File your annual return in form MGT-7/7A on time for avoiding the hefty penalty by MCA

File your annual return in form MGT-7/7A on time for avoiding the hefty penalty by MCA .  
If any company has failed to file its annual return within the prescribed time period such company and its officers who is in default shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees. 
As per section 92 of the companies Act every company must prepare an annual return with key details about its business as of the financial year's end. This includes information about its registered office, business activities, ownership structure, shareholding pattern, directors, key personnel, meetings, penalties, and compliance details.
For listed companies and those meeting certain financial criteria, a company secretary in practice must certify the return. Companies must also upload it on their website, if they have one.
The annual return must be filed with the Registrar within 60 days of the Annual General Meeting (AGM). If a company fails to file it on time, penalties apply, increasing daily until a maximum limit is reached. A company secretary who wrongly certifies the return may also face penalties.
Special provisions apply to One Person Companies, small companies, and startups, allowing for an abridged version and different signing requirements
Applicable Provisions
This MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the 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 Vatan Textiles Limited & ORS, concerned ROC had passed adjudication order dated 25/04/2024 for violation of section 92 of the companies Act 2013.
The Registrar of Companies, Mumbai (ROC Mumbai) vide Adjudication Order dated 25/04/2024 held the Company and its Officers/ Directors, who have defaulted liable for penalty under Section 92(5) of the Act from 30/11/2019 to 25/10/2020 for not filing Annual Return for the Financial Year 2018-19 within sixty days from the date of Annual General Meeting in pursuance of Section 96 of the Act.
The punishment for contravention of section 92 is prescribed under section 92(5) of the Companies Act, 2013 which states that
" If any company fails to file its annual return under sub-section(4), before the expiry of the period specified therein, such company and its every officers who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum off five lakh rupees.'”.
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 29/09/2024, 23/10/2024, 18/12/2024 & finally on 14/01/2025.The authorised representative have admitted the contravention of Section 137 of the companies Act 2013. The authorised representative further relied upon the benefits and Immunity Certificate issued by Ministry of Corporate Affairs to the company and its directors from any action against the delay of filings of the forms under the Companies Fresh Start Scheme (CFSS) 2020.
 ROC Mumbai vide further letter dated 27/09/2024 has stated that:
1. There was no argument regarding non-compliance as there is crystal clear default on the part of the company and its directors.
2. Default is made for F.Y. 2018-19 for which the due date of filing of Annual Return under Section 92 of the Act was 29/11/2019 i.e. prior to the outbreak of COVID-19 pandemic.
3. The Circular issued by the Ministry in view of COVID- Outbreak since March 2020 does not pertain to period of default.
4. Hence, the appeal filed by the company is not maintainable.
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 for violation of section 137 of the Act.

No. of days default

Penalty imposed on Company / KMP

First default

Default Continues penalty(In Rs.)

Total penalty levied

Maximum penalty

331 days

Vatan TextilesLimited

50,000

331*100=33,100

83,100

5,00,000

Rafeeq Ahmed Khan

50,000

331X100 = 33,100

83,100

5,00,000

Razi Hasan Khan

50,000

331X100= 33,100

83,100

5,00,000

Abdul Hameed

50,000

331X100 = 33,100

83,100

5,00,000

Urooj Hameed IQan

50,000

331X100= 33,100

83,100

5,00,000

Reduction in Penalty, if any
Taking into consideration the Adjudication Order of the Registrar of Companies, Mumbai; submissions made by the Appellants in their application as well as oral submissions of authorized representative during the hearing; further letter of ROC, Mumbai; I am of the considered view that the appeal is barred by limitation and hence, is rejected without going in the merit of the matter as the appeal was filed beyond 60 days after the receipt of Adjudication Order dated 25/ 04/2024 as, ROC, Mumbai has sent the order through Speed Post on 25/04/2024 itself. Accordingly, the Adjudication Order dated 25/04/2024 passed by 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 offers reduced penalties for Startups, One Person Companies (OPCs), and small companies. It states that in case of default, such entities are liable to pay only half the specified penalty, subject to a maximum limit, thereby easing the compliance burden. However, in the adjudication matter of Vatan Textiles Limited & ORS, the company being a public company does not qualify as a Startup, OPC, or small company. Hence, the benefit of reduced penalties under Section 446B is not applicable in this case.
Our Observation: -
The case of Vatan Textiles Limited & ORS highlights the importance of timely filing financial statements as required under Section 137 of the Companies Act, 2013. Failure to file the Annual Return within the prescribed 60-day period after the Annual General Meeting resulted in significant penalties being imposed on the company and its directors. 
Download MCA Adjudication Order

If any company has failed to file its annual return within the prescribed time period such company and its officers who is in default shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.

