Order for Penalty for Violation of Section 137 of Companies Act, 2013

CS Ashish Agarwal 27 Jul 2023 2,745 Views 0 comment Print Company Law | Notifications/Circulars, Orders

SARADA PLEASURE AND ADVENTURE LIMITED, a company incorporated in Bihar, has been penalized for violating Section 137 of the Companies Act, 2013. This violation pertains to the company’s failure to file financial statements for the financial years 2019-2020, 2020-2021, and 2021-2022. The penalty order was issued on July 27, 2023, by the Ministry of Corporate Affairs.

Fact of the Case: Adjudication Notice U/s 454 for the violations of Section 137(3) of the Companies Act, 2013 were issued to the company and its three directors in default to show cause for non-filing of Financial Statement for the F/Y 2019-2020, 2020-2021 & 2021-2022.

Adjudication Notices issued by this office on 12.06.2023 to the Company and its Directors for non-filing of Statutory Returns.

However, ROC has not received any reply from the company and its directors.

Hence, the provisions of Section 137(1) of the Companies Act, 2013 has been contravened by the company and its directors/offices.

Provision of Section 137(1): 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 AGM of the company, shall be filed with the Registrar within 30 days of the date of AGM in such manner, with such fees or additional fees, as applicable.

Penalty under U/S 137(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 ₹ 10,000/- and in case of continuing failure, with a further penalty of ₹ 1,000/- for each day during which such failure continues, subject to a maximum of ₹ 2,00,000/-, and the MD and the CFO of the company, if any, and, in the absence of the MD and the CFO, any other director who is charged by the Board with the responsibility of complying with the provisions of Section 137, and, in the absence of any such director, all the Directors of the Company, shall be liable to a penalty of ₹ 10,000/- and in case of continuing failure, with further penalty of ₹ 100/- for each day after the first during which such failure continues, subject to a maximum of ₹ 50,000/-.

Exemption U/S 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 ₹ 2,00,000/- in case of a company and ₹ 1,00,000/- in case of an officer who is in default or any other person, as the case may be.

As per MCA Portal, paid-up capital of the company is ₹ 2,22,56,77,000/- and as regards to turnover, the company has not filed its balance sheet since F/Y 2014-15, hence turnover could not be ascertained.

Therefore, the benefits of a small company cannot be extended to this company while adjudicating the penalty.

Default Period for Financial Statement (U/s 137):

1000 Days

635 Days

270 Days

(30/10/2020) – (27/07/2023)

(30/10/2021) – (27/07/2023)

(30/10/2022) – (27/07/2023)

Financial Year 2019-2020

Financial Year 2020-2021

Financial Year 2021-2022

Penalty Amount (In case Financial Statement U/s 137)

Name of person on whom penalty imposed	No. of days default	Total penalty ₹ {As per Section 137(3)}	Final Penalty imposed ₹ {As per Section 137(3)}
On Company	1000 Days	*₹ 10,000/- + (1001000)**	₹ 1,10,000/-
	635 Days	*₹ 10,000/- + (100635)**	₹ 73,500/-
	270 Days	*₹ 10,000/- + (100270)**	₹ 37,000/-
Rakesh Shrivastav (Director)	1000 Days	*₹ 10,000/- + (1001000)**	₹ 50,000/- (Maximum Limit)
	635 Days	*₹ 10,000/- + (100635)**	₹ 50,000/- (Maximum Limit)
	270 Days	*₹ 10,000/- + (100270)**	₹ 37,000/-
Sukumar Debnath (Director)	1000 Days	*₹ 10,000/- + (1001000)**	₹ 50,000/- (Maximum Limit)
	635 Days	*₹ 10,000/- + (100635)**	₹ 50,000/- (Maximum Limit)

	270 Days	*₹ 10,000/- + (100270)**	₹ 37,000/-
Shubhankar Ray (Director)	1000 Days	*₹ 10,000/- + (1001000)**	₹ 50,000/- (Maximum Limit)
	635 Days	*₹ 10,000/- + (100635)**	₹ 50,000/- (Maximum Limit)
	270 Days	*₹ 10,000/- + (100270)**	₹ 37,000/-
Total			₹ 6,31,500/-

Conclusion: The Adjudicating Officer imposed a penalty of ₹2,20,500 on the company and ₹1,37,000 each on its three directors for violating Section 137 of the Companies Act, 2013, pertaining to the non-filing of financial statements for the mentioned financial years. The company and its directors were given 90 days to make the penalty payments. Failure to comply with the order could result in further consequences as per Section 454(8) of the Act.

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Phone 0612-2216150
E-Mail : roc.patna@mca.gov.in
Website : www.mca.gov.in

Government of India
Ministry Of Corporate Affairs
Office of the Registrar of Companies, Bihar-Cum-Official Liquidator, High Court, Patna
4th Floor, ‘A’ Wing, Maurya Lok Complex
Dakbunglow Road, Patna-800001

Order No. ROC/PAT/Sec. 137/13364/701 Dated: 27.07.2023

Order for penalty for violation of section 137 of the Companies Act, 2013
In the Matter of SARADA PLEASURE AND ADVENTURE LIMITED
CIN: U01132BR2008PLC013364

Appointment of Adjudication Officer:-

1. The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/ 2014-Ad. II dated 24.03.2015 has appointed the undersigned as Adjudicating Officer in exercise of the powers conferred under 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. Whereas, Company M/ s. Sarada Pleasure And Adventure Limited, CIN-U01132BR2008PLC013364 (herein after known as Company) is a company incorporated on 20.06.2014 under the provisions of Companies Act, 1956/2013 in the state of Bihar and having its registered office situated at Office No S-5, Fifth Facing Towards, Chandi House Residential Complex, Exhibition Road, Patna, Bihar, 800001, India as per MCA website.

