Failure to appoint Internal Auditor: MCA Slaps ₹2.5 Lakh Penalty on Company and its Director [Read Order]

The Ministry of Corporate Affairs ( MCA ) has imposed a total penalty of ₹2.5 lakh on a private limited company and its director for failure to appoint an Internal Auditor.

As per Section 138 of the Companies Act, 2013 read with Rule 13(1)(c) of the Companies (Accounts) Rules, 2014, an internal auditor must be appointed and if there is any failure, a penalty may be imposed.

As per the order dated 08.12.2025, the ROC held that since the Exotel Techcom Private Limited’s (i.e., the Company) turnover crossed the prescribed threshold, it was required to appoint an internal auditor from FY 2022-23 onwards, but the appointment was made only on 14.11.2024.

There was a continuing default of 958 days, noted the registrar.

As per the order, the company itself filed a suo-motu application on 09.01.2025 admitting the lapse. It stated that it had not appointed an internalauditor for FY 2022-23 and FY 2023-24, even though such appointment was compulsory.

Accordingly, the ROC issued a show cause notice, followed by the hearing on 20.08.2025, which was attended by the authorised representative of the company. Additional turnover details were submitted by the practising company secretary on 25.08.2025 as directed during the hearing.

The ROC examined the submissions. It concluded that the company’s turnover had crossed ₹200 crore in FY 2021-22. And this makes the company mandatory to appoint an internal auditor from FY 2022-23.

As the auditor was appointed after the time period, the registrar held the company and its officer in default liable for penalty for the period 01.04.2022 to 14.11.2024 (958 days).

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