ROC Penalty for Incorrect PAS-3 Filing in Rights Issue: Lessons from Quality Enviro Engineers Limited

The adjudication order issued by the Registrar of Companies, Uttar Pradesh II, in the matter of QUALITY ENVIRO ENGINEERS LIMITED offers a clear illustration of how even a technical error in e-form selection can attract penalty under the Companies Act, 2013. This case revolves around a rights issue, incorrect reporting of the mode of allotment in Form PAS-3, and the consequent violation of Section 39(4) and Section 39(5) read with Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

This article recasts the factual background, legal provisions, reasoning, and outcome of the order dated 10 July 2026, and distils practical compliance pointers for companies and professionals handling share allotment and filing processes.

Background of the Adjudication

Appointment of Adjudicating Officer

The Ministry of Corporate Affairs, through Gazette notification number S.O. 698(E) dated 10/02/2026, designated the Registrar of Companies, Uttar Pradesh II, as the Adjudicating Officer under Section 454 of the Companies Act, 2013. This appointment authorises the ROC to impose penalties for non-compliance with provisions of the Act in terms of the Companies (Adjudication of Penalties) Rules, 2014.

Note: Section 454 empowers adjudicating officers to levy penalties for specified violations under the Act, following prescribed procedure and appeal mechanisms.

Company and Officer Details

Corporate Entity

The adjudication pertains to QUALITY ENVIRO ENGINEERS LIMITED, a company incorporated under the Companies Act, 2013/1956, bearing CIN U29190UP2016PLC082974, having its registered office at:

S2, DADA MARKET SAHIBABAD RAILWAY STATION ROAD II, SAHIBABAD GHAZIABAD, SAHIBABAD GHAZIABAD, GHAZIABAD, UTTAR PRADESH, INDIA, 201005

Individuals in Default

The following individuals were identified as officers in default/notices in the adjudication proceedings:

  • ASHWANI SRIVASTAVA
  • RAJIV KUMAR
  • NEHA SRIVASTAVA
  • AKHILESH KUMAR

These persons were treated as “officers in default” for the purpose of penalty under the relevant provisions of the Companies Act, 2013.

Section 39 of the Companies Act, 2013

The adjudication focuses on non-compliance with Section 39(4) and Section 39(5) of the Act. While Section 39(4) governs the requirement to file the return of allotment with the ROC, Section 39(5) prescribes the penalty for failure to comply with Section 39(3) or Section 39(4).

The order specifically reiterates the penalty mechanism under Section 39(5):

In case of any default under sub-section (3) or sub-section (4), the company and its officer who is in default shall be liable to a penalty, for each default, of one thousand rupees for each day during which such default continues or one lakh rupees, whichever is less.

Rule Framework

The ROC also referred to Rule 12 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, which deals with filing requirements for allotment, including Form PAS-3 for return of allotment.

Beneficial Provision: Section 446B

The company claimed the benefit of Section 446B of the Companies Act, 2013, which provides for lesser penalty in respect of certain classes of companies such as a small company, one-person company, start-up company, etc., subject to specified conditions. The ROC considered this submission while determining the quantum of penalty.

Factual Matrix: Rights Issue and Filing Error

Board Approval and Rights Issue

According to the company’s suo motu adjudication application and subsequent reply: