The Ministry of Corporate Affairs (MCA) recently imposed a penalty on Snap Fitness (India) Private Limited for a significant delay in filing its financial return. This violation of Section 137 of the Companies Act, 2013 has resulted in a penalty of Rs. 3,32,000.
The case revolves around the requirement under Section 137 of the Companies Act, 2013, which mandates companies to file their financial statements with the Registrar of Companies within a specified timeframe. Snap Fitness (India) Pvt Ltd failed to comply with this provision, leading to penal action.
Despite the company’s attempt to explain the delay, citing factors such as the global health crisis and internal challenges, the adjudicating officer found the violation to be established. The penalty not only affects the company but also its officers in default, including Ms. Alison Claudine McElroy, Mr. Ty Adam Menzies, and Mr. Rohit Narendra Lohade.
The penalty amount was determined based on the number of days of default and the relevant provisions of the Companies Act. The company and its officers are directed to pay the penalty within a specified timeframe, failing which further legal action may be taken.
The penalty imposed on Snap Fitness (India) Pvt Ltd highlights the importance of timely compliance with regulatory requirements. It serves as a reminder for companies to fulfill their obligations under the Companies Act, 2013 to avoid financial repercussions and legal consequences.
In conclusion, this case underscores the significance of adhering to statutory deadlines and maintaining corporate governance standards to avoid penalties and ensure transparency in business operations.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF COMPANIES
100, “EVEREST”, MARINE DRIVE,
MUMBAI – 400 002
Website : www.mca.gov.in
e-Mail ID : roc.mumbai@mca.gov.in
No. ROC(M)/SF(I)PL/JTA(AP)/ADJ-137/ORDER/592-596
Date 23 APR 2024
Order for Penalty under Section 454 for violation of Section 137 of the Companies Act, 2013
IN THE MATTER OF SNAP FITNESS (INDIA) PRIVATE LIMITED
(U85190MH2008PTC186286)
Appointment of Adjudicating Officer: –
1. Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad. II dated 24.03.2015 appointed the undersigned as Adjudicating Officer in exercise of the powers conferred by section 454 of the Companies Act, 2013 [herein after known as Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
Company: –
2. The Company SNAP FITNESS (INDIA) PRIVATE LIMITED (U85190MH2008PTC186286) (herein after known as ‘Company’) is a registered company with this office under the provisions of the Companies Act, 1956/2013 having its registered office as per MCA master data at address Urmi Axis, 7th Floor, Famous Studio Lane Dr. E. Moses Road, Mahalaxmi, Mumbai City, Mumbai, Maharashtra, India, 400011.
Relevant Provisions of the Companies Act, 2013
3. Section137- Copy of financial statement to be filed with Registrar. — (1) 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 0 manner, with such fees or additional fees as may be prescribed ***:
Provided that where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose:
Provided further that financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed ***:
Provided also that a One Person Company shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year:
Provided also that a company shall, along with its financial statements to be filed with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.
Provided also that in the case of a subsidiary which has been incorporated outside India (herein referred to as foreign subsidiary), which is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated copy of the financial statement in English.
(2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under subsection (1), duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held and 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 therein the company shall be liable to a penalty of one thousand rupees for every day during which the failure continues but which shall not be more than ten 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 one lakh 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 five lakh rupees.
Facts about the case: –
4. In terms of provisions of Section 137 of the Companies Act, 2013, the Company was required to file the Financial Statement within thirty days from the date of Annual General Meeting held in pursuance of Section 96 of the Companies Act, 2013.
5. Company along with other Applicants/ directors filed Suo-moto application for compounding of offence U/s 441 of the Companies Act, 2013 for contravention of Sec 137 of the Companies Act, 2013 dated 16/11/2021 for delay in filing Annual Return for financial year 2019-20 within prescribe time limit. Thus, considering the default period of year, Applicants are liable for adjudication u/s 454 of the Companies Act, 2013.
