The Ministry of Corporate Affairs recently issued an order imposing penalties on Snap Fitness (India) Private Limited for non-compliance with Section 92 of the Companies Act, 2013.
1. Background of the Case: The case involves Snap Fitness (India) Private Limited, a registered company under the Companies Act, 2013. The company faced allegations of failing to file its annual return within the stipulated time frame, as mandated by Section 92 of the Act.
2. Legal Provisions: Section 92 of the Companies Act, 2013, requires every company to prepare and file an annual return containing specified particulars within a specified timeframe. Failure to comply with this provision attracts penalties as per the Act.
3. Company’s Response: Snap Fitness attributed the delay in filing its annual return to various factors, including the global health crisis and internal challenges. The company emphasized its lack of intention to deceive stakeholders.
4. Findings and Penalties Imposed: Despite the company’s explanations, the adjudicating officer found merit in the allegations. Consequently, penalties were imposed on Snap Fitness and its officers in default, as per the provisions of Section 92.
5. Penalty Calculation: The penalty amount was calculated based on the duration of the default period and the provisions of the Companies Act, 2013. Each defaulting party was levied a penalty, considering the severity of the violation.
6. Applicability of Section 446B: The adjudicating officer also considered Section 446B, which determines penalties for non-compliance by certain categories of companies. Snap Fitness fell under the category of a small company, impacting the penalty amount.
7. Order and Consequences: The order specified the penalty amount and instructed Snap Fitness and its officers to remit the penalties within a specified timeframe. Failure to comply would lead to further legal consequences, including fines and potential prosecution.
8. Conclusion: The penalty imposed on Snap Fitness (India) Private Limited underscores the importance of compliance with statutory regulations under the Companies Act, 2013. This case serves as a reminder for companies to fulfill their obligations promptly to avoid legal repercussions. Additionally, it highlights the meticulous assessment conducted by regulatory authorities in enforcing corporate governance standards.
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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.mumbaiPmca.gov.in
Order No. ROC(M)/SF(I)PL/JTA(AP)/ADJ-92/ORDER/597-601 Date : 23 Apr, 2024
Order for Penalty under Section 454 for violation of Section 92 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 “the 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.
3. Relevant Provisions of the Companies Act, 2013
Section 92- Annual return. — (1) Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding —
(a) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;
(b) its shares, debentures and other securities and shareholding pattern;
(c) its indebtedness;
(d) its members and debenture-holders along with changes therein since the close of the previous financial year;
(e) its promoters, directors, key managerial personnel along with changes there in since the close of the previous financial year;
(f) meetings of members or a class thereof, Board and its various committees along with attendance details;
(g) remuneration of directors and key managerial personnel;
(h) penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;
(i) matters relating to certification of compliances, disclosures as may be prescribed;
(j) details, as may be prescribed, in respect of shares held by or on behalf of the Foreign Institutional Investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; and
(lc) such other matters as may be prescribed,
and signed by a director and the company secretary, or where there is no company secretary, by a company secretary in practice:
Provided that in relation to One Person Company and small company, the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
(2) The annual return, filed by a listed company or, by a company having such paid-up capital or turnover as may be prescribed shall be certified by a company secretary in practice in the prescribed form, stating that the annual return discloses the facts correctly and adequately and that the company has complied with all the provisions of this Act.
(3) An extract of the annual re turn in such form as may be prescribed shall form part of the Board’s report.
(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 specifijing the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed, within the time as specified, under section 403 .
(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 fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five latch rupees.
(6) If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five latch rupees.
Facts about the case: –
4. In terms of provisions of Section 92 of the Companies Act, 2013, the Company was required to file the Annual Return within sixty 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 92 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 92(4) of the Act the Company is required to file its Annual Return with the Registrar of Companies (ROC) within sixty days from the date of Annual General Meeting or where no Annual General Meeting is held in any year within sixty days from the date on which the AGM should have been held.
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 Annual Return on or before 28/02/2021. However, Company held its AGM on 01/04/2021 instead of 31/12/2020 and filed its Annual Return on 03/05/2021 instead of 28/02/2021, which results violation of Section 92 of the Companies Act, 2013 and thus liable for penal action u/s 92(5) 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 Annual Return for the said year within the due date i.e. 28/02/2021.
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 Annual Return within the time prescribed by the provisions of Section 92 of the Companies Act, 2013 though the default in filing AR is made good thereafter.
11. As per Section 92(5) of the Companies Act,2013 “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 fifty thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of five latch rupees”. 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 (1) 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 penalty shall be imposed for the default related to non-compliance of section 92 0
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. 28,150/- (Rupees Twenty Eight Thousands One hundred Fifty only) on Company and its Officers in default, each, as per table given below for violation of provisions of Section 92 of the Companies Act, 2013.
| No. of days of default (II) |
Penalty imposed on Company/ KMP | First default Penalty in (Rs.) | Default continues Penalty in (Rs.) |
Total Penalty Levied u/s 92 (Rs.) | Maximum Penalty in (Rs.) | Penalty payable as per Section 446B |
|
63
|
A. Company | 50,000/- | 63 X 100 = 6,300/- | 56,300/- | 56,300/- | 28,150/- |
| B. Directors /KMP Ms Alison Claudine (DIRECTOR) | 50,000/- | 63 X 100 = 6,300/- | 56,300/- | 56,300/- | 28,150/- | |
| Mr. Ty Adam Menzies (DIRECTOR) | 50,000/- | 63 X 100= 6,300/- | 56,300/- | 56,300/- | 28,150/- | |
| Mr Rohit Narendra Lohade (DIRECTOR) |
50,000/- | 63 X 100= 6,300/- | 56,300/- | 56,300/- | 28,150/- | |
| TOTAL | 1,12,600/- | |||||
TOTAL PENALTY PAYABLE: – Rs. 1,12,600/-
(1) The period of violation of provisions under Section 92 of the Companies Act, 2013 is from 01.04.2021 till 03.05.2021. As per signatory details available on MCA-21 portal, the above-mentioned individuals were the Officers in default during the period of violation.
(s) Due date of filing was 29th November of every year and Annual Return has not been filed within sixty 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 63 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. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee.
18. The Noticee 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.
19. 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.
20. 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.
21. 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.
22. Further the company and its officers are hereby direct that the penalty amount 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 INC-28 as per the provisions of the Act, attaching copy of adjudication order along with payment challans.
23. 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.
24. 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.
25. 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 (U8519 OMH2008PTC186286)
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.
