Penalty for Delayed Filing of INC-20A: Case of Latec Enviro Pvt. Ltd

Penalty for Delayed Filing of INC-20A: Case of Latec Enviro Pvt. Ltd .  In this article we will take you through the Adjudication order in the matter of Latec Enviro Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.
Applicable Provision – Section 10A of the Companies Act, 2013
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 declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration
Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:
• A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.
• The company has filed verification of its registered office with the ROC.
Non-compliance with this provision results in penalties imposed on the company and its officers in default.
Facts of the Case
Latec Enviro Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was incorporated on 14.11.2018 failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation and had filed said belatedly with a delay of 216 days on 15.12.2019
ROC Kerla & Lakshadweep examined the said default and passed the adjudication order under section 454 (3) & (4) of the Act for the delay of 216 days delay in filling the Form INC-20A under section 10A (2) of the Act.
Aggrieved by the order, company has filled the appeal. The Appellants have contended the impugned order on the grounds that the company is a small company, and the directors of the company were not aware of the provisions of Sec. 10A of the Companies Act, 2013 and that the delay was nonintentional. An opportunity of being heard was given to the Appellants on 30.12. 2020. The Appellants contented that the company is a small company and is not in operation and the penalty imposed is more than the paid-up capital and hence sought condonation.
Penalty Imposed by the Registrar of Companies
Upon identifying the non-compliance, the ROC imposed penalties as per the prescribed legal framework:
• Company Penalty: Rs. 50,000 for failure to comply with Section 10A.
• Officers in Default: Rs. 1,00,000 being the maximum penalty 
Reduction in Penalty on Appeal (If Any)
Considering the grounds urged by the Appellants in the Appeal RD reduce the penalties up to 40% for both which are as under:
• On Company: Rs, 20,000
• Officers in default: Rs, 40,000
The appellant shall pay the penalty in 60 days
Exemption to Startups, Small Companies, and OPCs Under Section 446B
Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal.
Conclusion
In this case, despite the company’s plea of being a small entity and lacking awareness of the law, the default was penalized as per legal provisions. However, considering the appeal, the Regional Director granted a 40% reduction in penalties, recognizing mitigating factors. This decision reinforces that while penalties may be reconsidered based on circumstances, ignorance of the law is not an acceptable defense.
Download MCA Adjudication Order

In this article we will take you through the Adjudication order in the matter of Latec Enviro Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai) which mandates to file a declaration under Section 10A of the Companies Act, 2013. This section mandates to file a declaration in Form INC-20A within 180 days of its incorporation. It refers that every company with share capital must declare that subscribers to the memorandum have paid the value of shares agreed upon. Failure to comply these requirements can attract penalties under the company shall be liable to a penalty of fifty thousand rupees and every officer who is in default shall be liable to a penalty of one thousand rupees for each day during which such default continues but not exceeding an amount of one lakh rupees.

Applicable Provision – Section 10A of the Companies Act, 2013

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 declaration in the E form INC-20A as per section 10A of the companies Act 2013. The matter was brought before the concerned Regional Director, Chennai, for consideration

Section 10A states that a company incorporated after the commencement of the Companies (Amendment) Act, 2019, shall not commence business or exercise any borrowing powers unless:

• A declaration is filed by a director within 180 days of incorporation, confirming that every subscriber to the memorandum has paid the value of shares agreed upon.

• The company has filed verification of its registered office with the ROC.

Non-compliance with this provision results in penalties imposed on the company and its officers in default.

Facts of the Case

Latec Enviro Private Limited, incorporated under the jurisdiction of the Southern Region (Chennai), was incorporated on 14.11.2018 failed to comply with the provisions of Section 10A. The company did not file the required declaration within 180 days of incorporation and had filed said belatedly with a delay of 216 days on 15.12.2019

ROC Kerla & Lakshadweep examined the said default and passed the adjudication order under section 454 (3) & (4) of the Act for the delay of 216 days delay in filling the Form INC-20A under section 10A (2) of the Act.

Aggrieved by the order, company has filled the appeal. The Appellants have contended the impugned order on the grounds that the company is a small company, and the directors of the company were not aware of the provisions of Sec. 10A of the Companies Act, 2013 and that the delay was nonintentional. An opportunity of being heard was given to the Appellants on 30.12. 2020. The Appellants contented that the company is a small company and is not in operation and the penalty imposed is more than the paid-up capital and hence sought condonation.

Penalty Imposed by the Registrar of Companies

Upon identifying the non-compliance, the ROC imposed penalties as per the prescribed legal framework:

• Company Penalty: Rs. 50,000 for failure to comply with Section 10A.

• Officers in Default: Rs. 1,00,000 being the maximum penalty

Reduction in Penalty on Appeal (If Any)

Considering the grounds urged by the Appellants in the Appeal RD reduce the penalties up to 40% for both which are as under:

• On Company: Rs, 20,000

• Officers in default: Rs, 40,000

The appellant shall pay the penalty in 60 days

Exemption to Startups, Small Companies, and OPCs Under Section 446B

Section 446B provides relief to startups, small companies, and One Person Companies (OPCs) by reducing the penalty amount levied under various provisions of the Companies Act. However, Section 10A is not explicitly covered under Section 446B, and hence, no exemption is available in such cases. The full penalty amount applies unless reduced through appeal.

Conclusion

In this case, despite the company’s plea of being a small entity and lacking awareness of the law, the default was penalized as per legal provisions. However, considering the appeal, the Regional Director granted a 40% reduction in penalties, recognizing mitigating factors. This decision reinforces that while penalties may be reconsidered based on circumstances, ignorance of the law is not an acceptable defense.