Introduction: The Ministry of Corporate Affairs, through the Registrar of Companies, Mumbai, has issued a penalty order (No. ROC(M)/SDL/ADJ-ORDER/6311 to 6313) dated December 26, 2023, against SM Dyechem Ltd. This order, under Section 454, addresses the company’s non-compliance with Section 137 of the Companies Act, 2013. This article provides insights into the background, relevant provisions, findings, and the penalties imposed.
Detailed Analysis:
Background: SM Dyechem Ltd, a registered company in Mumbai, is facing penalties for failing to file its Financial Statement within the prescribed timeframe. Section 137 of the Companies Act, 2013, mandates timely submission, and non-compliance results in penalties under Section 454.
Relevant Provisions: Section 137 outlines the obligations regarding filing financial statements with the Registrar of Companies. Failure to adhere to these provisions attracts penalties as specified in Section 454 of the Companies Act, 2013.
Observations: MCA21 database records indicate that SM Dyechem Ltd defaulted in filing its Financial Statement for the Financial Year 2018-2019. The company violated Section 137 by filing its Financial Statement on November 29, 2019, with a delay of 29 days from the due date of October 30, 2019.
Penalty Imposition: In the absence of any reply, the Adjudicating Officer, appointed by the Ministry of Corporate Affairs, decided to impose penalties. The company faces a penalty of Rs. 29,000, while its Officer in Default, Mr. Hersh Sanjiv Shah (CFO-KMP), incurs a penalty of Rs. 1,02,900.
Order and Consequences: The Adjudicating Officer, considering the facts and circumstances, imposed the penalties. The company and its officer are directed to remit the penalty amount through the Ministry of Corporate Affairs portal within 90 days. Failure to comply within this period may result in additional fines and potential prosecution.
Appeal Process: The order provides a 60-day window for filing an appeal with the Regional Director, Western Region, Ministry of Corporate Affairs, in Form ADJ, accompanied by the grounds of appeal and a certified copy of the penalty order.
Conclusion: SM Dyechem Ltd’s case serves as a reminder of the repercussions of non-compliance with the Companies Act, 2013. The penalty order, supported by relevant legal provisions, emphasizes the importance of adhering to regulatory requirements. Companies and their officers must prioritize the timely and accurate filing of financial statements to avoid financial penalties and legal consequences.
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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.mumbai@mca.gov.in
No. ROC(M)/SDL/ADJ-ORDER/6311 to 6313
Date : 26 DEC 2023
Order for Penalty under Section 454 for violation of Section 137 of the Companies Act, 2013.
IN THE MATTER OF SM DYECHEM LTD (U24110MH1982PLCO27307).
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 Act] read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
Company: –
2. The Company SM DYECHEM LTD bearing CIN: U24110MH1982PLCO27307 (herein after known as ‘Company’) is a registered company with this office under the provisions of the Companies Act, 1956 having its registered office as per MCA masterdata at address 3, Narayan Building, 23 LN Road, Dadar- East, Mumbai City, Mumbai, Maharashtra, India, 400014.
Relevant Provisions of the Companies Act, 2013
3. Section 137- 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 ***:
Provided that where the financial statements under sub-section (1) are not adopted at annual general meeting or adjourned annual general meeting, such unadopted financial statements along with the required documents under sub-section (1) shall be filed with the
Registrar within thirty days of the date of annual general meeting and the Registrar shall take them in his records as provisional till the financial statements are filed with him after their adoption in the adjourned annual general meeting for that purpose:
Provided further those financial statements adopted in the adjourned annual general meeting shall be filed with the Registrar within thirty days of the date of such adjourned annual general meeting with such fees or such additional fees as may be prescribed ***:
Provided also that a One Person Company shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year:
Provided also that a company shall, along with its financial statements to be filed with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.
Provided also that in the case of a subsidiary which has been incorporated outside India (herein referred to as foreign subsidiary), which is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated copy of the financial statement in English.
(2) Where the annual general meeting of a company for any year has not been held, the financial statements along with the documents required to be attached under sub-section (1), duly signed along with the statement of facts and reasons for not holding the annual general meeting shall be filed with the Registrar within thirty days of the last date before which the annual general meeting should have been held and 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 one thousand rupees for every day during which the failure continues but which shall not be more than ten 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 one lakh rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of five lakh rupees.
Facts about the case: –
4. In terms of provisions of Section 137 of the Companies Act, 2013, the Company was required to file the Financial Statement within thirty days from the date of Annual General Meeting held in pursuance of Section 96 of the Companies Act, 2013.
