In a recent adjudication order under Section 137 of the Companies Act, 2013, the Registrar of Companies, Chennai, has imposed penalties on M/s Vivan Trade Impex Private Limited for its failure to file financial statements for the fiscal year ending on March 31, 2018. This article provides an in-depth analysis of the case, outlining the pertinent details, legal provisions, actions taken, and the implications of the imposed penalties.
1. Background: M/s Vivan Trade Impex Private Limited, registered under the Companies Act, 2013, failed to comply with the statutory requirement of filing financial statements and annual returns for the financial year ending on March 31, 2018. Despite repeated notices and opportunities provided by the regulatory authority, the company and its directors did not furnish the requisite documents, leading to adjudication proceedings.
2. Legal Provisions: The adjudication is conducted under Section 137 of the Companies Act, 2013, which mandates the filing of financial statements with the Registrar of Companies within thirty days of the annual general meeting. Failure to comply with this provision incurs penalties as specified under the Act. The penalties accrue daily for continuing non-compliance, subject to a maximum limit.
3. Inquiry and Notices: Upon detecting the non-compliance, the Registrar of Companies initiated an inquiry under Section 206(4) of the Companies Act, 2013. Subsequent to the inquiry, the company and its directors were issued show-cause notices for adjudication. Despite receiving notices, neither the company nor its directors responded to the regulatory authority, necessitating further action.
4. Adjudication Hearing: Multiple adjudication hearings were scheduled to afford the company and its directors an opportunity to present their case. However, they failed to attend the hearings or provide any substantive response to the allegations of non-compliance. Only the Whole-Time Director, Mr. Sanjay Kumar Sharma, appeared during the final hearing, acknowledging the violation and expressing willingness to accept the prescribed penalty.
5. Decision and Penalties Imposed: Considering the gravity of the non-compliance and the provisions of the Companies Act, 2013, the adjudicating officer imposed penalties on both M/s Vivan Trade Impex Private Limited and its Whole-Time Director, Mr. Sanjay Kumar Sharma. The penalties were calculated based on the number of days of default, with additional amounts for continuing failure, reaching a total penalty of Rs. 1,91,600 on the company and Rs. 50,000 on Mr. Sanjay Kumar Sharma.
6. Compliance and Appeal Process: The adjudication order mandates the payment of the imposed penalties within ninety days through the specified online portal. Additionally, it outlines the process for lodging an appeal against the order with the Regional Director (SR), Ministry of Corporate Affairs, within sixty days. Failure to comply with the order or initiate an appeal within the stipulated timelines may result in further penalties or legal consequences as per the Companies Act, 2013.
7. Conclusion: The penalty imposed on M/s Vivan Trade Impex Private Limited underscores the significance of compliance with regulatory requirements governing corporate entities. Non-filing of financial statements not only violates statutory obligations but also reflects poorly on corporate governance standards. The adjudication order serves as a deterrent against similar instances of non-compliance and reaffirms the commitment of regulatory authorities to uphold transparency and accountability in corporate practices. It is imperative for companies to adhere to legal obligations and respond promptly to regulatory inquiries to avoid adverse consequences.
In conclusion, the adjudication order against M/s Vivan Trade Impex Private Limited highlights the repercussions of failure to file financial statements under the Companies Act, 2013. The penalties imposed serve as a reminder to companies and directors to prioritize compliance with statutory requirements, thereby fostering transparency and accountability in corporate governance.
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GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
OFFICE OF REGISTRAR OF COMPANIES, TAMIL NADU, ANDAMAN & NICOBAR ISLANDS, CHENNAI
II FLOOR, C- WING, SHASTRI BHAVAN, 26, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI- 6
F.NO.ROC/CHNNIVAN TRADE IMPEX/ADJ/S.137/2024 DATE: 19 MAR 2024
ADJUDICATION ORDER UNDER SECTION 137 OF THE COMPANIES ACT, 2013
IN THE MATTER OF M/S VIVAN TRADE IMPEX PRIVATE LIMITED
1. Appointment of Adjudicating Officer:-
The Ministry of Corporate Affairs vide its Gazette Notification No. A-42011/112/2014-Ad.II, dated 24.03.2015 has appointed Registrar of Companies, Chennai as Adjudicating Officer in exercise of the powers conferred by section 454(1) of the Companies Act, 2013 (hereinafter referred as Act or Companies Act, 2013) r/w Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
2. Company: –
Whereas the company viz M/s. Vivan Trade Impex Private Limited with CIN: U74999TN2016PTC113208 (herein after referred as ‘ company’ or ‘ subject company’) is a registered company with this office under the Companies Act, 2013 having its registered office as per MCA21 Registry at No.61, Sembudoss Street, II Floor, Chennai, Tamil Nadu. The financial & other details of the subject company as available on MCA-21 portal is stated as under:
| S. No. | Particulars | Details as per FY 2016-17 |
| 1. | Paid up Capital | Rs. 1,50,000/- |
| 2. | a. Revenue from Operation | NIL |
| b. Other Income | NIL | |
| c. Profit for the Period | NIL
Note: The company has not filed financial statements and Annual Return since 31.03.2018 |
|
| 3. | Whether it is a Holding Company | No |
| 4. | Whether it is a Subsidiary Company | No |
| 5. | Whether company registered under Section 8 of the Act? | No |
| 6. | Whether company is a small company? | No |
| 7. | Whether company registered under any other special Act? | No |
3. Directors
| S. No. | Name of Director Default | Designation | Date of Appointment | Date of Cessation |
| 1. | Sanjay Kumar Sharma | Whole time Director | 07.11.2016 | ….. |
4. Section and Penal Provision as per Companies Act, 2013
Section 137 of the Companies Act, 2013- 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 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 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 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.
