Penalty Proceedings for Private Placement Non-Compliance: Basant Nutrifoods Private Limited

Background of the Adjudication

The Registrar of Companies, Mumbai I, acting as Adjudicating Officer under Section 454 of the Companies Act, 2013, issued an order imposing monetary penalties on Basant Nutrifoods Private Limited and its directors for lapses in a private placement of equity shares. The contraventions related to Section 42(10) of the Companies Act, 2013, read with Section 42(6) and Rule 14(1) and Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

The adjudication proceedings commenced pursuant to a suo motu application made by the company and its directors, wherein they admitted various defaults in the conduct of a private placement and sought adjudication and lenient consideration.

Appointment and Jurisdiction of Adjudicating Officer

The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 698(E) dated 10/02/2026, appointed the Registrar of Companies, Mumbai I, as the Adjudicating Officer under Section 454 of the Companies Act, 2013. The appointment was made in conjunction with the Companies (Adjudication of Penalties) Rules, 2014, empowering the officer to levy penalties for violations under the Act, including those arising out of private placement provisions in Section 42.

The order under discussion bears Order ID: PO/ADJ/07-2026/MH/02518 and is dated 09/07/2026.

Parties Involved

Corporate Entity

  • BASANT NUTRIFOODS PRIVATE LIMITED
    • CIN: U46309MH2023PTC400932
    • Registered office: 23, FLOOR-3, PLOT NO. 101/109 GAYA BUILDING, YUSUF MEHERALI ROAD, MASJID, MANDVI, MUMBAI, MAHARASHTRA, INDIA 400003

Individual Noticees (Directors)

  1. MANOJ BASANTLAL AGRAWAL – Director (DIN: 00140749)
  2. ALKESH BASANTLAL AGRAWAL – Director (DIN: 00147045)
  3. RUCHIR MANOJ AGRAWAL – Director (DIN: 09604121)

These individuals, along with the company, were treated as “applicants” and “noticees” during the adjudication process.

The central provision invoked is Section 42(10) of the Companies Act, 2013. It provides 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.

Additionally, the contraventions were linked to:

  • Section 42(6) – dealing with timelines for allotment, repayment obligations, and requirement of a separate bank account for application money.
  • Rule 14(1) and Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 – which regulate prior shareholder approval and timing of filing of special resolution before issuing the private placement offer-cum-application letter.

Facts and Nature of Defaults

Private Placement Details

The company undertook a private placement of equity shares as follows:

  • The Board of Directors approved the issue of 17,21,000 equity shares of face value Rs. 10 each on 19.02.2024.
  • The Members (shareholders) approved the same via special resolution on 22.04.2024.
  • The private placement issue was carried out on 29.04.2024 / 29.05.2024 (the order notes dates in this range, linked to the offer and acceptance process).

Specific Lapses Admitted by the Company

In its suo motu adjudication application dated 05.02.2026, the company admitted to the following contraventions under Section 42 and the corresponding Rules:

  1. No separate bank account for application money

    • The company did not open a separate bank account in a scheduled bank for receipt of application money, in breach of the proviso to Section 42(6).
    • Application money was therefore not segregated as mandated.

  2. Private placement offer issued before filing special resolution

    • The company filed e-Form MGT-14 for submission of the special resolution (SRN AB6568960) only on 17.09.2025.
    • However, the private placement offer-cum-application letter was issued earlier, on 29.05.2024.
    • This sequencing violated Rule 14(8) of the Companies (Prospectus and Allotment of Securities) Rules, 2014, which requires filing of the relevant special or Board resolution with the Registrar before issuance of the offer-cum-application letter.

  3. Receipt of application money before shareholders’ approval

    • The company received application money aggregating to Rs. 1,71,80,000/- prior to obtaining shareholders’ approval, contrary to Rule 14(1) read with Section 42(6).