6. That as per proviso of Section 96 of the Companies Act, 2013, every Company is required to hold its AGM within six months from the end of its FY i.e. on or before 30th September of each year or not later than Fifteen months from the date of last AGM, whichever is earlier and as per proviso of Sec 137 of the Act 0 the 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
7. During the FY 2019-2020 due to difficulties faced in view of the pandemic caused by COVID-19, the Registrar of Companies vide order dt 08/09/2020 extended due date of holding AGM for financial year ended on 31/03/2020 by 3 months i.e. on or before 31/12/2020. Therefore, due date for holding AGM for FY 2019-2020 was on or before 31/12/2020 and to file financials on or before 29/01/2021. However, Company held its AGM on 01/04/2021 instead of 31/12/2020 and filed its financials on 30/04/2021 instead of 29/01/2021, which results violation of Section 137 of the Companies Act, 2013 and thus liable for penal action u/s 137(3)of the Act.
Reply of the Company: –
8. Company in its application stated that due to various factors, including the health crisis in the US in the year 2020 and circumstances involving change in the management of the Company and other internal difficulties, the Company was not able to convene its AGM for the Financial Year ended 31/03/2020 within the due date i.e. 31/12/2020 and also not able to file its Financials for the said year within the due date i.e. 29/01/2021.
9. Company stated that it does not have any intention of non-compliance with the provisions of Section to deceive any stakeholders.
FINDINGS: –
10. As observed from the Application, the Company has failed to file the financials within the time prescribed by the provisions of Section 137 of the Companies Act, 2013 though the default in filing financials is made good thereafter.
11. Further, S.137(3) states that “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”. Hence, penalty is being levied on Company, Ms Alison Claudine McElroy (Director), Mr. Ty Adam Menzies (Director) and Mr Rohit Narendra Lohade (Director).
12. The Section 446B of the Companies Act, 2013 (Substituted by the Companies (Amendment) Act,2020 Amendment Effective from 22nd January 2021) states that 5[446B. Notwithstanding anything contained in this Act, if penalty is payable for non-compliance of any of the provisions of this Act by a One Person Company, small company, start-up company or Producer Company, or by any of its officer in default, or any other person in respect of such company, then such company, its officer in default or any other person, as the case may be, shall be liable to a penalty which shall not be more than one-half of the penalty specified in such provisions subject to a maximum of two lakh rupees in case of a company and one lakh rupees in case of an officer who is in default or any other person, as the case may be.
Explanation. — For the purposes of this section-
(a) “Producer Company” means a company as defined in clause (l) of section 378A;
(b) “start-up company” means a private company incorporated under this Act or under the Companies Act, 1956 and recognised as start-up in accordance with the notification issued by the Central Government in the Department for Promotion of Industry and Internal Trade.]
That as per MGT-7 for FY 2020-21 filed vide SRN T58693672 dated 15/11/2021 by the Company it is observed that Paid up Capital of the Company is Rs. 2,72,36,990/- and turnover is Rs. Nil, thus the Company falls under category of Small Company and Section 446B will be applicable while adjudicating the penalty payable.
13. As the violation of the said provision has been established from the Application, the following Order is being passed.
ORDER
14. In exercise of the powers conferred on me vide Notification dated 24.03.2015 and having considered the facts and circumstances of the case and after taking into account the factors mentioned in the relevant Rules, I am of the opinion that 0 penalty shall be imposed for the default related to non-compliance of section 137 of the Act. The delay, if any, in passing of the order is due to the legal complexities involved in the matter.
15. Having considered the facts and circumstances of the case and after taking into the factors above, I hereby impose a penalty of Rs. 45,500/- (Rupees Forty-Five thousand Five hundred only) on Company and a penalty of Rs. 95,500/ – (Rupees Ninety-Five Thousand Five Hundred only) on each of its Officers in default, as per table given below for violation of provisions of Section 137 of the Companies Act, 2013.
