What happens if you miss annual filing deadline - Rahi Shipping Case

What happens if you miss annual filing deadline - Rahi Shipping Case . 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, must 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 Rahi Shipping (India) 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 ended on 31.03.2018. The matter was brought before the Regional Director (WR), Mumbai, for consideration.
Facts of the Case with ROC and RD
Rahi Shipping (India) 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 14.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents.
No response was received by the ROC to the SCN dated 14.02.201 from the company and its directors. However, company has finally filled the due annual return and Balance Sheets for the Financial Year 2017-18 on 18.06.2019.
The Registrar of Companies (ROC) considering the facts and circumstances-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:

The company has complied by filling necessary statutory returns with additional fees for the FY 2017-18. Further, appellant company pray for set aside the order dated 03.06.2019 of adjudicating officer, ROC.

However appellant company, in the response of notice of hearing stated that they have already filled an application pursuant to withdrawal of appeal and requested to consider the application and issue an order for confirming the withdrawal of appeal to enable the appellant to file an application with the ROC, Goa for issue of immunity certificate pursuant to Companies Fresh Start Scheme 2020.

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, 2,14,000

Director 1: Rs 1,21,400

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

On Company: Rs 68,500

Director 1: Rs 68,500

Reduction in penalties
Considering the request made by the appellant company for withdrawal of an appeal and same is hereby allowed by the RD. The appeal is accordingly disposed of as withdrawn.
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, in this case, Concerned RD had after considered the appeal of appellant company allow the withdraw the appeal as company has filed the due return under CFSS 2020.
Conclusion
Rahi Shipping (India) Private Limited highlights the importance of adhering to the mandatory filing requirements under Sections 92 and 137 of the Companies Act, 2013. Non-compliance can lead to significant penalties, both for the company and its directors, as demonstrated in this instance. However, the case also highlights the potential for relief in situations where mitigating circumstances exist, as shown by the Regional Director’s decision to consider the company’s efforts to rectify its default under the Companies Fresh Start Scheme 2020.
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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, must 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 Rahi Shipping (India) 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 ended on 31.03.2018. The matter was brought before the Regional Director (WR), Mumbai, for consideration.

Facts of the Case with ROC and RD

Rahi Shipping (India) 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 14.02.2019 to the company and its directors, calling them to show cause for non-filling of such documents.

No response was received by the ROC to the SCN dated 14.02.201 from the company and its directors. However, company has finally filled the due annual return and Balance Sheets for the Financial Year 2017-18 on 18.06.2019.

The Registrar of Companies (ROC) considering the facts and circumstances-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:

The company has complied by filling necessary statutory returns with additional fees for the FY 2017-18. Further, appellant company pray for set aside the order dated 03.06.2019 of adjudicating officer, ROC.

However appellant company, in the response of notice of hearing stated that they have already filled an application pursuant to withdrawal of appeal and requested to consider the application and issue an order for confirming the withdrawal of appeal to enable the appellant to file an application with the ROC, Goa for issue of immunity certificate pursuant to Companies Fresh Start Scheme 2020.

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, 2,14,000
Director 1: Rs 1,21,400

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

On Company: Rs 68,500
Director 1: Rs 68,500

Reduction in penalties

Considering the request made by the appellant company for withdrawal of an appeal and same is hereby allowed by the RD. The appeal is accordingly disposed of as withdrawn.

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, in this case, Concerned RD had after considered the appeal of appellant company allow the withdraw the appeal as company has filed the due return under CFSS 2020.

Conclusion

Rahi Shipping (India) Private Limited highlights the importance of adhering to the mandatory filing requirements under Sections 92 and 137 of the Companies Act, 2013. Non-compliance can lead to significant penalties, both for the company and its directors, as demonstrated in this instance. However, the case also highlights the potential for relief in situations where mitigating circumstances exist, as shown by the Regional Director’s decision to consider the company’s efforts to rectify its default under the Companies Fresh Start Scheme 2020.