Penalty under Section 137(3) for Failure to File FY 2017-18 Financial Statements: ROC Cuttack Order Explained
The Registrar of Companies, Cuttack has passed an adjudication order under Section 454 of the Companies Act, 2013 imposing penalties on DP FINANCIAL CORPORATION OF INDIA LIMITED and its officers for failure to file financial statements for the financial year ending 31.03.2018. The order highlights strict consequences of prolonged non-compliance with Section 137(1) and offers important compliance lessons for all companies.
This write-up summarises and analyses the key elements of the order, the statutory provisions applied, the procedure followed, and the quantum of penalty levied, in a practitioner-friendly format.
Statutory Background – Filing of Financial Statements
Obligation under Section 137(1)
Section 137(1) of the Companies Act, 2013 mandates every company to file with the Registrar a copy of the financial statements (duly adopted at the annual general meeting), along with all required documents, within the prescribed time.
For a typical company, the due date for filing financial statements is 30 days from the date of the annual general meeting. In this case, the ROC has considered 31.10.2018 as the due date of filing for the financial year ending **31.03.2018`.
Non-filing within this timeline triggers penal consequences under Section 137(3).
Penalty Mechanism under Section 137(3)
The order reproduces and applies Section 137(3) of the Companies Act, 2013, which provides as under:
For the company:
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.
For officers in default:
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 further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of fifty thousand rupees.
The provision thus operates on a fixed plus daily penalty model, subject to caps of:
- ₹2,00,000 for the company; and
- ₹50,000 for each officer in default.
Appointment of Adjudicating Officer
The Ministry of Corporate Affairs, through **Gazette Notification No. S.O.