Company fail to file its Financial Statement and Annual Return on due date with ROC

Company fail to file its Financial Statement and Annual Return on due date with ROC. In this article, we will take you through the mandatory annual filing requirements under Section 92 and Section 137 of the Companies Act, 2013, focusing on the implications of non-compliance and the penalties involved. Section 92(5) mandates that every company, including its directors, must file an annual return, while Section 137(3) requires the filing of the financial statement with the Registrar of Companies (ROC) within a specified time. Failure to comply with these provisions can result in penalties being levied against both the company and its directors, as demonstrated in the case of Wiltemar Trade and Forex Private Limited. The company’s failure to timely file its financial statements and annual return led to the imposition of penalties by the ROC.
Applicable Provisions
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its annual return and financial statement for the Financial Year for the financial year 2017-18. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
Wiltemar Trade and Forex Private Limited, a company registered under the Companies Act, 1956, with its registered office in Goa, was found to be in default of Section 92(5) and section 137 (3) of the Companies Act 2013. The ROC issued a show cause notice dated 27.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents. 
In response, the company stated that it has filed its annua returns and financial statement return for the FY 2017-18 on 23.03.2019.
The Registrar of Companies (ROC) considering the facts and circumstances-imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, and contended that the:

The appellant company had filed a compounding application with office of RD, WR, Mumbai u/s 441 of the companies Act 2013. Company contended that the penalty calculated by the adjudication officers appears to be incorrect as the MCA have granted extension of time for filling of AOC-4 and e-form MGT-7. The extension of time for filling the aforementioned documents was given up to 31.12.2018 with additional fees. Thus, the same should have been calculated for financial statement (AOC-4) and Annual Return (MGT-7) w.e.f 01.01.2019 till the date of filling i.e. 23.03.2019.

The appellant has regularized the filling of financial statement and annual return for the F.Y. 31.03.2018 on 23.03.2019 by paying additional fee for delay.

The financial condition of the company is not sound as per financial report of the company as per previous audited reports.

The company and its directors are unable to make the payments of penalties as imposed.

Imposed Penalty
The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows:
For Financial Statements as under section 137(1) of the companies Act 2013

On Company: Rs, 1,14,000

On officers in default: Rs. 1,14,100 each

For Annual Return as per section 92 (4) of the companies Act 2013

On Company: Rs 61,200

On officers in default: Rs. 61,200 each

Reduction in penalties:
Considering the request made by the appellant the concerned RD is of the opinion that there is nothing on record to show as to whether the ROC has imparted any hearing to the notices.
It is also not mentioned in the implunged order that the ROC has conducted an inquiry in the matter as required under the Rules.
One of the director being disqualified under section 164 (2) of the Act from 01.11.2016 to 31.10.2021, RD question order of ROC as how the financial statements and annual return signed by the disqualified director  who is also vacated in terms of provision of section 167 of the Act is filed with the ROC.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups.
Takeaways:
This MCA adjudication order underscores the critical importance of adhering to the annual filing requirements mandated under the Companies Act, 2013. Non-compliance with Sections 92 and 137 can lead to significant penalties, as seen in the case of Wiltemar Trade and Forex Private Limited. However, in this case appeal filled by the company has contended various grounds which had been surpassed by the ROC while hearing the matter. After considering all the fact and circumstances presented by the appellant company RD set aside the order for being defective on various grounds.
Further RD order ROC to conduct proceedings de novo and pass order in accordance with due compliance with section 454 and other applicable rules and regulations of the Act within 30 days from the date of this order.
Download MCA Adjudication Order

In this article, we will take you through the mandatory annual filing requirements under Section 92 and Section 137 of the Companies Act, 2013, focusing on the implications of non-compliance and the penalties involved. Section 92(5) mandates that every company, including its directors, must file an annual return, while Section 137(3) requires the filing of the financial statement with the Registrar of Companies (ROC) within a specified time. Failure to comply with these provisions can result in penalties being levied against both the company and its directors, as demonstrated in the case of Wiltemar Trade and Forex Private Limited. The company’s failure to timely file its financial statements and annual return led to the imposition of penalties by the ROC.

Applicable Provisions

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the adjudication of penalties for defaulting in filling of its annual return and financial statement for the Financial Year for the financial year 2017-18. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

Wiltemar Trade and Forex Private Limited, a company registered under the Companies Act, 1956, with its registered office in Goa, was found to be in default of Section 92(5) and section 137 (3) of the Companies Act 2013. The ROC issued a show cause notice dated 27.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents.

In response, the company stated that it has filed its annua returns and financial statement return for the FY 2017-18 on 23.03.2019.

The Registrar of Companies (ROC) considering the facts and circumstances-imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD). The hearing was attended by the company's representative, and contended that the:

The appellant company had filed a compounding application with office of RD, WR, Mumbai u/s 441 of the companies Act 2013. Company contended that the penalty calculated by the adjudication officers appears to be incorrect as the MCA have granted extension of time for filling of AOC-4 and e-form MGT-7. The extension of time for filling the aforementioned documents was given up to 31.12.2018 with additional fees. Thus, the same should have been calculated for financial statement (AOC-4) and Annual Return (MGT-7) w.e.f 01.01.2019 till the date of filling i.e. 23.03.2019.
The appellant has regularized the filling of financial statement and annual return for the F.Y. 31.03.2018 on 23.03.2019 by paying additional fee for delay.
The financial condition of the company is not sound as per financial report of the company as per previous audited reports.
The company and its directors are unable to make the payments of penalties as imposed.

Imposed Penalty

The ROC after considering the fact and circumstances of the case levied penalties. The penalty amount was determined based on the company's failure to comply with the relevant legal requirements. The details of the penalty, are as follows:

For Financial Statements as under section 137(1) of the companies Act 2013

On Company: Rs, 1,14,000
On officers in default: Rs. 1,14,100 each

For Annual Return as per section 92 (4) of the companies Act 2013

On Company: Rs 61,200
On officers in default: Rs. 61,200 each

Reduction in penalties:

Considering the request made by the appellant the concerned RD is of the opinion that there is nothing on record to show as to whether the ROC has imparted any hearing to the notices.

It is also not mentioned in the implunged order that the ROC has conducted an inquiry in the matter as required under the Rules.

One of the director being disqualified under section 164 (2) of the Act from 01.11.2016 to 31.10.2021, RD question order of ROC as how the financial statements and annual return signed by the disqualified director who is also vacated in terms of provision of section 167 of the Act is filed with the ROC.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013, provides for lesser penalties in cases involving small companies and startups.

Takeaways:

This MCA adjudication order underscores the critical importance of adhering to the annual filing requirements mandated under the Companies Act, 2013. Non-compliance with Sections 92 and 137 can lead to significant penalties, as seen in the case of Wiltemar Trade and Forex Private Limited. However, in this case appeal filled by the company has contended various grounds which had been surpassed by the ROC while hearing the matter. After considering all the fact and circumstances presented by the appellant company RD set aside the order for being defective on various grounds.

Further RD order ROC to conduct proceedings de novo and pass order in accordance with due compliance with section 454 and other applicable rules and regulations of the Act within 30 days from the date of this order.