In an important development from the Ministry of Corporate Affairs (MCA), businesses across India have been given a reprieve concerning the submission of their annual returns. An adjudication order issued by the Registrar of Companies, Maharashtra, Pune, has clarified that companies will not face penalties for the delay in submitting their annual returns, provided they do so within thirty days of receiving a notice from the MCA. This decision marks a significant shift in the MCA’s approach to compliance enforcement, aiming to encourage timely compliance without imposing undue penalties on businesses.
Overview of the MCA’s Decision
The adjudication order specifically addresses the penalties related to the non-compliance of Section 92(4) of the Companies Act, 2013, which mandates the filing of annual returns within a specified timeframe. Traditionally, failure to comply with this provision resulted in monetary penalties as outlined in Section 92(5) of the Act. However, under the new directive, if a company rectifies its compliance by submitting the required documents within thirty days of the issue of a notice by the adjudicating officer, no penalty will be imposed.
Legal Background and Implications
Section 92 of the Companies Act, 2013, lays down the requirements for the filing of annual returns by companies. It is a crucial part of regulatory compliance, ensuring transparency and accountability in the corporate sector. The recent order by the MCA amends the repercussions of non-compliance, providing a grace period for companies to fulfill their obligations without incurring penalties.
This move is particularly beneficial for businesses that may have missed their filing deadline due to oversight, misunderstanding, or other mitigating circumstances. It allows companies a window to address their lapse in compliance, emphasizing corrective action over punitive measures.
Steps for Compliance
To take advantage of this provision and ensure compliance, companies should:
- Act Promptly Upon Receiving Notice: Companies should not delay once they receive a notice regarding their non-compliance. The thirty-day grace period should be utilized efficiently to gather and submit the required documents.
- Ensure Accuracy in Submission: When submitting the annual returns within the grace period, companies must ensure that the documents are accurate and complete to avoid further issues.
- Seek Professional Advice if Needed: Companies uncertain about the compliance process should consider seeking advice from legal or financial professionals to ensure that their submission meets all requirements.
- Keep Documentation: It’s advisable to keep a record of the submission and any communication with the MCA regarding the notice and compliance, in case of future reference.
Conclusion
The MCA’s decision to not impose penalties for delayed submission of annual returns if filed within thirty days of notice is a positive development for the business community in India. It reflects a more understanding and supportive approach to corporate compliance, acknowledging the challenges businesses may face. This measure not only aids in reducing the burden of penalties on companies but also encourages a culture of compliance and timely rectification of lapses. Companies should take note of this change and ensure they remain vigilant about their compliance requirements to make the most of this provision.
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OFFICE OF THE
REGISTRAR OF COMPANIES
MAHARASHTRA, PUNE
MINISTRY OF CORPORATE AFFAIRS
GOVERNMENT OF INDIA
PCNTDA Green Building Block No. 1st& 2ndFloor,
Near Akurdi Railway Station, Akurdi, Pune- 411044
Phone No. 020-27651375/78
E-mail: rocpune@mca.gov.in
RoCP/ADJ/order/Sec-92/22-23/B 3003-to-3006
Date: 20 FEB 2024
SPEED POST
ADJUDICATION ORDER
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Adjudication Order of penalties in the matter of Gagan Narang
Sports Promotion Foundation having
CIN- U92412PN2011NPL138832 under Section 454(3) read
with section 92 read with of the Companies Act, 2013
Please Read:
- Companies (Adjudication Of Penalties) Rules, 2014 as amended by Companies (Adjudication of Penalties) Amendment Rules, 2019 (G.S.R.131(E) ).
- Provisions of Sub-section (4) and (5) of Section 92 of the Companies Act,
- Gazette Notification of Ministry of Corporate Affairs vide No. A42011/112/2014-AdIL dated 24.03.2015 (see SO 831(E), dated 03.2015)
- General Circular No. 1/2020 dated 02.03.2020.
- Companies (Amendment) Act, 2019, w.e.f. 02.11.2018
- Companies (Amendment) Act, 2020, w.e.f. 21.12.2020
In respect of:
WHEREAS GAGAN NARANG SPORTS PROMOTION FOUNDATION having CIN U92412PN2011NPL138832 is a company governed by the provisions Act and registered with this office having its office at- B/ 1004, 10th Floor, Pristine Prolife Mumbai Bangalore Highway, Next Sayaji Hotel, Wakad Pune 411057, Pune, Maharashtra, India.
