Penalty on Non-Filing of Annual Returns & Financial Statements

Recently, the Registrar of Companies (ROC), Gujarat, Dadar & Nagar Havelis passed an ex-parte order against M/S Astha International Limited (hereinafter referred to as “Company”) for a penalty under Section 454 of the Companies Act, 2013 (hereinafter referred to as “Act”) due to non-compliance with Section 12(1), 92(4) & 137(1) of the Act.

Sec 12 Registered office of company related provisions

• A company shall, within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.

(8) If any default is made in complying with the requirements of this section, the company and every officer who is in default shall be liable to a penalty of one thousand rupees for every day during which the default continues but not exceeding one lakh rupees.

Sec 92  Annual Return related provisions

(4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed.

(5) If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of [ten thousand rupees] and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of [two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is a default]

Sec 137 Copy of financial statement to be filed with Registrar

• A copy of the financial statements, including consolidated financial statement, if any, along with all the documents which are required to be or attached to such financial statements under this Act, duly adopted at the annual general meeting of the company, shall be filed with the Registrar within thirty days of the date of annual general meeting in such manner, with such fees or additional fees as may be prescribed.

(3) If a company fails to file the copy of the financial statements under sub-section (1) or sub-section (2), as the case may be, before the expiry of the period specified 4 [therein] the company shall be  [liable to a penalty] of  [ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two lakh rupees,] and the managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the Board with the responsibility of complying with the provisions of this section, and, in the absence of any such director, all the directors of the company, shall be  [shall be liable to a penalty of  [ten thousand rupees] and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of  [fifty thousand rupees.]

Whereas, the ROC issued a letter to the company on 22.09.2022 but the letter returned back to its office with the postal remark “In Complete” even though the letter was sent on the address as per the master data of the company.

Furthermore, the annual return along with required documents were not filed by the company on the MCA portal for the financial year 2018-19, 2019-20, 2020-21, 2021-22 within the compliance period as given under Section 92(4).

Moreover, such documents that were required to be attached to such financial statements by the company for the year ended 31.03.2019, 31.03.2020 & 31.03.2021 were also not filed on the MCA portal within such time limit as prescribed under Section 137(1).

While the Adjudicating Officer had a reasonable cause to believe that the Company and its officers are in default and have violated the provisions of Section 12(1), 92(4) & 137(1), which attracts Section 454(3) of the Act, that gives power to the Adjudicating Officer to pass an order against the company or its officers for the non-compliance of the relevant provisions of the Act.

The notice of adjudication was served by the office of the Adjudicating Officer to the company with a request to rectify the default within 15 days of the notice and an opportunity to be heard was also given but no one made an appearance in the office of Adjudicating Officer.

The Adjudicating Officer stated certain factors to be regarded in determining the quantum of penalty under Section 12(1), 92(4) & 137(1):

1. The amount of disproportionate gain or unfair advantage, whenever quantifiable, made as a result of default.
2. The amount of loss caused to an investor or group of investors as a result of the default .
3. The repetitive nature of default.

Since none of the aforesaid information was available on record it was difficult to quantify the unfair advantage caused by the notice or loss incurred to the investors in a default of this nature.

Total Penalty Imposed on company & directors / officers under section 12(1), 92(4) & 137(1) is as follows:

Penalty Imposed on	12(1)	92(4)	137(1)	Total Amount of Penalty
Astha International Limited	₹ 1,00,000/-	₹ 2,38,700/-	₹ 2,47,400/-	₹ 5,86,100/-
Chauhan Chandrasinh Shivaji	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Santosh Kisa Sapkale	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Ashish Dineshkumar Nagwanshi	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Shivajibhai Mangabhai Pardee	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Pradip Chintaman Panpatil	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Hiralal Shanker Bhalerao	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-
Alpesh Babubhai Savalia	₹ 1,00,000/-	₹ 1,42,500/-	₹ 1,44,900/-	₹ 3,87,400/-

 

It was further stated that the noticee shall pay the amount individually within 90 days of this order and the challan of the payment of penalty shall be forwarded to the office of the Adjudicating authority.