Non-Filing of Annual Return: MCA Imposes Penalty of Rs. 17.23 Lakh

Introduction: In a recent development, the Ministry of Corporate Affairs (MCA) has wielded its regulatory authority, imposing a substantial penalty on PRISM ORGANIC GREENS LIMITED for the non-filing of annual returns, a violation of Section 92 of the Companies Act, 2013. This order, dated December 26, 2023, serves as a stern reminder of the compliance obligations that companies must adhere to under the regulatory framework.

Detailed Analysis:

1. Legal Provisions Invoked: The MCA, through its adjudicating officer, invokes Section 454 of the Companies Act, 2013, read with Companies (Adjudication of Penalties) Rules, 2014. The order designates an Adjudicating Officer to assess penalties for non-compliance with Section 92(4) of the Act, which mandates the filing of annual returns within sixty days from the date of the annual general meeting.

2. Company in Question: PRISM ORGANIC GREENS LIMITED: The company, registered in Himachal Pradesh, finds itself in the regulatory spotlight. Situated at H.NO. 196-197 ROURA SECTOR, Bilaspur, the order details the company’s continuous failure to file annual returns from the financial year 2015-2016 to 2021-2022.

3. Violation and Penalties: The violation, as per Section 92(4), attracts penalties as per Section 92(5) of the Companies Act. The penalty amounts are meticulously calculated for each financial year, considering the number of days of default. The order provides a comprehensive breakdown of penalties for each fiscal year, imposing a total penalty of Rs. 332,200.

4. Director Responses: The order mentions responses from two out of three directors, Sh. Rajesh Kumar Aggarwal and Sh. Ramesh Chandra Mal. Both directors disassociate themselves from the company, citing illegitimate appointments and lack of consent. However, Sh. Navin Pratap Singh, identified as the Managing Director, is held responsible for compliance.

5. Appeal and Legal Consequences: The order outlines the appeal process, allowing the company and its officers to appeal within sixty days. It also underscores the potential legal consequences for non-payment of penalties, including fines and imprisonment.

6. Payment and Compliance: The order specifies that the penalty must be paid through the Ministry of Corporate Affairs portal, emphasizing adherence to the regulatory payment process. It further directs that the penalty shall be paid from personal sources/income of the officers in default.

Conclusion: The MCA’s imposition of a heavy penalty on PRISM ORGANIC GREENS LIMITED serves as a decisive action against non-compliance with annual return filing obligations. This case underscores the critical importance of timely adherence to regulatory requirements and the accountability of company officers. As companies navigate the complex regulatory landscape, this order serves as a cautionary tale, urging strict compliance to avoid legal repercussions.

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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF THE REGISTRAR OF
COMPANIES CUM OFFICIAL
LIQUIDATOR, HP,
CORPORATE BHAWAN
PLOT NO.4-B, SECTOR 27B,
CHANDIGARH PHONE NO.172-2639415,
2639416
Email roc.himachalQmca.gov.in

No. ROC/865

Dated: 26/12/2023

ORDER UNDER SECTION 454 FOR VIOLATION OF SECTION 92 OF THE COMPANIES ACT, 2013, READ WITH COMPANIES (ADJUDICATION OF PENALTIES) RULES, 2014

IN THE MATTER OF M/s PRISM ORGANIC GREENS LIMITED
(CIN: U74140HP2014PLC000676)

1. The Ministry of Corporate Affairs vide its gazette notification no.S.0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as an Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.

2. Whereas M/s PRISM ORGANIC GREENS LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at H.NO. 196-197 ROURA SECTOR, Bilaspur, BILASPUR, Himachal Pradesh, India, 174001 as per MCA website.

Provisions of the Act: –

3. As per Section 92(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.

As per Section 92(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 further penalty of one hundred rupees for each day 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 in default.

Facts about the case: –

4. Whereas as per the records, the company has not filed Annual Return for the financial year 2015-2016 to 2021-2022. This office has issued Show Cause Notice for violation of section 92(4) of the Companies Act, 2013 read with Companies (Adjudication of Penalties) Rules, 2014 to the company and its directors vide this office letter No. ROC/OL/HP/92/000676/112,113 dated 20.06.2023. However, two out of three directors have replied to the show cause notice, wherein Sh. Rajesh Kumar Aggarwal (Director) has stated vide letter dated 06.07.2023 that he was never a director in the subject company nor have any connection with the company and its officials. He further stated that his appointment was done without his knowledge and consent. Further Sh. Ramesh Chandra Mal (Director) has also replied vide letter dated NIL received on 18.07.2023 that he was illegally appointed as director of the company by the existing directors of the company without his consent on 19.12.2015 therefore he resigned in June 2016.

The replies of the directors were found to be satisfactory. However, Sh. Navin Pratap Singh, MD is appointed in the Company and is responsible for all compliances of the Companies Act, 2013.

5. Therefore, it is concluded that the company and its officers in default are liable for penalty as prescribed under Section 92(5) of the Act for non-filing of annual return of the company viz. PRISM ORGANIC GREENS LIMITED for: –

• Financial Year 2014-15 for 3222 days i.e., with effect from 31.12.2015 (last date of filing of annual return was 30.12.2015) to 26.12.2023 (date of order).
• Financial Year 2015-16 for 2583 days i.e., with effect from 30.11.2016 (Last date of filing of annual return was 29.11.2016) to 26.12.2023 (till this date).
• Financial Year 2016-17 for 2218 days i.e., with effect from 30.11.2017 (Last date of filing of annual return was 29.11.2017) to 26.12.2023 (till this date).
• Financial Year 2017-18 for 1853 days i.e., with effect from 30.11.2018 (Last date of filing of annual return was 29.11.2018) to 26.12.2023 (till this date).
• Financial Year 2018-19 for 1488 days i.e., with effect from 30.11.2019 (Last date of filing of annual return was 29.11.2019) to 26.12.2023 (till this date).
• Financial Year 2019-20 for 1398 days i.e., with effect from 28.02.2021 (Last date of filing of annual return was 27.02.2021) to 26.21.2023 (till this date).
• Financial Year 2020-21 for 695 days i.e., with effect from 31.01.2022 (Last date of filing of annual return was 30.01.2022) to 26.12.2023 (till this date).
• Financial Year 2021-22 for 392 days i.e., with effect from 30.11.2022 (Last date of filing of annual return was 29.11.2022) to 26.12.2023 (till this date).

Accordingly, I am inclined to impose a penalty as prescribed under Sub-Section (5) of Section 92 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are as under:

I am of this opinion that penalty is commensurate with the aforesaid failure committed by the Noticees and penalty so imposed upon the Officers-in-default shall be paid from their personal sources/income.

It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

6. Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi, 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 a certified copy of this order. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014).

7. Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, 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 and officer in default 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.

8. In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to: ­(1.) M/s Prism Organic Greens Limited, H.No. 196-197, Roura Sector, Bilaspur, Himachal Pradesh,174001, India, (2.) Sh. Navin Pratap Singh S/o Sh. Nagendra Singh and (3.) Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and will also be uploaded on website.

(Kamna Sharma)
Registrar of Companies & Adjudicating Officer
Himachal Pradesh

Copy to: -The Regional Director (NR), Ministry of Corporate Affairs, New Delhi for information.