not less than twenty-five thousand ropes but not more than one lakh rupees, or both.
If you do not pay your penalty, you will be prosecuted under section 454(8)(i) and (ii) of the Companies Act 2013, and you will be sentenced to six months in prison or a fine of not less than twenty-five thousand ropes but not more than one lakh rupees, or both.
To Read Order Download PDF Given Below :