Default in filling AOC-4 due to not holding General Meeting

Default in filling AOC-4 due to not holding General Meeting. In this article, we will take you through the mandatory annual filing requirements under Section 137 of the Companies Act, 2013, focusing on the implications of non-compliance and the penalties involved. 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 Graham Firth Steel Products (India) Limited & ORS. The company’s failure to timely file its financial statements led to the imposition of penalties by the ROC.
However, in the appeal process, the Regional Director (RD) considered the submission made by the company. This adjudication order highlights the importance of understanding the consequences of non-compliance and the opportunities for relief when justified reasons are presented.
Applicable Provisions
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the MCA adjudication of penalties for defaulting in filling of its financial statement for the Financial Year 2018-19. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
Graham Firth Steel Products (India) Limited & ORS, a company registered under the Companies Act, 1956, with its registered office in Mumbai, was found to be in default of section 137 (3) of the Companies Act 2013. The ROC issued a show cause notice dated 12.03.2020 to the company and its directors, calling them to show cause for non-filling of such documents.
The company has failed to file a copy of financial statements with the ROC for the FY 2018-19 within a period of thirty days as per the provision of section 137 of the companies Act 2013. The period of default is calculated from 31/10/2019 till the date of dispatch of the SCN date 12/03/2020. The default period is thus calculated to be at a total of 103 days.
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:

SCN was issued during the peak period of CVID-19 which is not justified .

A reasonable opportunity of being heard was not given to the appellants for committing alleged default.

However, appellants have complied with the said section by filling AOC-4with the additional fee on 09/01/2023 before receiving adjudication order dated 27/06/2024.

Appellants were directed by the Hon’ble NCLT by their interim order dated 13/12/2017 stating that respondent shall not convene any general meeting and Extra general meeting without special leave of this tribunal and without sufficient notice to all the members.

ROC, Mumbai further stated that:

There is crystal clear default on the part of the company and its directors.

Due date of filling financial statements under the section 137 of the Act 30/10/2019 i.e. prior to the outbreak of COVID-19 pandemic.

Hon’ble NCLT had given liberty that the general meeting and Extra- Ordinary General Meeting cannot be convened without a specific leave of the tribunal. Thus, the company could have obtained the leave.

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:

On Company: Rs, 10,00,000

On all officer in default: Rs. 5,00,000

Reduction in penalties:
Upon hearing the appeal, the RD reviewed the circumstances and consider all the submission made by the company. Concerned RD is of the view that there is no merit in the appeal, and accordingly, the adjudication order dated 27/06/2024 passes by the ROC, Mumbai is “CONFIRMED” under section 454 (7) of the Act.  
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. However, in this case, Graham Firth Steel Products (India) Limited & ORS is outside the scope of section 446B of the companies Act.
To conclude:
The case of Graham Firth Steel Products (India) Limited & ORS highlights the critical importance of timely compliance with the annual filing requirements under Section 137 of the Companies Act, 2013. While non-compliance can lead to significant penalties, the appeal process may offer an opportunity for reduction, provided that there are justifiable circumstances.
Download MCA Adjudication Order

In this article, we will take you through the mandatory annual filing requirements under Section 137 of the Companies Act, 2013, focusing on the implications of non-compliance and the penalties involved. 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 Graham Firth Steel Products (India) Limited & ORS. The company’s failure to timely file its financial statements led to the imposition of penalties by the ROC.

However, in the appeal process, the Regional Director (RD) considered the submission made by the company. This adjudication order highlights the importance of understanding the consequences of non-compliance and the opportunities for relief when justified reasons are presented.

Applicable Provisions

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the MCA adjudication of penalties for defaulting in filling of its financial statement for the Financial Year 2018-19. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

Graham Firth Steel Products (India) Limited & ORS, a company registered under the Companies Act, 1956, with its registered office in Mumbai, was found to be in default of section 137 (3) of the Companies Act 2013. The ROC issued a show cause notice dated 12.03.2020 to the company and its directors, calling them to show cause for non-filling of such documents.

The company has failed to file a copy of financial statements with the ROC for the FY 2018-19 within a period of thirty days as per the provision of section 137 of the companies Act 2013. The period of default is calculated from 31/10/2019 till the date of dispatch of the SCN date 12/03/2020. The default period is thus calculated to be at a total of 103 days.

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:

SCN was issued during the peak period of CVID-19 which is not justified .
A reasonable opportunity of being heard was not given to the appellants for committing alleged default.
However, appellants have complied with the said section by filling AOC-4with the additional fee on 09/01/2023 before receiving adjudication order dated 27/06/2024.
Appellants were directed by the Hon’ble NCLT by their interim order dated 13/12/2017 stating that respondent shall not convene any general meeting and Extra general meeting without special leave of this tribunal and without sufficient notice to all the members.

ROC, Mumbai further stated that:

There is crystal clear default on the part of the company and its directors.
Due date of filling financial statements under the section 137 of the Act 30/10/2019 i.e. prior to the outbreak of COVID-19 pandemic.
Hon’ble NCLT had given liberty that the general meeting and Extra- Ordinary General Meeting cannot be convened without a specific leave of the tribunal. Thus, the company could have obtained the leave.

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:

On Company: Rs, 10,00,000
On all officer in default: Rs. 5,00,000

Reduction in penalties:

Upon hearing the appeal, the RD reviewed the circumstances and consider all the submission made by the company. Concerned RD is of the view that there is no merit in the appeal, and accordingly, the adjudication order dated 27/06/2024 passes by the ROC, Mumbai is “CONFIRMED” under section 454 (7) of the Act.

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. However, in this case, Graham Firth Steel Products (India) Limited & ORS is outside the scope of section 446B of the companies Act.

To conclude:

The case of Graham Firth Steel Products (India) Limited & ORS highlights the critical importance of timely compliance with the annual filing requirements under Section 137 of the Companies Act, 2013. While non-compliance can lead to significant penalties, the appeal process may offer an opportunity for reduction, provided that there are justifiable circumstances.