ROC Orders for late filling of Annual Return Under Companies Act 2013

ROC Orders for late filling of Annual Return Under Companies Act 2013. 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.
In the case of Crystal Textiles Private Limited, the violation pertained to non-compliance with Section 92 and Section 137 of the Companies Act, 2013.

Section 92: This provision mandates companies to file an annual return with the Registrar of Companies (ROC) within 60 days from the date of the annual general meeting (AGM).

Section 137: This section requires companies to file their financial statements, including balance sheets and profit and loss accounts, with the ROC within 30 days of the AGM. Any failure to comply attracts penalties as prescribed under the Act.

Facts of the Case
Crystal Textiles Private Limited failed to file its annual return and financial statements within the prescribed time limits for the financial year ending 31.03.2018. Consequently, the matter was taken up by the Registrar of Companies (ROC), which issued show cause notices to the company and its officers in default for non-filling of such documents. One of the directors of the company on the behalf of the company requested to grant time of 45 days to take necessary measure to make default good. Though even after extension of time company did not file the annual return and financial statement for the FY 31.03.2017 & 31.03.2018.
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:

Company is not carrying on the business since last two decades and has been dormant without any business activities for a substantial period of time.

The company has received STK-1 as well from the concerned ROC as on 12th July 2019 for the removal of name of company from the ROC.

Company stated that the due to uncordial relation between the shareholders and one shareholder company is unable to attend AGM and due to this company are unable to approve its accounts nor appoint its auditor for the relevant years. Though another shareholder of the company is in the process of filling petition under section 97 of the companies act 2013 requesting for direction from NCLT, Mumbai for holding AGM in the company.

Though when forum asked the authorised representative whether the default have been made good to which she informed that the company has not filed its annual return & financial statement till the date of hearing.

Considering the facts and circumstances of given by the authorised representative on the behalf of the company, RD was of the opinion that appeal is not maintainable and same is liable to be rejected, accordingly the appeal gets rejected.
Penalty Imposed
The adjudicating officer-imposed penalties on the company and its directors for non-compliance. The penalties were calculated as per the provisions of Section 92(5) and Section 137(3) of the Companies Act, 2013 as follows:
For Financial Statements as under section 137(1) of the companies Act 2013

On Company: Rs, 3,79,000

Director 1: Rs 1,37,900

Director 2: Rs 1,37,900

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

On Company: Rs 85,000

Director 1: Rs 85,000

Director 2: Rs 85,000

Reduction in Penalty
After considering the facts and circumstances presented by the authorized representative of Crystal Textiles Private Limited, the Regional Director (RD) was of the opinion that the appeal was not maintainable, as the company had failed to rectify the default despite being granted sufficient time. Furthermore, the company had not complied with the mandatory filing requirements under Section 92 and Section 137 of the Companies Act, 2013, even at the time of the hearing. Given these continued lapses and the absence of any justifiable grounds for non-compliance, the RD upheld the penalties imposed by the Registrar of Companies (ROC) and rejected the appeal.
Conclusion
The case highlights the importance of timely compliance with statutory filing obligations under the Companies Act, 2013. Non-compliance, even in cases where a company is dormant, may attract stringent penalties, reinforcing the regulatory intent to ensure transparency and accountability in corporate governance. The rejection of the appeal in this matter underscores the necessity for companies to adhere to legal mandates and take proactive measures to address defaults in a timely manner.
Download MCA Adjudication Order

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.

In the case of Crystal Textiles Private Limited, the violation pertained to non-compliance with Section 92 and Section 137 of the Companies Act, 2013.

Section 92: This provision mandates companies to file an annual return with the Registrar of Companies (ROC) within 60 days from the date of the annual general meeting (AGM).
Section 137: This section requires companies to file their financial statements, including balance sheets and profit and loss accounts, with the ROC within 30 days of the AGM. Any failure to comply attracts penalties as prescribed under the Act.

Facts of the Case

Crystal Textiles Private Limited failed to file its annual return and financial statements within the prescribed time limits for the financial year ending 31.03.2018. Consequently, the matter was taken up by the Registrar of Companies (ROC), which issued show cause notices to the company and its officers in default for non-filling of such documents. One of the directors of the company on the behalf of the company requested to grant time of 45 days to take necessary measure to make default good. Though even after extension of time company did not file the annual return and financial statement for the FY 31.03.2017 & 31.03.2018.

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:

Company is not carrying on the business since last two decades and has been dormant without any business activities for a substantial period of time.
The company has received STK-1 as well from the concerned ROC as on 12th July 2019 for the removal of name of company from the ROC.
Company stated that the due to uncordial relation between the shareholders and one shareholder company is unable to attend AGM and due to this company are unable to approve its accounts nor appoint its auditor for the relevant years. Though another shareholder of the company is in the process of filling petition under section 97 of the companies act 2013 requesting for direction from NCLT, Mumbai for holding AGM in the company.
Though when forum asked the authorised representative whether the default have been made good to which she informed that the company has not filed its annual return & financial statement till the date of hearing.

Penalty Imposed

The adjudicating officer-imposed penalties on the company and its directors for non-compliance. The penalties were calculated as per the provisions of Section 92(5) and Section 137(3) of the Companies Act, 2013 as follows:

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

On Company: Rs, 3,79,000
Director 1: Rs 1,37,900
Director 2: Rs 1,37,900

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

On Company: Rs 85,000
Director 1: Rs 85,000
Director 2: Rs 85,000

Reduction in Penalty

After considering the facts and circumstances presented by the authorized representative of Crystal Textiles Private Limited, the Regional Director (RD) was of the opinion that the appeal was not maintainable, as the company had failed to rectify the default despite being granted sufficient time. Furthermore, the company had not complied with the mandatory filing requirements under Section 92 and Section 137 of the Companies Act, 2013, even at the time of the hearing. Given these continued lapses and the absence of any justifiable grounds for non-compliance, the RD upheld the penalties imposed by the Registrar of Companies (ROC) and rejected the appeal.

Conclusion

The case highlights the importance of timely compliance with statutory filing obligations under the Companies Act, 2013. Non-compliance, even in cases where a company is dormant, may attract stringent penalties, reinforcing the regulatory intent to ensure transparency and accountability in corporate governance. The rejection of the appeal in this matter underscores the necessity for companies to adhere to legal mandates and take proactive measures to address defaults in a timely manner.