ROC Adjudication on Form MGT-14: No Penalty Where Filing Exists and Compliance Is Established

Background and Context

The Registrar of Companies, Uttar Pradesh initiated adjudication proceedings under Section 454 of the Companies Act, 2013 against LOKVIKAS BENEFIT NIDHI LIMITED and its directors for an alleged violation of Section 117(1) read with Section 179(3)(g). The core allegation was that the assessee had not filed Form MGT-14 in respect of board resolutions approving the financial statements for multiple financial years, thereby attracting the penal provisions of Section 117(2).

This matter arose out of an inquiry under Section 206(4) conducted by the office of the Registrar of Companies (ROC), pursuant to directions issued by the higher authorities of the Ministry of Corporate Affairs (MCA). Ultimately, during adjudication, it was discovered that the company had in fact filed Form MGT-14 for the financial year 2020-21, though this filing was not traceable at the time of issuance of the show cause notice. On verification of this later filing, the ROC concluded that no penalty was leviable.

This order is a useful illustration that where statutory forms are ultimately found to have been duly filed, penalty under Section 117(2) cannot be sustained merely on the basis of an earlier, incomplete system reflection or visibility issue.

Appointment and Authority of Adjudicating Officer

Statutory Empowerment under Section 454

The Ministry of Corporate Affairs, through Gazette Notification No. S.O. 831(E) dated 24/03/2015, appointed the undersigned ROC as the Adjudicating Officer for the purpose of Section 454 of the Companies Act, 2013. The appointment confers power to adjudicate penalties under various provisions of the Act, in line with the Companies (Adjudication of Penalties) Rules, 2014.

Accordingly, the adjudicating authority is empowered to:

  • Examine instances of non-compliance reported through inquiries, inspections, or other sources
  • Determine whether a default under the Act has occurred
  • Quantify penalty in accordance with the specific penalty provisions, including Section 117(2)
  • Issue orders directing payment of penalty and rectification of defaults

Details of the Company and Individuals Involved

Corporate Entity

  • Name of company: LOKVIKAS BENEFIT NIDHI LIMITED
  • CIN: U67190UP2017PLC093239
  • Registered office address:
    GURAWALIA KUSHINAGAR NA GORAKHPUR
    GORAKHPUR
    UTTAR PRADESH
    INDIA 274302

This company is registered under the provisions of the Companies Act, 2013/1956 with the office of ROC, Uttar Pradesh.

Directors / Officers in Default

The adjudication proceedings also referred to the following individuals as officers in default:

  • AMBIKA SHARMA
  • DILIP SHARMA
  • PUJA SHARMA

Their respective DINs have been recorded in the adjudication order, and they were treated as persons responsible for ensuring statutory compliance on behalf of the company.

Filing of Resolutions – Section 117

Section 117(1) mandates that specified resolutions and agreements passed by a company must be filed with the ROC within the prescribed period, in the prescribed form (including Form MGT-14 where applicable). Resolutions relating to approval of financial statements by the Board fall within the scope of Section 179(3)(g), and accordingly, are required to be filed in Form MGT-14 under Section 117(1).

Nature and Quantum of Penalty – Section 117(2)

The adjudicating authority reproduced and relied upon Section 117(2), which provides:

(2) If any company fails to file the resolution or the agreement under sub-section (1) before the expiry of the period specified therein, such 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 after the first during which such failure continues, subject to a maximum of two lakh rupees and every officer of the company who is in default including liquidator of the company, if any, 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 fifty thousand rupees.

Thus, the scheme of Section 117(2) is:

  • Initial fixed penalty:
    • Rs. 10,000 on the company
    • Rs. 10,000 on each officer in default
  • Daily penalty for continuing failure:
    • Rs. 100 per day after the first day of default
  • Caps on maximum penalty:
    • Rs. 2,00,000 for the company
    • Rs. 50,000 for each officer in default