Yes, I did travel with Indian passport after getting citizenship in Canada once.
That seems to be the problem as OCI as you know became active only in December 2005.
While I now know that is wrong, I was amazed at two things:
1. The cost of the penalty. (which is still fine)
2. The treatment I got as I had physically gone to get the passport cancelled.
As of writing this post, I have not yet got the clearance from New Delhi, I was told such cases are happening, and mine is not the first time. But it will take upto 120 days for New Delhi to clear such cases.
Officially the punishment for this is imprisonment, or banning entry or a fine of a large amount.
** Note if one did not travel also, it is still considered against the law in India to retain Indian passport after getting a new citizenship. So hope for some of you this will be a good reminder.
Further I believe the Indian government should have given a grace period once OCI became available. After all, most Indians do not get foreign passports because they don't like their roots but for economic reasons.