ROC Impose Penalty for not filling Annual Return

ROC Impose Penalty for not filling Annual Return . In this article, we will take you through the mandatory annual 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, msust 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 Enarai Techprint Private Limited. The company’s failure to timely file its financial statements and annual return led to the imposition of penalties by the ROC.
However, in the appeal process, the Regional Director (RD) considered the company’s mitigating circumstances and reduced the penalties, highlighting the importance of understanding the consequences of non-compliance and the opportunities for relief when justified reasons are presented.
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 31.03.2016 to 31.03.2018. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
Enarai Techprint 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 13.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents. In response to the said show notice, one of the directors of the company had informed the ROC that the company was not operational since 2007, all assets are taken over and appropriated by Economic Development Corporation. There is no hope of any revival of the company in the future. He has further stated that default will be regularized and requested to waive the penalty.
The Registrar of Companies (ROC) 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:
As informed to ROC and confirmed in the financial certified the company has stopped operation and business in the year 2007 due to market conditions. Consequently, the financial institution EDC, took over the fixed assets of the company in the year 2007.
The entire burden of paying the penalties and fines morally fall on a sole director who was managing the company since inception. He is also called up to settle the remaining loan of the associates company as its sole guarantor, in addition to the company, whose assets are already taken over as collateral.
Along with all these things, appellants company has made its default good by filling annual return and financial statements for the financial year 31.03.2016 to 31.03.2018 belatedly on 28.03.2019.
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, 1,46,000

Director 1: Rs 1,14,600

Director 2: Rs 1,14,600

Director 3: Rs 1,14,600

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

On Company: Rs 61,700

Director 1: Rs 61,700

Director 2: Rs 61,700

Reduction in penalties: 
Upon hearing the appeal, the RD reviewed the circumstances and the non-compliance along with the company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount, providing partial relief to the appellant as follows:
For Financial Statements as under section 137(1) of the companies Act 2013

On Company: Rs, 14,600

Director 1: Rs 11,460

Director 2: Rs 11,460

Director 3: Rs 11,460

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

On Company: Rs 6,170

Director 1: Rs 6,170

Director 2: Rs 6,170

Director 3: Rs 6,170

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. However, Enarai Techprint Private Limited, being a private company falling within the defined categories, may qualified for the benefits of this section. However, RD after considering the given fact and circumstances had already been reduced the amount of penalty
Conclusion
The case of Enarai Techprint Private Limited underscores the significance of adhering to the mandatory filing requirements under Sections 92 and 137 of the Companies Act, 2013. Non-compliance with these provisions not only results in financial penalties but also places a substantial burden on the company and its directors. However, this case also highlights that the Regional Director, take into account mitigating circumstances and allow for relief in justified cases. The reduction in penalties demonstrates the importance of timely compliance and the possibility of obtaining leniency when genuine hardships are presented. This case serves as a reminder for companies to remain vigilant in fulfilling their statutory obligations to avoid unnecessary penalties and legal proceedings.
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In this article, we will take you through the mandatory annual 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, msust 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 Enarai Techprint Private Limited. The company’s failure to timely file its financial statements and annual return led to the imposition of penalties by the ROC.

However, in the appeal process, the Regional Director (RD) considered the company’s mitigating circumstances and reduced the penalties, highlighting the importance of understanding the consequences of non-compliance and the opportunities for relief when justified reasons are presented.

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 31.03.2016 to 31.03.2018. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

Enarai Techprint 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 13.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents. In response to the said show notice, one of the directors of the company had informed the ROC that the company was not operational since 2007, all assets are taken over and appropriated by Economic Development Corporation. There is no hope of any revival of the company in the future. He has further stated that default will be regularized and requested to waive the penalty.

The Registrar of Companies (ROC) 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:

As informed to ROC and confirmed in the financial certified the company has stopped operation and business in the year 2007 due to market conditions. Consequently, the financial institution EDC, took over the fixed assets of the company in the year 2007.

The entire burden of paying the penalties and fines morally fall on a sole director who was managing the company since inception. He is also called up to settle the remaining loan of the associates company as its sole guarantor, in addition to the company, whose assets are already taken over as collateral.

Along with all these things, appellants company has made its default good by filling annual return and financial statements for the financial year 31.03.2016 to 31.03.2018 belatedly on 28.03.2019.

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, 1,46,000
Director 1: Rs 1,14,600
Director 2: Rs 1,14,600
Director 3: Rs 1,14,600

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

On Company: Rs 61,700
Director 1: Rs 61,700
Director 2: Rs 61,700

Reduction in penalties:

Upon hearing the appeal, the RD reviewed the circumstances and the non-compliance along with the company’s arguments, including mitigating factors and potential rectifications, were considered. Consequently, the RD exercised its discretion to reduce the penalty amount, providing partial relief to the appellant as follows:

For Financial Statements as under section 137(1) of the companies Act 2013

On Company: Rs, 14,600
Director 1: Rs 11,460
Director 2: Rs 11,460
Director 3: Rs 11,460

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

On Company: Rs 6,170
Director 1: Rs 6,170
Director 2: Rs 6,170
Director 3: Rs 6,170

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. However, Enarai Techprint Private Limited, being a private company falling within the defined categories, may qualified for the benefits of this section. However, RD after considering the given fact and circumstances had already been reduced the amount of penalty

Conclusion

The case of Enarai Techprint Private Limited underscores the significance of adhering to the mandatory filing requirements under Sections 92 and 137 of the Companies Act, 2013. Non-compliance with these provisions not only results in financial penalties but also places a substantial burden on the company and its directors. However, this case also highlights that the Regional Director, take into account mitigating circumstances and allow for relief in justified cases. The reduction in penalties demonstrates the importance of timely compliance and the possibility of obtaining leniency when genuine hardships are presented. This case serves as a reminder for companies to remain vigilant in fulfilling their statutory obligations to avoid unnecessary penalties and legal proceedings.