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Registrar of Companies (Gujarat, Dadra & Nagar Haveli) issues Penalty Order for Non-Filing of Financial Statements

Provisions Involved:

Section 137 of Companies Act, 2013 states that 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 Annual General Meeting (AGM) of the company, shall be filed with the Registrar within thirty days of the date of AGM in such a manner, with such fees or additional fees as may be prescribed.

Facts of the Case for Violation of Section 137-

  • The subject company (Astha International Limited) has not filed the copies of financial statements including consolidated financial statements along with all the documents which are required to be attached to such financial statements for the year ended March 31, 2019, March 31, 2020 & March 31, 2021 should have been filed on the MCA Portal in accordance with the provisions of Section 137(1) of the Companies Act, 2013 within 30 days from the date of adoption of the said documents before the AGM (for FY 2019-20, date extended up to February 01, 2021).
  • As per Section 137(3) of the Companies Act, 2013, if a company fails to file the copy of financial statements under sub-section (1) or sub-section (2) as the case may be, before the expiry of the period specified, then the company shall be liable to a penalty of Rs. 10,000 and in case of continuing failure, with a further penalty of Rs. 100 for each day during such failure continues, subject to maximum of Rs. 2,00,000.
  • The Managing Director and CFO of the company, if any, or in absence of these two, then the director who is charged by the board with the responsibility of complying with the provision of this section, shall be liable to a penalty of Rs. 10,000 and in case of continuing failure, with a further penalty of Rs. 100 for each day during such failure continues, subject to maximum of Rs. 50,000.
  • The subject company and every officer of the company who have not complied with the section 137 were now liable to be penalized.
  • Total Penalty of Rs. 12,61,700 was imposed on the subject company and its directors/officers who are in default for violation of section 137(3) which are as follows:
  • Penalty for non-filing of Balance Sheet for the F.Y. 2018-19 – Rs. 1,24,200 on company and Rs. 3,50,000 on its 7 directors/officers.
  • Penalty for non-filing of Balance Sheet for the F.Y. 2019-20 – Rs. 78,300 on company and Rs.
    3,50,000 on its 7 directors/officers.
  • Penalty for non-filing of Balance Sheet for the F.Y. 2020-21 – Rs. 44,900 on company and Rs.
    3,14,300 on its 7 directors/officers.

Decision on Violation of Section 137-

  • The said amount of penalty shall be paid by way of form no. INC-28 of e-payment (available on www.mca.gov.in) under “Pay miscellaneous fees” category in MCA fee and payment service within 90 days of the order and the Challan / SRN (service request number) generated after payment of penalty through online mode shall be forwarded to the office along with copy of form No. INC-28.
  • Appeal against this order may be filed in writing with the Regional Director, North Western Regional, Ministry of Corporate Affairs, Ahmedabad within a period of sixty days from the date of receipt of the order, in Form ADJ [available on www.mca.gov.in] setting forth the grounds of appeal and shall be accompanied by a certified copy of the order.
  • Astha International Limited was also invited to provide attention to Section 454(8) (i.e., adjudication of penalties) of the Companies Act, 2013 in the event of non-compliance of the order which provides that in case of default in payment of penalty, prosecution will be filed u/s 454(8)(ii) of the Act at their own costs without any further notice.
  • As per provisions of Section 454(8)(i) of the Companies Act, 2013, where company does not pay the penalty imposed by the Adjudication Officer or the Regional Director within 90 days from the date of receipt of order, the company shall be punishable with fine which shall not be less than Rs. 25,000 but which may be extended to Rs. 5,00,000.
  • Further as per Section 454(8)(ii) of the Companies Act, 2013, where an officer of a company who is in default does not pay the penalty within 90 days from the date of receipt of order, such officers shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than Rs. 25,000 but which may be extended to Rs. 1,00,000, or with both.

SW Remarks:
After looking into the above judgement, it is clearly visible that section 137 of Companies Act, 2013
should be properly followed by each and every company (i.e., copy of financial statement to be
filed with registrar) to avoid penal implications and imprisonment of the officers who have not
compiled with this section.
Also, a same case was seen later on in which M/s Nulinz Education Private Limited was marked default
by ROC Tamil Nadu for not following the above section 137 of Companies Act, 2013.

Ankit Sawhney, Audit Associate, SW India

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