What is the penalty for violation of Section 137 of Companies Act 2013?

What is the penalty 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 SM Dyechem Limited & ORS, 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 then CFO, who have defaulted liable for penalty under section 137(3) of the Act from 31/10/2019 to 28/11/2019 for not filling financial statements within the time prescribed by the provision of Section 137the 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 28/05/2024.The authorised representative have submitted that the:

There was a defect in the adjudication order dated 20/12/2023 stating that Financial Statements (AOC-4) under section 137 of the Act for the year 2018-19 were filed on 29/11/2019 as the MCA general circular dated 29/10/2019 had given extension of time for filling AOC-4 for financial year 2018-19 up to 30/11/2019.

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)

No of days default

Penalty imposed on company/KMP

First Default

Default Continues

Total Penalty levied

Maximum penalty

29 days

On Company

N.A.

29*1000=29,000

29,000

10,00,000

On 1st director

1,00,000

29*100= 2,900

1,00,000 +2,900=1,02,900

5,00,000

Reduction in Penalty, if any
Taking into consideration the adjudication order of the ROC, submission made by the appellants in their application, and oral submission of the authorised representative of the company and the ARoC during the hearing, ROC adjudication order dated 26/12/2023 is set aside and the penalty is waived off.
Any Benefit of Section 446B of Companies Act
Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In this adjudication matter of SM Dyechem Limited & ORS company being a public company does not fall under the purview of section 446B of the companies Act 2013.
Findings: -
The case of SM Dyechem Limited & ORS 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.
Further in appeal the company has presented the valid ground presenting their authentic reason to waive the penalty. Considering their submission RD set aside the order of ROC and waive off all the penalty.
Download MCA Adjucation Order

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 SM Dyechem Limited & ORS, 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 then CFO, who have defaulted liable for penalty under section 137(3) of the Act from 31/10/2019 to 28/11/2019 for not filling financial statements within the time prescribed by the provision of Section 137the 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 28/05/2024.The authorised representative have submitted that the:

There was a defect in the adjudication order dated 20/12/2023 stating that Financial Statements (AOC-4) under section 137 of the Act for the year 2018-19 were filed on 29/11/2019 as the MCA general circular dated 29/10/2019 had given extension of time for filling AOC-4 for financial year 2018-19 up to 30/11/2019.

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)

No of days default	Penalty imposed on company/KMP	First Default	Default Continues	Total Penalty levied	Maximum penalty
29 days	On Company	N.A.	29*1000=29,000	29,000	10,00,000
29 days	On 1st director	1,00,000	29*100= 2,900	1,00,000 +2,900=1,02,900	5,00,000

Reduction in Penalty, if any

Taking into consideration the adjudication order of the ROC, submission made by the appellants in their application, and oral submission of the authorised representative of the company and the ARoC during the hearing, ROC adjudication order dated 26/12/2023 is set aside and the penalty is waived off.

Any Benefit of Section 446B of Companies Act

Section 446B of the Companies Act, 2013 provides a significant relief mechanism for small companies and start-ups by reducing the penalty burden for certain non-compliances. Under this provision, if a small company or a start-up commits a default for which a penalty is prescribed under the Act, the penalty imposed shall not be more than half of the specified penalty, subject to a maximum limit. In this adjudication matter of SM Dyechem Limited & ORS company being a public company does not fall under the purview of section 446B of the companies Act 2013.

Findings: -

The case of SM Dyechem Limited & ORS 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.

Further in appeal the company has presented the valid ground presenting their authentic reason to waive the penalty. Considering their submission RD set aside the order of ROC and waive off all the penalty.