Can ROC initiate adjudication for delay of18 days in filling INC-20A?

Can ROC initiate adjudication for delay of18 days in filling INC-20A?. After registration of the company, it is mandatory for every company having share capital to file a declaration for commencement of business. This declaration is filled in e-form INC-20A with the MCA within 180 days from the date of incorporation.
It has been observed that in recent ROC(s) order, companies are filling an adjudication application Suo moto to adjudicate the penalties for delay in filling form INC-20A even for a few days. As in this MCA adjudication order company has filed the application Suo-moto in e-Form GNL-I along with its officers in default u/s I0A (2) and physical application on 06/06/2024 for adjudication of violation of Section I0A (1) r/w section 454 of the Companies Act, 2013 (the Act) seeking necessary orders.
As per section 10A of the companies Act a company incorporated after the commencement of the Companies (Amendment) Act,2019 and having a share capital shall not commence any business or exercise any borrowing powers unless —
1. A declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and
2. The company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.
3.  If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
4.  Where no declaration has been filed with the Registrar under clause (a) of subsection (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the  name of the company from the register of companies under Chapter XVIll"
Facts About of the case:
In Infracx Developers Private Limited, company has filed the e-form INC-20A bearing SRN- AA6917977 on 22.02.2024 with a delay of 18 days commencing from the last due date and therefore, default is made in complying with the aforesaid statutory provisions by non-filing of the declaration of commencement of business  (INC-20A) within the prescribed statutory period of 180 days of incorporation date.
Thereby 18 days' delay has occurred in filing form INC-20A. The alleged delay occurred due to one of subscriber, Mr. Vinay Sunder Toomu whose subscription money was received with delay. Hence, the delay occurred was unintentional, and there was no willful or intentional violation of the provisions of the Companies Act, 2013.
The company has filed the form INC-20A on 22/02/2024, hence the default has been made good before filing of adjudication application.
Adjudication of Penalty
With regard to the above factors that are to be considered while determining the quantum of penalty, it is noted that the subject company in its application has mentioned to be a small company as per the definition of Section 2(85) of the Companies Act, 2013 so lesser penalties be imposed on such companies.
Having considered the facts and hearings held in the matter and after taking into accounts the above factors, the concerned ROC has reasonable cause to believe that for the period, 03/02/2024 to 22.02.2024 the subject Company and its Officer in Default have failed to comply with the provisions of
Section I0A (1) of the Companies Act, 2013. Therefore, adjudicating officers impose the penalty on the Company and its Officers in Default pursuant to Rule 3 (12) and provision and provision of the said Rule 3(13) of Companies (Adjudication of Penalties) Rules, 2014 of the Companies Act, 2013 as follows: -

To whom penalty imposed

On default

Calculation of penalty amount

Penalty imposed after considering section 446B

On Company

50,000

25,000

On 1st director(Default for period of 18 days)

1,000

1000*18 =18,000 subject to maximum of 1,00,000

9,000

On 2nd director

1,000

1000*18 =18,000 subject to maximum of 1,00,000

9,000

Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit.
In this MCA adjudication order the company being a small company attract provision of lesser penalty as provided under Section 446(B) of the Companies Act, 2013.
Findings:
The adjudication order highlights the active approach taken by the company in filing a Suo moto adjudication application to rectify the delay in filing Form INC-20A. Despite the delay being unintentional and caused by unforeseen circumstances, the company and its officers were subjected to penalties under Section 10A (2) read with Section 454 of the Companies Act, 2013. However, as the company qualified as a small company under Section 2(85) of the Act, it availed the benefit of reduced penalties under Section 446B. This case highlights the importance of timely compliance with statutory requirements and the relief mechanism available to small companies to mitigate financial penalties in cases of minor delays.
Download ROC Order

After registration of the company, it is mandatory for every company having share capital to file a declaration for commencement of business. This declaration is filled in e-form INC-20A with the MCA within 180 days from the date of incorporation.

It has been observed that in recent ROC(s) order, companies are filling an adjudication application Suo moto to adjudicate the penalties for delay in filling form INC-20A even for a few days. As in this MCA adjudication order company has filed the application Suo-moto in e-Form GNL-I along with its officers in default u/s I0A (2) and physical application on 06/06/2024 for adjudication of violation of Section I0A (1) r/w section 454 of the Companies Act, 2013 (the Act) seeking necessary orders.

As per section 10A of the companies Act a company incorporated after the commencement of the Companies (Amendment) Act,2019 and having a share capital shall not commence any business or exercise any borrowing powers unless —

1. A declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and

2. The company has filed with the Registrar a verification of its registered office as provided in sub-section (2) of section 12.

3. If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

4. Where no declaration has been filed with the Registrar under clause (a) of subsection (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIll"

Facts About of the case:

In Infracx Developers Private Limited, company has filed the e-form INC-20A bearing SRN- AA6917977 on 22.02.2024 with a delay of 18 days commencing from the last due date and therefore, default is made in complying with the aforesaid statutory provisions by non-filing of the declaration of commencement of business (INC-20A) within the prescribed statutory period of 180 days of incorporation date.

Thereby 18 days' delay has occurred in filing form INC-20A. The alleged delay occurred due to one of subscriber, Mr. Vinay Sunder Toomu whose subscription money was received with delay. Hence, the delay occurred was unintentional, and there was no willful or intentional violation of the provisions of the Companies Act, 2013.

The company has filed the form INC-20A on 22/02/2024, hence the default has been made good before filing of adjudication application.

Adjudication of Penalty

With regard to the above factors that are to be considered while determining the quantum of penalty, it is noted that the subject company in its application has mentioned to be a small company as per the definition of Section 2(85) of the Companies Act, 2013 so lesser penalties be imposed on such companies.

Having considered the facts and hearings held in the matter and after taking into accounts the above factors, the concerned ROC has reasonable cause to believe that for the period, 03/02/2024 to 22.02.2024 the subject Company and its Officer in Default have failed to comply with the provisions of

Section I0A (1) of the Companies Act, 2013. Therefore, adjudicating officers impose the penalty on the Company and its Officers in Default pursuant to Rule 3 (12) and provision and provision of the said Rule 3(13) of Companies (Adjudication of Penalties) Rules, 2014 of the Companies Act, 2013 as follows: -

To whom penalty imposed	On default	Calculation of penalty amount	Penalty imposed after considering section 446B
On Company	50,000	50,000	25,000
On 1st director(Default for period of 18 days)	1,000	1000*18 =18,000 subject to maximum of 1,00,000	9,000
On 2nd director	1,000	1000*18 =18,000 subject to maximum of 1,00,000	9,000

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit.

In this MCA adjudication order the company being a small company attract provision of lesser penalty as provided under Section 446(B) of the Companies Act, 2013.

Findings:

The adjudication order highlights the active approach taken by the company in filing a Suo moto adjudication application to rectify the delay in filing Form INC-20A. Despite the delay being unintentional and caused by unforeseen circumstances, the company and its officers were subjected to penalties under Section 10A (2) read with Section 454 of the Companies Act, 2013. However, as the company qualified as a small company under Section 2(85) of the Act, it availed the benefit of reduced penalties under Section 446B. This case highlights the importance of timely compliance with statutory requirements and the relief mechanism available to small companies to mitigate financial penalties in cases of minor delays.