Failure to File Copy of Financial Statement u/s 137 of Companies Act: MCA imposes Penalty on Company and Board of Directors

In a recent order of adjudication passed by the Ministry of Corporate Affairs ( MCA ), the Registrar of Companies imposed a fine of ₹3.3 lakhs on the company and its board of directors for the failure to file a copy of the financial statement as per Section 137 of the companies act.

The Company is registered under the provisions of the Companies Act, and its registered office is in Varanasi, Uttar Pradesh. The authorised capital of the company amounts to ₹1,100,000.00. During an inquiry conducted on the company, it was observed that the company had not filed its financial statements in Form AOC-4 for the financial years of 2020 and 2021.

The MCA observed that the company and its directors have failed to comply with provisions of Section 137 of the Companies Act,2013, in filing of the financial statement of the company and also was determined to attract penal provisions mentioned in Section 137(3) of the Companies Act,2013

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Section 137(1) of the Companies Act,2013 provides that:

“A Copy of the financial statements, including consolidated financial statement, is 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 the annual general meeting in such manner, with such fees or additional fees as may be prescribed.”

Section 137(3) of the Companies Act 2013 Provides 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 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 after the first during which such failure continues, subject to a maximum of 9 [fifty thousand rupees.]

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It was also observed that a Show Cause Notice was issued to the company and its officers concerning this default under Section 137(3) of the Companies Act, 2013, read with Companies (adjudication of penalties ) rules, 2014 by this office for non-filing of balance sheets for the considered year. However, the company and its officer have failed to furnish any reply to the said Show Cause Notice, and therefore, no hearing was held on this matter.

Considering all the facts of the situation, the Registrar of Companies imposed a penalty of ₹3,33,300 as per Section 137(3) of the Companies Act, 2013. It was directed that the amount of penalty was to be paid individually by way of e-payment system available on the Ministry’s website under the head of the “Pay Miscellaneous fees” category in MCA fee and payment services within 90 days, starting from the day of the pronouncement of the order. It was also directed that the Challan/SRN generated after penalty payment be forwarded to this office. The registrar also asserted that the company has to file INC-28 as per the provisions of the Act

To Read the full text of the Order CLICK HERE

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