1. Appointment of Adjudicating Officer:
Ministry of Corporate Affairs vide its Gazette Notification No. A42011/112/2014-Ad.11, dated 24.03.2015 (see SO 831(E), dated 24.03.2015) appointed undersigned as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (herein after known as Act) r/w Rule 3(1) of Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act. The undersigned vide Companies (Amendment) Act, 2019 is entrusted to adjudicate penalties under section 92 of the Companies ACT, 2013 with effect from 02.11.2018.
2. Company:
GAGAN NARANG SPORTS PROMOTION FOUNDATION having CIN U92412PN2011NPL138832 (herein after referred as Company) is a registered company with this office under the provisions of section 8 of the Companies Act, 1956 having its registered office as per MCA21 Registry at address “at- B/ 1004, 10th Floor, Pristine Pro life Mumbai Bangalore Highway, Next Sayaji Hotel, Wakad Pune 411057, Pune, Maharashtra, India.”
3. Relevant provisions of the Companies Act, 2013:
As per provision of Section 92(4) of Companies Act, 2013 “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 provision of Section 92(5) of Companies Act, 2013 If a company fails to file its annual return under sub-section 92(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 after the first 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.;
4. Facts about the Case:
a) In terms provisions of section 92(4) Companies Act, 2013, “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”;
b) In terms of the provisions of section 92(5) of the Act, If a company fails to file its annual return under sub-section 92(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 after the first 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.;
c) An Inquiry was conducted by the JO and during the Inquiry and examination of records it has been observed that, the MCA portal, that the company has not filed Annual Return for the F.Y. 2019-20. Thus, company and its directors has violated the of provisions of Section 92(4) and liable for action u/ s 92(5) of the Companies Act, 2013.
A reasonable opportunity was given to the company and its directors vide order under section 206(4) of the Companies Act, 2013 vide letter no. ROCP/INQ/2022/1263 to 1266 dated 30.09.2022. However, the reply submitted by the Company was not satisfactory and the competent authority has directed to adjudicate the matter.
d) Accordingly, the adjudication officer has issued adjudication notice vide ROCP/ADJ/ Sec-92/22-23/859-862 dated 04.07.2023 (herein after referred as Adjudication Notice) under Section 454(4) read with 92 of the Companies Act, 2013 read with Rule 3(2) Of Companies (Adjudication of Penalties), 2014 as amended in Amendment Rules, 2019, to the company and its officers in default for the violation of the provisions of the act as mentioned in para “a, b 8s c” above;
e) A reply to the Adjudication notice has been received on 21.07.2023 from the company and its Directors stating that “The Company will remain intact with its reply to your letter dated 30th September, 2022 that the “Company has conducted the Annual General meeting within the prescribed timeline for the financial year 2019-20 but failed to file the necessary forms with the Registrar of Companies. Company is in process of filing of said forms on the MCA portal.” Further , now the company has complied and filed the necessary forms with the Hon’ble Registrar of Companies for the financial year 2019-20 vide SRN F59268565 dated 01/03/2023. We further confirm that Company is a law-abiding entity and have complied with all the requisite compliances as per the provisions of the Companies Act, 1956/ Companies Act, 2013.
f) Further, under section 454(4) of the Act read with Rule 3(2) of the Companies (Adjudication Of Penalties) Rules, 2014, Noticee(s) were given an opportunity to submit a reply by issuing an Adjudication Notice vide ROCP/ADJ/Sec-92/22-23/859-862 dated 04.07.2023 (herein after referred as Adjudication Notice) to why the penalty should not be imposed under the provisions of 92(5) of the Act against the Company and its officers in default for the above stated violations.
g) Hence, as the said violation has already been concluded by JO during the course of Inquiry :- no further hearing in physical is required to ascertain the violation of the said section.
5. ORDER:
After considering the submission made in the application and facts of the case, it is proved beyond doubt that the company and the officers of the company have defaulted in complying the provisions under section 92(4)) of the Act and made the offence good on 01.03.2023. Further taking into the consideration the proviso of sub-section (3) of section 454 of the Companies Act, 2013 which inter alia provides that in case the default related to noncompliance of section 92 has been rectified either prior to, or within thirty days of the issue of the notice by the adjudicating officer, no penalty be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.
Having considering the facts and circumstances of the case and after taking into the account the provisions mentioned in the relevant Rules followed by amendments in section 454(3) of the Companies Act 2013, I am of the opinion that no penalty shall be imposed for the default related to noncompliance of section 92 of the Act as the said default has been rectified by filing its Annual Return for the financial year ended 31-03-2020 on 01.03.2023 prior to issue of notice by Adjudicating officer. Accordingly, the company is directed to file e-form INC-28 with the office of ROC, Pune.
(Mangesh Jadhav, ICLS)
Adjudicating Officer
Registrar of Companies
Maharashtra, Pune
