MCA Imposes hefty Penalty for Non-Filing MGT-7 AND AOC-4

MCA Imposes hefty Penalty for Non-Filing MGT-7 AND AOC-4. In this article, we will take you through the mandatory ROC 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 Sumeru Developers 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
Sumeru Developers 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 25/02/2019 to the company and its directors, calling them to show cause for non-filling of such documents. 
In response, the company filed the reply dated 09.03.2019 with ROC, however, the reply of the company was found not satisfactory by the ROC. However, the company has filed the due annual return and balance sheets for the financial year 2017-18 on 19.08.2019.
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. The company contended that the company was required to file e-form AOC-4 on or before 28.10.2018 and e-form MGT-7 on or before 28.11.2018, subsequently the MCA had given relaxation of additional fee for filing of AOC-4 XBRL and MGT-7 up to 31.12.2018

Due to unavoidable circumstances there was delay in filling the same form were filed with the ROC as on 28.08.2019 (AOC-4) and 19.08.2019 (MGT-7) by paying the applicable additional fees.

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, 2,30,000

On officers in default: Rs. 1,23,100 each

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

On Company: Rs 70,100

On officers in default: Rs. 70,100 each

Reduction in penalties
The matter was kept for hearing on 30.01.2020 wherein all the submission made by the appellant in the appeal and oral submission made by the company during the hearing were heard and order was reserved. In the meantime, company has made an application to the concerned RD with respect to withdrawal of the appeal so that they can file the form CFSS in order to obtain immunity certificates.
Considering the request made by the appellant company for withdrawal of an appeal, RD allow the same and accordingly appeal is 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.
To Conclude:
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 Sumeru Developers 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 ROC 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 Sumeru Developers 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

Sumeru Developers 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 25/02/2019 to the company and its directors, calling them to show cause for non-filling of such documents.

In response, the company filed the reply dated 09.03.2019 with ROC, however, the reply of the company was found not satisfactory by the ROC. However, the company has filed the due annual return and balance sheets for the financial year 2017-18 on 19.08.2019.

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. The company contended that the company was required to file e-form AOC-4 on or before 28.10.2018 and e-form MGT-7 on or before 28.11.2018, subsequently the MCA had given relaxation of additional fee for filing of AOC-4 XBRL and MGT-7 up to 31.12.2018
Due to unavoidable circumstances there was delay in filling the same form were filed with the ROC as on 28.08.2019 (AOC-4) and 19.08.2019 (MGT-7) by paying the applicable additional fees.

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, 2,30,000
On officers in default: Rs. 1,23,100 each

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

On Company: Rs 70,100
On officers in default: Rs. 70,100 each

Reduction in penalties

The matter was kept for hearing on 30.01.2020 wherein all the submission made by the appellant in the appeal and oral submission made by the company during the hearing were heard and order was reserved. In the meantime, company has made an application to the concerned RD with respect to withdrawal of the appeal so that they can file the form CFSS in order to obtain immunity certificates.

Considering the request made by the appellant company for withdrawal of an appeal, RD allow the same and accordingly appeal is 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.

To Conclude:

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 Sumeru Developers 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.