Can ROC Take Action After 3 Years? Companies Act Limitation

Summary: The article considers whether the Registrar of Companies (ROC) can act after three years in relation to defects in an AOC-4 filed for FY 2014-15 on 28 September 2015, where a notice was issued on 30 September 2022. It explains that a three-year limitation does not generally prevent ROC from asking questions about an old filing or initiating adjudication under Section 454 of the Companies Act, 2013. The article distinguishes this from criminal prosecution, for which the limitation framework referred to in the article is now contained in Section 514 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), following replacement of the CrPC from 1 July 2024. It identifies limitation periods of six months for fine-only offences, one year for offences carrying imprisonment up to one year, and three years for offences carrying imprisonment exceeding one year but not exceeding three years, while stating that the limitation chapter does not apply where punishment can exceed three years, such as fraud under Section 447. The article further explains that the relevant starting point may depend on when the defect came to the knowledge of the authorities, and distinguishes defects under Sections 134(8), 129(7) and 447. It states that Section 134(8) was amended with effect from 21 December 2020 to provide monetary penalties, whereas Section 129(7) continues to carry imprisonment of up to one year and Section 447 carries substantially more serious punishment. The article advises companies not to ignore an ROC notice, to respond on merits, and to consider limitation specifically where criminal prosecution is threatened. It also discusses compounding under Section 441 and the separate 90-day payment consequence following an adjudication order under Section 454.

Can ROC Take Action After 3 Years? A Simple Explanation for Company Owners

A company filed its AOC-4 (the yearly form with financial statements and Board’s report) for the year 2014-15 back on 28 September 2015. Years later, on 30 September 2022, the Registrar of Companies (“ROC”) sent a notice pointing out defects in that filing. The company said: “Too much time has passed — 3 years is the limit, so you cannot act now.” Is that correct? Here is the answer in plain, everyday language — with the exact legal provisions named, so you know exactly where each rule comes from.

The Short Answer

Saying “3 years are over, so ROC can do nothing” is an overstatement — that is not how the law actually works here. Think of it like a traffic policeman: he can still walk up and ask questions about an old incident. Whether he can actually fine you, or drag you to court, is a separate question with its own separate rules. People often mix these up. The truth is that ROC’s power runs on at least three different clocks, not one, and “3 years” is only the name of one of them.

Step by Step, in Plain Language

1. If ROC is just asking questions or pointing out a mistake

1. If ROC is just asking questions or pointing out a mistake — there is no time limit on this at all. ROC’s general power to look at anything a company has filed and call for an explanation is part of its ordinary supervisory function under the Companies Act, 2013, and no section puts a deadline on simply asking. Seven years, ten years — it does not matter. So yes, ROC can send this kind of notice.

2. If ROC wants to fine the company for the mistake

2. If ROC wants to fine the company for the mistake — this is done through ROC’s own in-house fining process under Section 454 (Adjudication of Penalties), where an officer of ROC decides the penalty himself, without a criminal court. Section 454 does not fix any deadline by which ROC must start this process — so a 10-year gap does not, by itself, make the notice invalid. There is one thing worth flagging here though: once ROC actually passes a penalty order, the company or officer must pay within 90 days. If that payment is not made, the non-payment becomes a fresh, separate offence in its own right, and that offence can be prosecuted in a criminal court — with its own limitation clock running from the end of that 90-day window, not from the date of the original filing mistake. So “no deadline for ROC to start” is correct, but it is not the end of the story once a penalty order actually exists.

3. The “3-year” rule shows up only in one specific situation

3. The “3-year” rule shows up only in one specific situation — if the mistake is serious enough that someone could still go to jail for it, then to actually prosecute a person before a criminal (Special) Court, there is a real time limit borrowed from ordinary criminal procedure law. This limit used to sit in Section 468 of the Code of Criminal Procedure (CrPC); since 1 July 2024, the CrPC has been replaced by the Bharatiya Nagarik Suraksha Sanhita, 2023 (“BNSS”), and the same rule now sits in Section 514 of the BNSS. Depending on how serious the possible punishment is, the limit is 6 months (fine-only offences), 1 year (offences carrying up to 1 year’s imprisonment), or 3 years (offences carrying imprisonment of more than 1 year but up to 3 years). Where the punishment can exceed 3 years — as with fraud under Section 447 — this chapter simply does not apply, so there is no fixed statutory time-bar at all for that kind of offence. So the “3 years” argument does exist, but only for one narrow band of offences, not for everything ROC might do.

4. When does the limitation clock start?

4. Even then, the clock does not always start on the filing date. It starts from the date ROC actually found out about the problem — which courts have said could be the very day the form was filed (if the mistake was obvious on the face of it), or years later, if it only came to light during an inspection. This rule is now found in Section 516 of the BNSS (earlier Section 469 of the CrPC). So “7 years have passed since filing” does not automatically mean “too late” — what matters is when ROC actually discovered it, not simply how many years have gone by since filing.