Facts about the case:-

3. As per the provisions of section 137(1) of the Act, 2013: 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. However, it is observed that the said company has not filed its financial statements for the financial years 2019-2020, 2020-2021 and 2021-2022 as per the MCA portal.

Therefore, it appears that the provision of section 137(1) of the Companies Act, 2013 has been contravened by the company and its directors/officers in default w.r.t non-filing of copy of financial statements.

4. Whereas, this office has issued show cause notice for default under section 137(1) of the Companies Act, 2013 vide this office letter no. ROC/PAT/SCN/Sec-137/13364/416-419 dated 12.06.2023.

5. However, this office has not received any reply from the company and its directors. Hence, the provisions of Section 137(1) of the Companies Act, 2013 has been contravened by the company and its directors/officers and therefore they are liable for penalty u/ s. 137(3) of the Companies Act, 2013 for the Financial Years 2019-2020, 20202021 and 2021-2022.

Section 137(3) states that:- “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 ten thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day during which such failure continues, subject to a maximum of two 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 liable to a penalty of ten thousand rupees and in case of continuing failure, with further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees”.

6. Further Section 446B states that “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”.

7. As per clause 85 of section 2 of the Companies Act, 2013, small company means a company whose paid up capital and turnover shall not exceed rupees four crore and rupees forty crore respectively. As per MCA portal, paid up capital of the company- Sarada Pleasure And Adventure Limited is Rs. 2,22,56,77,000 and as regard to turnover, the company has not filed its balance sheet since financial year 2014-2015, hence turnover could not be ascertained. Therefore, the benefits of small company cannot be extended to this company while adjudicating penalty.

ORDER

8. Having considered the facts and circumstances of the case and after taking into account the provisions of Rule-11 of Companies (Adjudication of Penalties) Rules, 2014 (as amended), I hereby impose a penalty of Rs. 2,20,500 (Two Lakhs Twenty Thousand Five Hundred) on Company and Rs. 137,000 (One Lakh Thirty-Seven Thousand) each on the 3 (three)Directors, viz., Shri Rakesh Shrivasta and Shri Sukumar Debnath and Shri Shubhankar Ray, as per Table Below for violation of Section 137 of the Companies Act, 2013 for the financial years 2019-2020, 2020-2021 and 2021-2022:

Nature of default	Violation of Section of the Companies Act, 2013	Company /Officers to whom penalty imposed	No. of days in default*	Penalty for defaults (Rs.) as per Section 137(3) of the Act	Total Penalty _(Rs.)[maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default]	Penalty Imposed(Rs.)
Non- filing of Financial Statements for FY 2019- 2020	Section 137(1)	On Company	1000	10000+100 /per day	10000+1000*100= 110,000	110,000
		Shri Rakesh Shrivastav, DIN: 01863917	1000	10000+100 /per day	10000+1000*100= 110,000	50,000
		Shri Sukumar Debnath, DIN: 03212480	1000	10000+100 /per day	10000+1000*100= 110,000	50,000
		Shri Shubhankar Ray, DIN: 05260587	1000	10000+100 /per day	10000+1000*100= 110,000	50,000
Non-filing of Financial Statements for FY 2020-21	Section 137(1)	On Company	635	10000+100 /per day	10000+635*100= 73,500	73,500
		Shri Rakesh Shrivastav, DIN: 01863917	635	10000+100 /per day	10000+635*100= 73,500	50,000
		Shri Sukumar Debnath, DIN: 03212480	635	10000+100 /per day	10000+635*100= 73,500	50,000
		Shri Shubhankar Ray, DIN: 05260587	635	10000+100 /per day	10000+635*100= 73,500	50,000
Non- filing of Financial Statements for FY 2021-22	Section 137(1)	On Company	270	10000+100 /per day	10000+270*100= 37,000	37,000
		Shri Rakesh	270	10000+100	10000+270*100=	37,000
		Shrivastav, DIN: 01863917		/per day	37,000
		Shri Sukumar Debnath, DIN: 03212480	270	10000+100 /per day	10000+270*100= 37,000	37,000
		Shri Shubhankar Ray, DIN: 05260587	270	10000+100 /per day	10000+270*100= 37,000	37,000

(* No of days have been calculated from 31.10.2020 to till date of order, i.e., 27.07.2023 for FY 2019-2020 and so on)

9. The noticee shall pay the amount of penalty individually for the company and its directors (out of own pocket) by way of e-payment (available on Ministry website www.mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment Services within 90 (ninety) days of this order. The Challan/SRN generated after payment of penalty through online mode shall be forwarded to this office.

10. Appeal against this order may be filled in writing with the Regional Director (ER), Ministry of Corporate Affairs, Kolkata, within a period of 60 (sixty) days from the date of receipt of this order, in Form ADJ (available on Ministry website www.mca.gov.in) setting forth the grounds of appeal and shall be accompanied by a certified copy of this order (Section 454(5) and 454(6) of the Act read with Companies (Adjudication of Penalties) Rules, 20141.

11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order.

(Aparajit Barua)
Adjudicating Officer &
Registrar of Companies-Cum-
Official Liquidator, Patna