5. It was observed as per the MCA21 database, that the Company has defaulted in filing its Financial Statement for the Financial Year 2018-2019. The company is in violation of provisions of Section 137 of the Companies Act, 2013 for late-filing of Financial Statement for the financial year ended 31.03.2019 with a delay of 29 days. The due date of filing was 30.10.2019, however, the Company filed its Financial Statement on 29.11.2019 for the Financial Year 2018-19.
6. This office had issued a Show Cause Notice to the Company and its Officers in default on 26.10.2020 under Section 454 of the Companies Act, 2013 for adjudication of offence under Section 92(5) of the Companies Act, 2013.
Reply of the Company:-
7. No reply has been received by this office from the Company and its Officers in default till date.
FINDINGS: –
8. As observed from the MCA21 database, the Company has failed in filing Financial Statement within the time prescribed by the provisions of Section 137 of the Companies Act, 2013.
9. It is also observed that no reply has been received from the Company and its Officers in Default to the Show Cause Notice till date.
10. As per Section 454 of the Companies Act, 2013 read with Rule 3(11) of Companies (Adjudication of Penalties) Rules, 2014, if the Company and Officers in default fail to reply or neglect or refuse to appear as required, the adjudicating officer may pass an order imposing the penalty in the absence of such person after recording the reasons for doing so.
11. As no reply has been received till date and the violation of the said provision has been established from the MCA21 database, the following Order is being passed.
12. Further, as per the provisions of Section 2(60) Read with Section 2(51) of the Companies Act, 2013 KMPs are being considered as Officers in Default. Hence, penalty is being levied on Mr. Hersh Sanjiv Shah (CFO-KMP) and not on the other noticees viz Mr. Nilesh Mahendra Gandhi (Director) and Ms. Priti Nilesh Gandhi (Director).
ORDER
13. 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 137 of the Act. The delay, if any, in passing of the order is due to the legal complexities involved in the matter.
14. Having considered the facts and circumstances of the case and after taking into consideration the above-stated factors, I hereby impose a penalty of Rs. 29,000/- on the Company (Rupees Twenty-Nine thousand only) on the Company and Rs.1,02,900/- (Rupees One Lakh, Two Thousand and Nine Hundred Only) on its Officer in default, each, as per table given below for violation of provisions of Section 137 of the Companies Act, 2013.
| No. of days of default (•) |
Penalty imposed on Company/ KMP | First default Penalty in (Rs.) | Default continues Penalty in (Rs.) | Total Penalty Levied in (Rs.) | Maximum
Penalty in |
| 29 | A. Company
SM DYECHEM LITD [CIN: U24110MH1982PLCO27307] |
N. A. | 29 x 1000 = 29,000/- | 29,000/- | 10,00,000/- |
| B. Directors /KMP
1. HERSH SANJIV SHAH (CFO-KMP) |
1,00,000 | 29 x 100 = 2,900/- | 1,00,000 + 2,900 = 1,02,900/- | 5,00,000 | |
| TOTAL | 1,31,900/- | 15,00,000 | |||
TOTAL PENALTY PAYABLE: – Rs. 1,31,900/-
(•) The period of violation of provisions under Section 137 of the Companies Act, 2013 is from 31.10.2019 till 28.11.2019. As per signatory details available on MCA21 portal, the abovementioned individual was the Officer in default during the period of violation.
(•) Due date of filing was 30.10.2019 and Financial Return was filed on 29.11.2019. Default period is thus calculated to be at a total of 29 days till 28.11.2019.
15. I am of this opinion that, the penalty is commensurate with the aforesaid failure committed by the Noticee/s.
16. The Noticee/s 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.
17. Please note that as per Section 454(8)(i) of the Companies Act, 2013, where the Company does not pay the penalty imposed by the Adjudicating Officer or the Regional Director within a period .of 90 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.
18. Where an Officer of a Company, who is in default, does not pay the penalty within a period of 90 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.
19. 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.
20. Further, the company and its officers are hereby direct that the penalty amount shall be remitted from their own sources through MCA21 portal within 60 days from the date of receipt of order. The company needs to file INC-28 as per the provisions of the Act, attaching the copy of the adjudication order along with payment challans.
2. As per 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, 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 60 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.
22. 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.
(B MISHRA)
Adjudication officer and Registrar of Companies,
Maharashtra, Mumbai.
