Non Compliance of MSME-1 filing at MCA

Non Compliance of MSME-1 filing at MCA . If company has not filled form MSME 1 within a prescribed period of time, then company and its officers in default will get penalised as per section 405 of the companies Act 2013. As Section 405 of the Companies Act, 2013 empowers the Central Government to require certain companies or classes of companies to furnish information or statistics as prescribed. This provision enables the government to collect necessary data for regulatory, policy-making, or administrative purposes. The section mandates that companies must comply with such directives within the specified time frame and in the prescribed manner. This section is crucial for maintaining corporate transparency and ensuring that the government has access to relevant information for governance.
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 (ER), Hyderabad, for consideration.
Facts of the Case with ROC and RD
In Samsung R&D Institute India Bangalore Private Limited, concerned ROC had passed adjudication order dated 15.11.2023 for violation of section 405 of the Act to the company and its officers.
ROC in his adjudication order stated that company did not provide complete disclosure of specific transactions in Form MSME-1 for the duration April 2022 to September 2022 and October 2022 to March 2023 within the prescribed period. It is stated that this was later rectified by the company by belatedly disclosing the required details through MSME forms1 filed on 25.07.2023 for the above mentioned durations.
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 01/02/2024

The authorised representative stated that the non-filling was unintentional and was an oversight resulting from an internal clerical error.

It is stated that this was later rectified by the company by belatedly disclosing the required details through MSME forms 1 filed on 25.07.2023.

Imposed Penalty
Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty for the period 01.11.2022 to 25.07.2023 (266 days) of Rs. 2,85,000 each on company and 2 Directors and for the period 01.05.2023 to 25.07.2023 (85 days) Rs 1,04,000 each on the company and 2 directors.
Reduction in Penalty
After considering all the facts and submissions made by the company, the then RD upon hearing had reduced the penalty imposed by the ROC to 60% i.e. Rs. 2,33,400 each for the company and 2 directors, total aggregating to Rs 7,00,200) and the appellants were directed to comply with the order.
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 Samsung R&D Institute India- Bangalore Private Limited company does not fall under the criteria of a small company thus cannot claim the benefit of section 446B of the companies Act 2013 though after considering all the submissions concerned RD already reduced the penalty up to some extent.
Findings: -
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 reduce the penalty amount on both company and its officers in default. This adjudication order demonstrates that how important it is to present appeal and submission in the proper way. This order also highlights that the company needs to be compliant with each and every section and provision of the companies Act 2013.
Download MCA Adjudication Order

If company has not filled form MSME 1 within a prescribed period of time, then company and its officers in default will get penalised as per section 405 of the companies Act 2013. As Section 405 of the Companies Act, 2013 empowers the Central Government to require certain companies or classes of companies to furnish information or statistics as prescribed. This provision enables the government to collect necessary data for regulatory, policy-making, or administrative purposes. The section mandates that companies must comply with such directives within the specified time frame and in the prescribed manner. This section is crucial for maintaining corporate transparency and ensuring that the government has access to relevant information for governance.

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 (ER), Hyderabad, for consideration.

Facts of the Case with ROC and RD

In Samsung R&D Institute India Bangalore Private Limited, concerned ROC had passed adjudication order dated 15.11.2023 for violation of section 405 of the Act to the company and its officers.

ROC in his adjudication order stated that company did not provide complete disclosure of specific transactions in Form MSME-1 for the duration April 2022 to September 2022 and October 2022 to March 2023 within the prescribed period. It is stated that this was later rectified by the company by belatedly disclosing the required details through MSME forms1 filed on 25.07.2023 for the above mentioned durations.

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 01/02/2024

The authorised representative stated that the non-filling was unintentional and was an oversight resulting from an internal clerical error.
It is stated that this was later rectified by the company by belatedly disclosing the required details through MSME forms 1 filed on 25.07.2023.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty for the period 01.11.2022 to 25.07.2023 (266 days) of Rs. 2,85,000 each on company and 2 Directors and for the period 01.05.2023 to 25.07.2023 (85 days) Rs 1,04,000 each on the company and 2 directors.

Reduction in Penalty

After considering all the facts and submissions made by the company, the then RD upon hearing had reduced the penalty imposed by the ROC to 60% i.e. Rs. 2,33,400 each for the company and 2 directors, total aggregating to Rs 7,00,200) and the appellants were directed to comply with the order.

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 Samsung R&D Institute India- Bangalore Private Limited company does not fall under the criteria of a small company thus cannot claim the benefit of section 446B of the companies Act 2013 though after considering all the submissions concerned RD already reduced the penalty up to some extent.

Findings: -

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 reduce the penalty amount on both company and its officers in default. This adjudication order demonstrates that how important it is to present appeal and submission in the proper way. This order also highlights that the company needs to be compliant with each and every section and provision of the companies Act 2013.