Failure to Serve Annual Report Breaches S.136: MCA Imposes ₹25K Penalty on Company and ₹5k Each on Directors [Read Order]

The Ministry of Corporate Affairs has imposed a penalty of Rs 25,000 on the Company and Rs 5,000 each on directors for the violation of Section 136 of the Companies Act. The penalty was imposed on account of failure to serve annual reports to its members.

The matter was related to an inspection ordered by the MCA. The report of the inspection was submitted in 2023. During the inspection, the IO observed that Om Shyamji Foods Private Limited had not served the copies of its annual report for FY 2018-19 to its members.

The company in the reply admitted that, being a private company, the Annual report was sent to the members by hand delivery, in accordance with their oral understanding since incorporation. The members never questioned this since its incorporation.

The Company started the practice of sending the Annual Reports by Indian Post from FY 2020-21. Thus, the IO concluded that the Company had failed to serve the Annual Reports for FY 2019-20 to its members, in contravention of provisions of section 136 of the Companies Act, 2013.

A show cause notice was issued in October 2025 to the company and its directors, Mr. Anil Kumar Gupta and Mr Raghav Gupta Anilkumar. No reply was filed on the e‑adjudication portal, prompting the adjudicating officer to schedule an e‑hearing in December 2025.

During the hearing, the company’s representative admitted the default but argued that the entity was a small company during the relevant period. However, the ROC noted that the company’s paid‑up capital of ₹2 crore and turnover of over ₹15.76 crore for FY 2017–18 exceeded the thresholds defined under Section 2(85), thereby disqualifying it from small company status.

On the basis of the Inspection report of the IO, it was observed that the Company failed to serve the Annual Reports for FY 2018-19 to its members, in contravention of the provisions of section 136 of theccccccccccccccccccccccccccccccccccccccccccccccccccccccc, 2013.

Thus, the Company was held liable to a penalty of Rs. 25,000/- and its Officers in default shall be liable to a penalty of Rs.5,000/- under the provisions of Section 136(1) for default of Section 136(3) of the Act.

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