5. Issue of Adjudication Notice:
This Office has conducted an Inquiry U/s 206 (4) of the Companies of the Companies Act, 2013 in the matter of M/s. Vivan Trade Impex Private Limited. The Inquiry report states that the company has not filed Annul Returns and Balance sheet for the financial year ending on 31.03.2018. After that this office has issued show cause for adjudication vide letters (i) No. ROC/CHN/113208/S.137/P.2/INQUIRY FOLLOW UP/ 2020 on 06.05.2022 to the company and its Officers in default for non-compliance of Section 137 of the Companies Act, 2023.
6. Reply of Company and Directors for Adjudication Notice issued:
No reply has been received from the company and its directors.
7. Adjudication Hearing:
Since no reply has been received from the company and its directors for the Adjudication notice, this office had issued Adjudication Hearing Notice to the subject company and Officers in default on 15.09.2023 fixing the hearing date as 21.09.2023 at 03:30 PM. No response was received for the hearing notice dated 15.09.2023 and neither the authorized representative of the company nor the Directors attended the hearing on 21.09.2023. Hence, this office fixed final hearing for the said violation on 19.10.2023 at 03:.00PM vide notice dated 13.10.2023 and served the same through Post and email. Pursuant to the hearing notice dated 13.10.2023, Shri. Sanjay Kumar Sharma, Whole Time Director has appeared before the Adjudicating Authority on 19.10.2023 at 03:.00 PM and made submissions that “the said violation may be adjudicated and accepted to pay the penalty as prescribed under Section 137(3) of the Companies Act, 2013”.
8. Decision
Having considered the facts and circumstances of the case and after taking into account the factors above, it is concluded that (i) the company and its officers in default are liable for penalty as prescribed under Section 137(3) of the Act for non-filing of financial statements for the Financial Year ending on 31.03.2018.
- Financial Year 2017-18 for 1816 days i.e, by considering the AGM was conducted on 30.09.2018, 30 days from the date of AGM i.e, 29.10.2018 to 19.10.2023 (both days are included)
Accordingly, I am inclined to impose a penalty as prescribed under Sub-section 3 of Section 137 of the Companies Act, 2013. The details of the penalty imposed on the company and officers in default are shown in the table below:
I. FY 2017-18
|
Name of person on whom |
No of days of default | Penalty for default (Rs) | Total Penalty (Rs) | Maximum Limit for penalty (Rs) |
Penalty Imposed (Rs) |
| M/s. Vivan Trade Impex Private Limited, Company |
1816 days |
Rs.10,000 + Rs.100 per day (for continuing failure) | 10,000 + 1816 x 100= 191600 | 2,00,000 | 1,91,600 |
| Sanjay Kumar Sharna, Whole Time Director | 1816 days |
Rs.10,000+ Rs.100 per day (for continuing failure) | 10,000 + 1816 x 100= 191600 | 50,000 | 50,000 |
Therefore, in view of the above said violation, in exercise of the powers vested to the undersigned under Section 454(1) & (3) of the Companies Act, 2013 a penalty of Rs.1,91,600 (Rupees One lakh ninety one thousand six hundred) is imposed on the Company and Rs.50,000/- (Rupees Fifty thousand) is imposed on ether Officer in default. Totally Rs. 2,41,600/- (Rupees Two lakhs forty one thousand six hundred) as penalty amount for the FY 17-18.
9. The said amount of penalty shall be paid through online by using the website mca.gov.in(Misc. head) within 90 days of receipt of this order, and intimate this office with proof of penalty paid.
10. Whereas Appeal against this order may be filed with the Regional Director (SR), Ministry of Corporate Affairs, 5th Floor, Shastri Bhavan, 26 Haddows Road, Chennai-600006, Tamil Nadu within a period of sixty days from the date of receipt of this order, in Form ADJ [available on Ministry website mca.gov.in] 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 (Adjudicating of Penalties) Rules, 2014].
11. Your attention is also invited to section 454(8) of the Act in the event of non-compliance of this order, “(8)(i) Where company fails to comply with the order made under subsection (3) or sub-section (7), as the case may be within a period of ninety days from the date of the 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.
(ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be 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.”
(B. SRIKUMAR, ICLS)
REGISTRAR OF COMPANIES
TAMILNADU, CHENNAI.
ADJUDICATING OFFICER
