Penalty for Violating Section 92 & 137 of Companies Act, 2013 – ROC order

Learn about the penalties imposed on a Tamil Nadu company for violating Sections 92 and 137 of the Companies Act, 2013, and the consequences thereof.

Penalty on Tamil Nadu Company for Violating Section 92 and Section 137 of the Companies Act, 2013

The annual return provides crucial details about a company’s structure, operations, and financial status, and is mandatory for all active incorporated companies to submit to the Registrar of Companies (ROC) on a yearly basis. This report offers a comprehensive overview of the company’s yearly performance.

Compliance with Section 92 of the Companies Act, 2013 is crucial for companies operating in India, as it pertains to the filing of annual returns with the Registrar of Companies (RoC). Section 92 (1) of the Companies Act, 2013 mandates that every company, irrespective of its size, must file an annual return with the RoC within 60 days of holding its Annual General Meeting (AGM) or where no AGM is held in any year within 60 days from the date on which the AGM should have been held together with the statement specifying the reasons for not holding the AGM with such fees, as applicable.

In this article, we will discuss the importance of complying with Section 92 of the Companies Act, 2013 along with latest Order for penalty levied by Registrar of Companies, Tamil Nadu, Coimbatore (Ref: ROC/CBE/A.O./92&137/031419/2022).

Facts in brief:

Adjudication notice under Section 454 for the violations of Section 92 and 137 of the Companies Act, 2013 were issued to one of the Company named M/s Nulinz Education Private Limited having its registered office at Salem, Tamil Nadu to show cause for non-filing of Annual Return and Financial Statement for the FY 2019-2020. Previously, Adjudication notices issued was issued on 16/11/2022 to the Company and its Directors for non-filing of Statutory Returns but the Company has not filed Statutory Returns for which Show Cause Notice was issue.

Provisions of the Companies Act, 2013 which were violated:

1. Section 92(5) of the Companies Act, 2013 provides that if any company fails to file its annual return 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 Rs.10,000 and in case of continuing failure, with further penalty of Rs.100 for each day during which such failure continues, subject to a maximum of Rs.2,00,000 in case of a company and Rs.50,000 rupees in case of an officer who is in default.

1. Section 129 of the Companies Act, 2013 provides that company shall prepare a financial statement and provides that at every annual general meeting of a company, the Board of Directors of the company shall lay before such meeting financial statements for the financial year. Section 137 provides that a copy of financial statements, including consolidated financial statement, if any along with all the documents which are required to be 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 30 days of the date of AGM in such manner, with such fees , as applicable.

• Section 137 provides that if a company fails to file the copy of the financial statements, as the case may be, before the expiry of the period, the company shall be liable to a penalty of Rs.10,000 and in case of continuing failure, with a further penalty of Rs.100 for each day during which such failure continues, subject to maximum of Rs.2,00,000, and the MD, CFO, if any, and in their absence, 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 liable to a penalty of Rs.10,000 and in case of continuing failure, with further penalty of RS.100 for each day subject to maximum of Rs.50,000.

Order:

• Adjudicating Officer held that the offence committed is of serious nature since non-filing of Annual accounts by the Company has placed itself out of reach of stakeholders/regulatory authorities. The object of filing of Annual Return of company in MCA portal is in public interest, to enable the investor, public and whosoever interested in the company can access the fundamental information about the company and its management. Non-filing of this statutory return is not only violation of the provisions of the Act but result in denial of information to the various stakeholders, public in general.

• As per Section 454 read with Rule 3(4) of the Companies Act, 2013 the reply to such notice shall be filed in electronic mode only within the period as specified in the notice. However, the company has not made any reply.

• The total penalty of Rs.1,94,300 has been imposed on the Company along with 2 Directors for violating Section 92 and Section 137 of the Companies Act, 2013. The Company and its Directors are directed to rectify the default immediately from the date of receipt of copy of the order.

We may think that the penalty should be much higher considering the default time period. The interesting part of the story is related to Section 446B of the Companies Act, 2013. The section provides for the lesser penalties for One Person Company or Small Companies. Therefore, in the above case the penalty has been drastically reduced considering it as Small Company.