| No. of days of default (■) | Penalty imposed on Company/ KMP | First default Penalty in (Rs.) | Default continues Penalty in (Rs.) | Total Penalty levied in (Rs.) | Maximum Penalty in (Rs.) | Penalty payable as per Section 446B |
|
91
|
A. Company | N.A. | 91 X 1,000 = 91,000/- | 91,000/- | 10,00,000/- | 45,500/- |
| B. Directors /KMP | ||||||
| Ms Alison Claudine (DIRECTOR) | 1,00,000/- | 91 X 1,000 =91,000/- | 1,00,000 + 91,000 = 1,91,000/- | 5,00,000/- | 95,500/- | |
| Mr. Ty Adam Menzies (DIRECTOR) | 1,00,000/- | 91 X 1,000 = 91,000/- | 1,00,000 + 91,000 = 1,91,000/- | 5,00,000/- | 95,500/- | |
| Mr Rohit Narendra Lohade (DIRECTOR) | 1,00,000/- | 91 X 1,000 = 91,000/- | 1,00,000 + 91,000 = 1,91,000/- | 5,00,000/- | 95,500/- | |
| TOTAL | 3,32,000/- | |||||
TOTAL PENALTY PAYABLE: – Rs. 3,32,000/-
(■) The period of violation of provisions under Section 137 of the Companies Act, 2013 is from 29.01.2021 till 30.04.2021. As per signatory details available on MCA21 portal, the above-mentioned individuals were Officers in default during the period of violation.
(■) Due date of filing was 30th October of every year and Annual Return has not been filed within thirty days from the date of Annual General Meeting held in pursuance of Section 96 of the Companies Act, 2013. Default period is thus calculated to be at a total of 91 days. Kindly refer para 15 of this order.
16. Considering the Paid-up Share Capital of the Company and Turnover for FY 2020-21 Section 446B is applicable and I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee/s.
17. The Noticee/s shall pay the said amount of penalty through “Ministry of Corporate Affairs” portal and proof of payment be produced for verification within 90 days of receipt of this order.
18. Please note that as per Section 454(8)(i) of the Companies Act, 2013, where Company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period of ninety days from the date of receipt of the copy of the order, the Company shall be punishable with fine which shall not be less than twenty-five thousand rupees, but which may extend to five lakh rupees.
19. Where an Officer of a Company who is in default does not pay the penalty within a period of ninety days from the date of the receipt of the copy of the order, such officer shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty-five thousand rupees, but which may extend to one lakh rupees, or with both.
20. Therefore, in case of default in payment of penalty, prosecution will be filed under Section 454(8)(i) and (ii) of the Companies Act, 2013 at your own costs without any further notice.
21. Further the company and its officers are hereby direct that the penalty amount 0 shall be remitted from their own sources through MCA 21 ports within 60 days from the date of receipt of order. The company need to file 1NC-28 as per the provisions of the Act, attaching copy of adjudication order along with payment challans.
22. Appeal if any, against this order may be filed in writing with the Regional Director, Western Regional, Ministry of Corporate Affairs, within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by the certified copy of this order. (Section 454 of the Companies Act,2013 read with the Companies (Adjudicating of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019.
23. In terms of the provisions of sub-rule (9) of Rule 3 of Companies (Adjudication of Penalties) Rules 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019, copy of this order is being sent to the Company and Noticee/s and also to Office of the Regional Director, Western Region, Ministry of Corporate Affairs.
24. You are also requested to serve a copy of this Order on the undermentioned Director/MD/ WTD/Officers under Section 20 of the Companies Act, 2013 for compliance.
(B MISHRA)
Adjudication officer and Registrar of Companies,
Maharashtra, Mumbai.
To,
1. SNAP FITNESS (INDIA) PRIVATE LIMITED
(U85190MH2008PTC186286)
Urmi Axis, 7th Floor, Famous Studio Lane
Dr. E. Moses Road, Mahalaxmi, Mumbai City,
Mumbai, Maharashtra, India, 400011.
2. ALISON CLAUDINE MCELROY (DIRECTOR)
3. TY ADAM MENZIES (DIRECTOR)
4. ROHIT NARENDRA LOHADE (DIRECTOR)
Copy to: –
THE REGIONAL DIRECTOR (WR)
Ministry of Corporate Affairs,
100, Everest building, Marine drive,
Mumbai.
……………….For information.