As per section 92 of the companies Act every company must prepare an annual return with key details about its business as of the financial year's end. This includes information about its registered office, business activities, ownership structure, shareholding pattern, directors, key personnel, meetings, penalties, and compliance details.

For listed companies and those meeting certain financial criteria, a company secretary in practice must certify the return. Companies must also upload it on their website, if they have one.

The annual return must be filed with the Registrar within 60 days of the Annual General Meeting (AGM). If a company fails to file it on time, penalties apply, increasing daily until a maximum limit is reached. A company secretary who wrongly certifies the return may also face penalties.

Special provisions apply to One Person Companies, small companies, and startups, allowing for an abridged version and different signing requirements

Applicable Provisions

This MCA adjudication order involves an appeal under Section 454(5) of the Companies Act, 2013, concerning the 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 Vatan Textiles Limited & ORS, concerned ROC had passed adjudication order dated 25/04/2024 for violation of section 92 of the companies Act 2013.

The Registrar of Companies, Mumbai (ROC Mumbai) vide Adjudication Order dated 25/04/2024 held the Company and its Officers/ Directors, who have defaulted liable for penalty under Section 92(5) of the Act from 30/11/2019 to 25/10/2020 for not filing Annual Return for the Financial Year 2018-19 within sixty days from the date of Annual General Meeting in pursuance of Section 96 of the Act.

The punishment for contravention of section 92 is prescribed under section 92(5) of the Companies Act, 2013 which states that

" If any company fails to file its annual return under sub-section(4), before the expiry of the period specified therein, such company and its every officers who is in default shall be liable to a penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum off five lakh rupees.'”.

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 29/09/2024, 23/10/2024, 18/12/2024 & finally on 14/01/2025.The authorised representative have admitted the contravention of Section 137 of the companies Act 2013. The authorised representative further relied upon the benefits and Immunity Certificate issued by Ministry of Corporate Affairs to the company and its directors from any action against the delay of filings of the forms under the Companies Fresh Start Scheme (CFSS) 2020.

ROC Mumbai vide further letter dated 27/09/2024 has stated that:

1. There was no argument regarding non-compliance as there is crystal clear default on the part of the company and its directors.

2. Default is made for F.Y. 2018-19 for which the due date of filing of Annual Return under Section 92 of the Act was 29/11/2019 i.e. prior to the outbreak of COVID-19 pandemic.

3. The Circular issued by the Ministry in view of COVID- Outbreak since March 2020 does not pertain to period of default.

4. Hence, the appeal filed by the company is not maintainable.

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 for violation of section 137 of the Act.

No. of days default	Penalty imposed on Company / KMP	First default	Default Continues penalty(In Rs.)	Total penalty levied	Maximum penalty
331 days	Vatan TextilesLimited	50,000	331*100=33,100	83,100	5,00,000
	Rafeeq Ahmed Khan	50,000	331X100 = 33,100	83,100	5,00,000
	Razi Hasan Khan	50,000	331X100= 33,100	83,100	5,00,000
	Abdul Hameed	50,000	331X100 = 33,100	83,100	5,00,000
	Urooj Hameed IQan	50,000	331X100= 33,100	83,100	5,00,000

Reduction in Penalty, if any

Taking into consideration the Adjudication Order of the Registrar of Companies, Mumbai; submissions made by the Appellants in their application as well as oral submissions of authorized representative during the hearing; further letter of ROC, Mumbai; I am of the considered view that the appeal is barred by limitation and hence, is rejected without going in the merit of the matter as the appeal was filed beyond 60 days after the receipt of Adjudication Order dated 25/ 04/2024 as, ROC, Mumbai has sent the order through Speed Post on 25/04/2024 itself. Accordingly, the Adjudication Order dated 25/04/2024 passed by 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 offers reduced penalties for Startups, One Person Companies (OPCs), and small companies. It states that in case of default, such entities are liable to pay only half the specified penalty, subject to a maximum limit, thereby easing the compliance burden. However, in the adjudication matter of Vatan Textiles Limited & ORS, the company being a public company does not qualify as a Startup, OPC, or small company. Hence, the benefit of reduced penalties under Section 446B is not applicable in this case.

Our Observation: -

The case of Vatan Textiles Limited & ORS highlights the importance of timely filing financial statements as required under Section 137 of the Companies Act, 2013. Failure to file the Annual Return within the prescribed 60-day period after the Annual General Meeting resulted in significant penalties being imposed on the company and its directors.