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If any company has failed to file its annual return within the prescribed time period such company and its officers who is in default shall be liable to penalty of fifty thousand rupees and in case of continuing failure, with a further penalty of 100 rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.
As per section 92 of the companies Act every company must prepare an annual return with key details about its business as of the financial year's end. This includes information about its registered office, business activities, ownership structure, shareholding pattern, directors, key personnel, meetings, penalties, and compliance details.
For listed companies and those meeting certain financial criteria, a company secretary in practice must certify the return. Companies must also upload it on their website, if they have one.
The annual return must be filed with the Registrar within 60 days of the Annual General Meeting (AGM). If a company fails to file it on time, penalties apply, increasing daily until a maximum limit is reached. A company secretary who wrongly certifies the return may also face penalties.
Special provisions apply to One Person Companies, small companies, and startups, allowing for an abridged version and different signing requirements
Applicable Provisions
The 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 In House Production Limited & ORS, ROC vide adjudication order dated 26/12/2023 held that the company and its additional directors who have defaulted liable for penalty under section 92(5)) of the Act from 30/11/2019 to 12/03/2020 for not filling Annual Return for the financial year 2018-19 within 60 days from the date of Annual General Meeting in pursuance of Section 96 of the Act.
Considering the fact and circumstances of the case, 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 has admitted the contravention of section 92 of the Act. Further stated that the:
- Company have appealed on the ground that Annual Return has been filed by the company under the Companies Fresh Start Scheme (CFSS) 2020.
ROC further stated via 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 as follows:
|
Relevant Periods |
To whom penalty imposed |
First Default |
Default Continues |
Total Penalty Levied |
Maximum Penalty |
|
104 days |
On Company |
50,000 |
104*100=10,400 |
60,400 |
5,00,000 |
|
On 1st director |
50,000 |
104*100=10,400 |
60,400 |
5,00,000 |
|
|
On 2nd director |
50,000 |
104*100=10,400 |
60,400 |
5,00,000 |
|
|
On 3rd director |
50,000 |
104*100=10,400 |
60,400 |
5,00,000 |
Reduction in Penalties, If any
Taking into account the adjudication order of the ROC, submission made by the appellant in their application as well as oral submissions of the authorised representative during the hearing and further letter of the concerned ROC and oral submission of the authorised representative during the hearing, it is observed that:
-
There is no inherent defect in the adjudication order dated 26/12/2023
-
ROC, Mumbai has imposed penalty as per Section 92(5) of the companies Act 2013.
-
The appellants have failed to furnish the immunity certificate issued by the MCA under CFSS-2020
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 offers substantial relief to OPCs, small companies, and start-ups by reducing penalties for specific non-compliances. As per this provision, if such entities commit a default with a monetary penalty, the imposed penalty shall not exceed half of the standard amount, subject to prescribed limits. This encourages compliance and ease of doing business. However, in the adjudication of In-House Production Limited & ORS, the Regional Director upheld the ROC's order, and no benefit under Section 446B was granted for OPC. The relief excludes serious offenses involving fraud or public interest.
To conclude:
From the above case, it is apparent that In House Production Limited & ORS failed to comply with the provisions of Section 92 of the Companies Act, 2013, leading to adjudication by the Registrar of Companies (ROC). After getting order from the concerned ROC, an appeal filled by the company to claiming various points just not fair on the grounds of ROC order. Though after considering all the facts and submissions made by the company, RD dismissed the appeal as there was no merit in the s
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