Default in filling AOC-4 within prescribed period of time- Section 137 of the Companies Act

Default in filling AOC-4 within prescribed period of time- Section 137 of the Companies Act . 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 Ensa Steel Industries Ltd & ORS. The company’s failure to timely file its financial statements 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 MCA adjudication of penalties for defaulting in filling of its annual return 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
Ensa Steel Industries Ltd & ORS, a company registered under the Companies Act, 1956, with its registered office in Mumbai, was found to be in default of section 92 of the Companies Act 2013. The ROC issued a show cause notice dated 02.03.2020 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 annual return 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 30/10/2019 till the date of dispatch of the SCN date 02/03/2020. The default period is thus calculated to be at a total of 123 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:
• Appellant has never received any SCN issued by the ROC only received the impugned order date 03/06/2024. 
• A SCN was issued on 02/03/2020 i.e. on the day when the financial statements were filed and default for non-compliance was cleared. 
• ROC has not considered the extended date for filling by the Supreme Court of India and impose the penalty for the period from 31/10/2019 till 25/10/2020.
ROC, Mumbai further stated that:
• There is crystal clear default on the part of the company and its directors.
• Default is made for FY 2018-19 for which date of filing of financial statements under section 137 was 30/10/2019 i.e. prior to the outbreak of COVID-19 pandemic. 
• SCN served on appellants were returned back by the postal authority. 
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 each
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 03/06/2024 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, Ensa Steel Industries Ltd & ORS is outside the scope of section 446B of the companies Act. 
Our Observation:
The case of Ensa Steel Industries Ltd & 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 Ensa Steel Industries Ltd & ORS. The company’s failure to timely file its financial statements 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 MCA adjudication of penalties for defaulting in filling of its annual return 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

Ensa Steel Industries Ltd & ORS, a company registered under the Companies Act, 1956, with its registered office in Mumbai, was found to be in default of section 92 of the Companies Act 2013. The ROC issued a show cause notice dated 02.03.2020 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 annual return 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 30/10/2019 till the date of dispatch of the SCN date 02/03/2020. The default period is thus calculated to be at a total of 123 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:

• Appellant has never received any SCN issued by the ROC only received the impugned order date 03/06/2024.

• A SCN was issued on 02/03/2020 i.e. on the day when the financial statements were filed and default for non-compliance was cleared.

• ROC has not considered the extended date for filling by the Supreme Court of India and impose the penalty for the period from 31/10/2019 till 25/10/2020.

ROC, Mumbai further stated that:

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

• Default is made for FY 2018-19 for which date of filing of financial statements under section 137 was 30/10/2019 i.e. prior to the outbreak of COVID-19 pandemic.

• SCN served on appellants were returned back by the postal authority.

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 each

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 03/06/2024 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, Ensa Steel Industries Ltd & ORS is outside the scope of section 446B of the companies Act.

Our Observation:

The case of Ensa Steel Industries Ltd & 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.