ROC Impose penalty of RS 7,71,900 for Violation of Section 137 of Companies Act 2013

If the financial statements (AOC-4) are filed after 30 days from the date of AGM with the MCA, then this would be considered as a violation of section 137 of the Companies Act 2013. Any violation of this section will result in penalties for both company and its officers under section 137 (3) of the Act.

Annual Filling is a mandatory compliance for any company irrespective of their size, nature and location. As we can observe in this MCA adjudication order in which a company has failed to file a copy of financial statement with the ROC.

Section 137 of the Companies Act, 2013 mandates that every company must file a copy of its financial statements, including consolidated financial statements (if applicable), along with the necessary documents with the Registrar of Companies (ROC) within thirty days of its annual general meeting (AGM). If the financial statements are not adopted at the AGM, they must still be filed as provisional documents within the same timeframe, with the final adopted version to be submitted after an adjourned AGM.

Applicable Provisions

This 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

In Victor Impex Limited, concerned ROC had passed adjudication order dated 26/12/2023 for violation of section 137 of the companies Act 2013.

The concerned ROC vide adjudication order dated 26/12/2023 held the company and its additional directors, who have defaulted liable for penalty under section 137(3) of the Act from 31/10/2019 to 27/10/2020 for not filling financial statements for the financial Year 2018-19 within 30 days from the date of Annual General Meeting in pursuance of Section 96 of the Act.

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 11/06/2024.The authorised representative have admitted the contravention of section 137of the companies Act 2013. The authorised representative further stated that he did not find any defect in ROC Adjudication order but have applied on the ground that the delay was committed due to circumstances beyond the control of the management/company. Further authorised representatives stated that the: -

ROC vide further letter dated 03/06/2024 concluded that the ground of appeal relied by the appellants in their submissions are not tenable.

Imposed Penalty

Considering all the facts, circumstances and all the submission made by the company, the adjudicating authority had imposed penalty on companies and officers for violation of section 137 of the Act.

Penalty u/s 137(3) of the companies Act, 2013 against the defaulters (First Default = Rs. 10,000. Continuing default = Rs100 day. Maximum Rs.2,00,000 in case of company and Rs 50,000 in case of officer in default and any other person)

Reduction in Penalty

Taking into consideration the adjudication order of the ROC, submission made by the appellants in their application, further letter of ROC, dated 03/06/2024 and, oral submissions of the authorised representative during the hearing, it is observed that there is no inherent defect in the adjudication order dated 26/12/2023.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides that for small companies and start-ups, penalties for non-compliances shall be half of the prescribed amount, with a cap of Rs. 2 lakh for the company and Rs. 1 lakh for each officer in default. This provision aims to ease compliance burdens on such entities. However, in the adjudication matter of Victor Impex, being a public company, it does not qualify as either a small company or a start-up. Therefore, the reduced penalty provisions under Section 446B are not applicable, and full penal provisions under the Act will apply.

Findings: -

The case of Victor Impex Limited highlights the importance of timely filing financial statements as required under Section 137 of the Companies Act, 2013. Failure to file the financial statements within the prescribed 30-day period after the Annual General Meeting resulted in significant penalties being imposed on the company and its directors. Despite the company's claim that the delay was due to circumstances beyond their control, such as not receiving the Show Cause Notice, the Regional Director upheld the penalties as no valid grounds were found to reduce them. Furthermore, as the company is a public company, it did not qualify for the relief under Section 446B, which provides penalty reduction for small companies or start-ups. This case serves as a reminder for all companies, regardless of their size or nature, to comply with statutory filing requirements to avoid severe financial consequences.

No of days default	Penalty imposed on company/KMP	First Default	Default Continues	Total Penalty levied	Maximum penalty
363 days	On Company	N.A.	363*1000=3,63,000	3,63,000	10,00,000
	On 1st director	1,00,000	363*100= 36,300	1,36,300	5,00,000
	On 2nd director	1,00,000	363*100= 36,300	1,36,300	5,00,000
	On 3rd director	1,00,000	363*100= 36,300	1,36,300	5,00,000

ROC Impose penalty of RS 7,71,900 for Violation of Section 137 of Companies Act 2013

Applicable Provisions

Facts of the Case with ROC and RD

Imposed Penalty

Reduction in Penalty

Any Benefit of Section 446B of Companies Act

Findings: -

Download MCA Adjucation Order

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