Delay in filling AOC-4 & MGT-7 but MCA grant relief under CFSS Scheme 2020 by MCA Adjudication Order

Delay in filling AOC-4 & MGT-7 but MCA grant relief under CFSS Scheme 2020 by 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 Isani and Virani Hotels 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
Isani and Virani Hotels 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 12.03.2019 to the company and its directors, calling them to show cause for non-filling of such documents. 
No response was received by the ROC to the SCN from the company and its director. Therefore, notice of inquiry was issued to the company and its directors providing them an opportunity of being heard and to personally or through authorised representatives.
Authorised representatives on the behalf of the company mentioned that the company has filled the due annual returns and balance sheet for the FY 2017-18 on 10.07.2019.
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. Authorized representative contended that the company has conducted its AGM every year and has adopted its financial statements as per procedure laid down by the Act. However, due to unavoidable reasons, company was unable to file the same.

While hearing was going on, in the meantime the appellant company has submitted a letter dated 04.09.2020 and informed that a new scheme has been introduced by the MCA i.e. Companies Fresh Start Scheme 2020 and company has made the default good through this scheme.

Further authorised representatives mentioned that the company is in process of making applications for issue of immunity certificates, therefore requested for withdrawal of appeal which was filled on 23.03.2019.

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, 1,11,100

On officers in default: Rs. 1,11,100 each

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

On Company: Rs 58,100

On officers in default: Rs. 58,100 each

Reduction in penalties:
Considering the request made by the appellant the concerned RD is of the opinion that allow the application of withdrawal of appeal and same is hereby allowed. The appeal is accordingly disposed of as withdrawn.
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 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 Isani and Virani Hotels Private Limited. However, in this case appeal filled by the company had been withdrawn as they had made their default good by filling under the Companies Fresh Start Scheme 2020 and in process to produce immunity certificates. Thus, RD approve the application for withdrawal of appeal.
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 Isani and Virani Hotels 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

Isani and Virani Hotels 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 12.03.2019 to the company and its directors, calling them to show cause for non-filling of such documents.

No response was received by the ROC to the SCN from the company and its director. Therefore, notice of inquiry was issued to the company and its directors providing them an opportunity of being heard and to personally or through authorised representatives.

Authorised representatives on the behalf of the company mentioned that the company has filled the due annual returns and balance sheet for the FY 2017-18 on 10.07.2019.

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. Authorized representative contended that the company has conducted its AGM every year and has adopted its financial statements as per procedure laid down by the Act. However, due to unavoidable reasons, company was unable to file the same.
While hearing was going on, in the meantime the appellant company has submitted a letter dated 04.09.2020 and informed that a new scheme has been introduced by the MCA i.e. Companies Fresh Start Scheme 2020 and company has made the default good through this scheme.
Further authorised representatives mentioned that the company is in process of making applications for issue of immunity certificates, therefore requested for withdrawal of appeal which was filled on 23.03.2019.

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, 1,11,100
On officers in default: Rs. 1,11,100 each

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

On Company: Rs 58,100
On officers in default: Rs. 58,100 each

Reduction in penalties:

Considering the request made by the appellant the concerned RD is of the opinion that allow the application of withdrawal of appeal and same is hereby allowed. The appeal is accordingly disposed of as withdrawn.

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 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 Isani and Virani Hotels Private Limited. However, in this case appeal filled by the company had been withdrawn as they had made their default good by filling under the Companies Fresh Start Scheme 2020 and in process to produce immunity certificates. Thus, RD approve the application for withdrawal of appeal.