Order under Sec 454: ROC-Surat penalizes Swati Processors Pvt Ltd for Sec 136 Violation

Order under Sec 454: ROC-Surat penalizes Swati Processors Pvt Ltd for Sec 136 Violation. In this article, we will take you through the mandatory provisions under Section 136(1) of the Companies Act, 2013. As per section 136(1) of the Companies Act, 2013, Without prejudice to the provisions of section 101, a copy of the financial statements, including consolidated financial statements, if any, auditor‘s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting. 
Applicable Provisions:- 
As per section 136(1) of the Companies Act, 2013, Without prejudice to the provisions of section 101, a copy of the financial statements, including consolidated financial statements, if any, auditor‘s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting. 
Provided that in the case of a listed company, the provisions of this sub-section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements. 
Provided further that the Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed. 
Facts of the case: 
The Company has practice of sending notice of AGM and balance sheet to members by hand delivery/ordinary post. No proof of dispatch could be produced, and the company has not furnished proof of dispatch of AGM notice to members which revealed that company has committed the Default/Non-compliance of section 136 of the Companies Act, 2013.   
After reviewing the appeal and the company’s circumstances, the Regional Director acknowledged to reduce the penalties imposed and the penalty imposed by the Registrar of Companies is reduced to Rs. 4,000/- on company and directors. 
Penalty Imposed by Registrar of Companies on Company and Officers in Default 
Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced to 10%.

Violation of section

Penalty imposed on company/ directors

Penalty imposed by ROC

Revised penalty imposed by RD

Sec. 136 of the Companies Act, 2013

Company

25,000

2,500

Director-1

5,000

500

Director-2

5,000

500

Director-3

5,000

500

Total

40,000

4000

Reduction in penalty 
The ground stated for the reduction of penalty are as follows: 
1. The Company has never said that notice of AGM has not been dispatched. It was only stated that proof of dispatch was not furnished. Under no stretch of imagination, it may be assumed that notice was not dispatched. 
2. The appellant company is a private limited company and a small company as per section 2(85) of the Companies Act, 2013.
Exemption to Startup/ Small Company/OPC under section 446B: 
As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.  
In this case, Section 446B will not apply. 
Conclusion 
In conclusion, In summary, the Regional Director's decision shows a balanced approach to corporate governance. It emphasizes the importance of following regulations while also considering the company’s financial struggles. This case highlights the need for flexibility in enforcement, allowing for accountability and compassion during tough times. 
Download MCA adjudication order:

In this article, we will take you through the mandatory provisions under Section 136(1) of the Companies Act, 2013. As per section 136(1) of the Companies Act, 2013, Without prejudice to the provisions of section 101, a copy of the financial statements, including consolidated financial statements, if any, auditor‘s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting.

Applicable Provisions:-

As per section 136(1) of the Companies Act, 2013, Without prejudice to the provisions of section 101, a copy of the financial statements, including consolidated financial statements, if any, auditor‘s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting.

Provided that in the case of a listed company, the provisions of this sub-section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements.

Provided further that the Central Government may prescribe the manner of circulation of financial statements of companies having such net worth and turnover as may be prescribed.

Facts of the case:

The Company has practice of sending notice of AGM and balance sheet to members by hand delivery/ordinary post. No proof of dispatch could be produced, and the company has not furnished proof of dispatch of AGM notice to members which revealed that company has committed the Default/Non-compliance of section 136 of the Companies Act, 2013.

After reviewing the appeal and the company’s circumstances, the Regional Director acknowledged to reduce the penalties imposed and the penalty imposed by the Registrar of Companies is reduced to Rs. 4,000/- on company and directors.

Penalty Imposed by Registrar of Companies on Company and Officers in Default

Taking into consideration the facts of the appeal and submissions made by the authorized representative, the penalty imposed by Registrar of Companies is reduced to 10%.

Violation of section	Penalty imposed on company/ directors	Penalty imposed by ROC	Revised penalty imposed by RD
Sec. 136 of the Companies Act, 2013	Company	25,000	2,500
	Director-1	5,000	500
	Director-2	5,000	500
	Director-3	5,000	500
	Total	40,000	4000

Reduction in penalty

The ground stated for the reduction of penalty are as follows:

1. The Company has never said that notice of AGM has not been dispatched. It was only stated that proof of dispatch was not furnished. Under no stretch of imagination, it may be assumed that notice was not dispatched.

2. The appellant company is a private limited company and a small company as per section 2(85) of the Companies Act, 2013.

Exemption to Startup/ Small Company/OPC under section 446B:

As per sec. 446B of the Companies Act, 2013, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.

In this case, Section 446B will not apply.

Conclusion

In conclusion, In summary, the Regional Director's decision shows a balanced approach to corporate governance. It emphasizes the importance of following regulations while also considering the company’s financial struggles. This case highlights the need for flexibility in enforcement, allowing for accountability and compassion during tough times.