5. It also matters exactly what the “defect” is

5. It also matters exactly what the “defect” is. Not all annual-filing mistakes are treated the same way:

•  A defect in the Board’s report — governed by Section 134(8). This provision was amended with effect from 21 December 2020 to remove imprisonment entirely — today it is a money penalty only, for the company as well as every officer in default, decided by ROC under Section 454. The exact current penalty amount should be checked against the up-to-date Act text before quoting it to a client, since these figures do get revised.
• A defect in the financial statements themselves — governed by Section 129(7). Unlike the Board’s report, this was not decriminalised — it can still mean imprisonment of up to a year for the responsible officer (managing director, CFO, or director-in-charge), or a fine of Rs. 50,000 to Rs. 5,00,000, or both. So the 3-year criminal-court limit under BNSS Section 514 could genuinely matter here.
• A false or fraudulent statement — this moves into Section 447 (Punishment for Fraud), a much more serious and separate provision, with its own stricter punishment range. Because that punishment can extend well beyond 3 years, the BNSS limitation chapter does not apply to it at all — meaning there is effectively no fixed time-bar on prosecuting genuine fraud.

So before anyone can say whether “3 years” actually helps the company, one first has to pin down precisely which provision — 134(8), 129(7), or 447 — ROC is pointing at.

Bottom Line for a Company in This Situation

The company is not automatically off the hook just because 7 years have passed. ROC can still ask questions under its general powers, and can very likely still fine the company through the Section 454 adjudication process — no time limit stops that from starting. The 3-year argument (now under BNSS Section 514) becomes relevant only if ROC tries to send the matter to a criminal court over something that still carries jail time — practically, that means a Section 129(7) financial-statement default or a Section 447 fraud allegation, not a Section 134(8) Board’s-report defect. And even then, it depends on when ROC can be shown to have actually found out about the problem (BNSS Section 516), not simply on how many years have gone by since filing.

Practical Advice

Do not ignore the notice or refuse to respond by claiming limitation — that risks a one-sided adjudication order against the company under Section 454. It is better to respond to ROC on the merits of what is actually wrong, and keep the limitation argument in reserve only for the specific situation where a criminal prosecution (not just a fine) is actually threatened, and only after checking which provision is actually in play. Where the default is genuinely a one-time, compoundable lapse, it is also worth examining whether the matter can be closed through compounding under Section 441 of the Companies Act — paying a composition amount to close the matter — rather than contesting it on limitation grounds alone. And once any adjudication order under Section 454 is actually passed, calendar the 90-day payment deadline carefully — missing it opens up a fresh, separate exposure under Section 454(8).

FAQs

Q1. If the company made a mistake in its filing, does that automatically mean only a penalty (money) and nothing else?

A. Not automatically — it depends on which provision the mistake falls under. A mistake in the Board’s report (Section 134(8)) is now punished with money only, no jail, for anyone. But a mistake in the financial statements themselves (Section 129(7)) can still mean fine or jail for the responsible officer, even today. So one cannot assume “it’s just a penalty” until the exact provision involved is checked.

Q2. What does “decriminalised” mean here, and does it apply to every mistake?

A. “Decriminalised” means the law was changed so that a mistake which used to risk jail time now only costs money — the company simply pays a penalty through ROC’s Section 454 process instead of appearing before a criminal court. This happened for Section 134(8) (Board’s report) with effect from 21 December 2020, as part of the Companies (Amendment) Act, 2020, but not for every provision — Section 129(7) (financial statements), for example, was left as it was, with jail still on the table. So decriminalisation is provision-specific, not a blanket change across the whole Companies Act.

Q3. Is there really any time limit (limitation) at all, or can ROC act forever?

A. There is no fixed time limit for ROC to simply ask questions about an old filing, and Section 454 itself does not fix a deadline for ROC to start the adjudication (penalty) process. A real time limit comes into the picture only if the matter is serious enough to go to a criminal court and still carries jail time — governed today by BNSS Section 514 — and even that time limit does not start counting from the date of filing; it starts from the date ROC actually found out about the problem (BNSS Section 516).

Q4. Can ROC issue a penalty notice under Section 454 even after 10 years?

A. Yes, in principle — because Section 454 has no written time limit for initiating adjudication. A 10-year gap does not automatically make the notice invalid. That said, an extremely long, unexplained delay could still be questioned separately — not on the specific “3-year limitation” ground, but on the general principle that a government authority should not sit on a matter forever and then spring it on someone without good reason. This is a much weaker and more uncertain argument than the criminal-court limitation, so it should not be relied upon as a sure defence.

Q5. If the company simply does not reply to a very old notice, will the problem go away?

A. No — staying silent is riskier, not safer. If the company does not respond, ROC can pass an adjudication order under Section 454 without hearing the company’s side. It is safer to reply on the facts of the mistake, and raise the “too much time has passed” point only where it genuinely applies (the criminal-court situation under BNSS Section 514), rather than using it as a reason not to respond at all.

Q6. Does it matter whether the mistake was innocent or deliberate?

A. Yes, quite a bit. An honest, one-time slip under Section 134(8) or Section 129(7) is treated very differently from a deliberately false or fraudulent statement under Section 447. A deliberately false filing can trigger that much stricter, fraud-specific provision, which carries heavier punishment, effectively falls outside the BNSS limitation chapter altogether, and is treated more seriously by courts — so “it was just a clerical error” and “it was a knowingly false statement” are not the same conversation at all.

Q7. If the company would rather just close the matter than argue about limitation, is that possible?

A. Often, yes. Where the default is a genuine, compoundable lapse — most Section 134(8) or Section 129(7) situations are — the company can apply for compounding under Section 441 of the Companies Act before the Regional Director or NCLT, as applicable, and pay a composition amount to close the matter instead of litigating limitation. This is frequently the faster, lower-risk route, and is worth evaluating alongside (not instead of) a response on merits.

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Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at [email protected]).