In Oriental Industrial Investment Corporation Limited & ORS company has failed to file a copy of annual return with ROC for the FY 2018-19 within 60 days as per the provision of section 92 of the companies Act which leads to penalty for both company and officers in default. DIR-12 for one of the directors has been filed on 06/06/2024 i.e. after completion of adjudication proceedings to avoid payment of adjudication penalty and also not able to satisfy as to why company has not filed DIR-12 between 09/11/2017 to 06/06/2024.
As per section 92 of the companies Act evry 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
The 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
Oriental Industrial Investment corporation Limited & ORS, ROC vide adjudication order dated 11/12/2023 held that the company and its officers who have defaulted liable for penalty under section 92(5)) of the Act from 30/11/2019 to 27/10/2020 for not filling Annual Return for the financial year 2018-19 within 60 days from the date of Annual General Meeting in pursuance of Section 96 of the Act.
Considering the fact and circumstances of the case, 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 has admitted the contravention of section 92 of the Act. Further stated that the:
1. The adjudication order was issued in the name of Optimates Textile Industries Limited and not against Oriental Industrial Investment Corporation. This error makes the entire order unenforceable.
2. The company is a small company with a turnover of NIL for the FY 2018-19, 2020-21, 2021-22 &2022-23.
3. The SCN was not appropriately served upon the company and its directors.
ROC further stated via letter dated 03/06/2024 stated that: -
1. Notices were sent to the company and all officers in default. However, the same were returned back.
2. No reply has been received by this office from the company and its officers in default till date.
3. Penalty has been levied upon all officers in default during the period of violation i.e from 30/11/2019 to 20/10/2020.
4. The office issued SCN dated 19/10/2020 but no reply has been received from the company and its directors.
Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty as follows:
|
Relevant Periods |
To whom penalty imposed |
First Default |
Default Continues |
Total Penalty Levied |
Maximum Penalty |
|
326 days |
On Company |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
|
On 1st director |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
|
|
On 2nd director |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
|
|
On 3rd director |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
|
|
On 4th director |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
|
|
On 5th director |
50,000 |
326*100=32,600 |
82,600 |
5,00,000 |
Reduction in Penalties, If any
Taking into account the adjudication order of the ROC, submission made by the appellant in their application as well as oral submissions of the authorised representative during the hearing and further letter of the concerned ROC, concerned RD is of view that there Is no merit in the appeal, and accordingly, the adjudication order dated 11/12/2023 passed by the ROC, Mumbai is confirmed.
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 for LLP shall not be more than half of the specified penalty, subject to a maximum limit. In adjudication matter Oriental Industrial Investment Corporation Limited & ORS, being a public company do not qualify to claim the benefit of section 446B of the companies Act 2013.
Takeaways:
From the above case, it is apparent that Oriental Industrial Investment Corporation Limited & ORS failed to comply with the provisions of Section 92 of the Companies Act, 2013, leading to adjudication by the Registrar of Companies (ROC). After getting order from the concerned ROC, an appeal filled by the company to claiming various points just not fair on the grounds of ROC order. Though after considering all the facts and submissions made by the company, RD dismissed the appeal as there was no merit in the same.
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