Delay Filing of MGT 7 and benefit under CFSS scheme 2020

Delay Filing of MGT 7 and benefit under CFSS scheme 2020 . MGT-7/MGT-7A is a form which every company is required to file with the MCA withing a period of sixty days from the date of Annual General Meeting. If any company fail to do so, then concerned ROC can initiate action against the company and officers in default. 
As per Section 92 of the Companies Act, 2013 every company, must provide a snapshot of the company’s key details, including its registered office, principal business activities, shareholding structure, indebtedness, members, directors, and any changes therein. It must be filed in the prescribed form (MGT-7 or MGT-7A for small companies and OPCs) within 60 days from the annual general meeting (AGM) or the due date for holding the AGM. This section ensures corporate transparency and accountability, and non-compliance may attract penalties as specified under the Act.
Applicable Provisions
The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the MCA adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
In The Jeet Machine Tools limited & ORS, concerned ROC had passed adjudication order dated 11/12/2023 for violation of section 92 of the companies Act 2013. 
ROC in his adjudication order held that company and its officers in default, who have defaulted liable for penalty under section 92(5) of the act from 30/112019 to 18/10/2020 for not filling annual return for the Financial Year 2018-19 within a period of 60 days from the date of Annual General Meeting in pursuance of Section 96 of the Act. 
The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 13/06/2024.The authorised representative on the behalf of the company stated that the:-
• The company has lost its Managing Director on 28/12/2020. 
• The company has filed both copy of financial statements (AOC-4) and Annual Return (Form MGT-7) under the Companies Fresh Start Scheme (CFSS) 2020. Further companies availing thus scheme shall not be charged additional fee, they will be granted immunity from the launch of prosecution and proceedings arose due to delay in filling of belated documents. 
Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Violation of Section

To whom penalty imposed

Maximum Penalty

Default of section 92 of the Companies Act 2013

On Company

5,00,000

On Managing Director

5,00,000

On CFO

5,00,000

Reduction in Penalty
Taking into the consideration the adjudication order of the ROC and the submission made by the appellant in his application as well as the oral submissions of the authorised representative during the hearing and further letter of ROC during the course of the hearing, the adjudication order dated 07/05/2024 passed by the ROC Mumbai is “Set Aside” under section 454 (7) of the companies Act 2013 and the penalty is waived off, as the ROC has failed to give benefit of immunity granted by MCA to the company and its directors. Under CFSS 2020.
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 adjudication matter of Jeet Machine Tools Limited & ORS company did not fall under the criteria of Section 446B of the companies Act 2013. 
CCL Observation:
In conclusion, the appeal under Section 454(5) of the Companies Act, 2013, was carefully examined by the Regional Director and considering all the fact and circumstances RD set aside the order of ROC as ROC has failed to give benefit of immunity granted by MCA to the company and its directors vide circular No. 12/2020 under CFSS 2020. This demonstrates that the how important it is for companies to file appeal under the prescribed time to take relief granted by the authorities.
Download MCA Adjudication Order:

MGT-7/MGT-7A is a form which every company is required to file with the MCA withing a period of sixty days from the date of Annual General Meeting. If any company fail to do so, then concerned ROC can initiate action against the company and officers in default.

As per Section 92 of the Companies Act, 2013 every company, must provide a snapshot of the company’s key details, including its registered office, principal business activities, shareholding structure, indebtedness, members, directors, and any changes therein. It must be filed in the prescribed form (MGT-7 or MGT-7A for small companies and OPCs) within 60 days from the annual general meeting (AGM) or the due date for holding the AGM. This section ensures corporate transparency and accountability, and non-compliance may attract penalties as specified under the Act.

Applicable Provisions

The case involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the MCA adjudication of penalties. The relevant rules include the Companies (Adjudication of Penalties) Rules, 2014. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

In The Jeet Machine Tools limited & ORS, concerned ROC had passed adjudication order dated 11/12/2023 for violation of section 92 of the companies Act 2013.

ROC in his adjudication order held that company and its officers in default, who have defaulted liable for penalty under section 92(5) of the act from 30/112019 to 18/10/2020 for not filling annual return for the Financial Year 2018-19 within a period of 60 days from the date of Annual General Meeting in pursuance of Section 96 of the Act.

The Registrar of Companies (ROC) imposed penalties for non-compliance, leading the company to file an appeal before the Regional Director (RD) and an opportunity of being heard was given by the RD to appellants on 13/06/2024.The authorised representative on the behalf of the company stated that the:-

• The company has lost its Managing Director on 28/12/2020.

• The company has filed both copy of financial statements (AOC-4) and Annual Return (Form MGT-7) under the Companies Fresh Start Scheme (CFSS) 2020. Further companies availing thus scheme shall not be charged additional fee, they will be granted immunity from the launch of prosecution and proceedings arose due to delay in filling of belated documents.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers in default as follows:

Violation of Section	To whom penalty imposed	Maximum Penalty
Default of section 92 of the Companies Act 2013	On Company	5,00,000
	On Managing Director	5,00,000
	On CFO	5,00,000

Reduction in Penalty

Taking into the consideration the adjudication order of the ROC and the submission made by the appellant in his application as well as the oral submissions of the authorised representative during the hearing and further letter of ROC during the course of the hearing, the adjudication order dated 07/05/2024 passed by the ROC Mumbai is “Set Aside” under section 454 (7) of the companies Act 2013 and the penalty is waived off, as the ROC has failed to give benefit of immunity granted by MCA to the company and its directors. Under CFSS 2020.

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 adjudication matter of Jeet Machine Tools Limited & ORS company did not fall under the criteria of Section 446B of the companies Act 2013.

CCL Observation:

In conclusion, the appeal under Section 454(5) of the Companies Act, 2013, was carefully examined by the Regional Director and considering all the fact and circumstances RD set aside the order of ROC as ROC has failed to give benefit of immunity granted by MCA to the company and its directors vide circular No. 12/2020 under CFSS 2020. This demonstrates that the how important it is for companies to file appeal under the prescribed time to take relief granted by the authorities.