Reduced ROC Penalty for Start-up’s Delayed PAS-3 in Private Placement of NCDs

The Registrar of Companies, Bangalore, has recently passed an adjudication order under Section 454 of the Companies Act, 2013 in relation to delayed filing of Form PAS-3 (return of allotment) for a private placement of Non-Convertible Debentures (NCDs). While a technical default under Section 42(8) and penalty under Section 42(9) was clearly made out, the ROC extended the benefit of reduced penalty available to eligible start-ups under Section 446B.

This order offers useful guidance for companies, especially start-ups, on the consequences of late filing of PAS-3, the quantum of penalties, and how Section 446B can significantly mitigate financial exposure in such cases.

Background of the Adjudication Proceedings

Appointment 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, Bangalore, as Adjudicating Officer under Section 454 of the Companies Act, 2013. This appointment empowers the officer to levy penalties in accordance with the Companies (Adjudication of Penalties) Rules, 2014.

Company and Officers Involved

The adjudication pertains to TECHFINO CAPITAL PRIVATE LIMITED, having CIN U65999KA2018PTC114532, registered under the Companies Act, 2013/1956. Its registered office is located at:

DSR TECHNO CUBE BBMP KATHA NO.639/645/1, SURVEY NO.68, VILLAGE, VARTHUR ROAD, NEXT TO SKR KALYAN MANTAPA, THUBARAHALLI KUNDALAHALLI BANGALORE NORTH BANGALORE KARNATAKA INDIA 560037

The proceedings also involved the following individuals as officers in default:

  • JAYAPRAKASH PATRA
  • RATIKANTA SATAPATHY
  • RAJESH KUMAR PANDA
  • SHARAD AGGARWAL

Each of them was examined for liability under Section 42(9) in respect of delayed PAS-3 filing.

Key Statutory Provisions

  1. Private Placement of Securities

    The private placement of NCDs was carried out under:

    • Section 42 of the Companies Act, 2013, and
    • Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

    These provisions collectively govern the process of private placement, including offer, acceptance, allotment, and filing requirements.

  2. Filing of Return of Allotment – Section 42(8)

    Under Section 42(8), once securities are allotted under a private placement, the company must:

    file a return of allotment with the Registrar within fifteen days from the date of allotment.

    This filing is done through Form PAS-3, and non-compliance triggers penal consequences.

  3. Penalty for Default – Section 42(9)

    The adjudicating officer specifically cited the following provision:

    If a company defaults in filing the return of allotment within the period prescribed under sub-section (8), the company, its promoters and directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.

    Thus, both the company and the concerned officers in default are exposed to:

    • A daily penalty of ₹1,000 for the period of continuing default,
    • Subject to a maximum cap of ₹25,00,000.

  4. Lesser Penalty for Start-ups – Section 446B

    Section 446B provides for reduced monetary penalties for specified classes of companies, including eligible start-ups, subject to prescribed conditions. This provision was crucial in determining the final penalty in this matter.

Chronology of Events and Nature of Default

Private Placement of NCDs

Based on the company’s own adjudication application filed on 17.09.2025, the following sequence was recorded:

  1. Approval of Offer