ROC Penalty for Non-Filing of Financial Statements: Key Lessons from Section 137(3) Adjudication

The Registrar of Companies (ROC), Bangalore has passed an adjudication order under Section 454 of the Companies Act 2013 for violation of Section 137(3) due to non-filing of financial statements for the financial year 2022–23. This order demonstrates how serious the Ministry of Corporate Affairs (MCA) is about timely statutory filings and the consequences of ignoring notices and hearing opportunities.

This article breaks down the order, explains the legal framework, analyses the computation of penalty, and highlights practical compliance takeaways for companies and officers.

Statutory Framework: Filing of Financial Statements under Section 137

Obligation to File Financial Statements

Under Section 137 of the Companies Act 2013, every company is required to file its financial statements with the ROC within the prescribed timeline after adoption in the Annual General Meeting (AGM), or in case of an adjourned meeting, within the extended period as provided under the law.

The provision covers:

  • Filing of:
    • Balance sheet
    • Profit and loss account or income and expenditure account
    • Cash flow statement, if applicable
    • Notes to accounts
    • Any other documents forming part of financial statements
  • Within the statutory time limit specified in Section 137(1) and, where relevant, Section 137(2)

Penal Consequences under Section 137(3)

Section 137(3) prescribes penalties for failure to file the prescribed financial statements within time. The provision quoted in the order is as follows:

“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 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.”

Therefore:

  • Company Liability

    • Base penalty: ₹10,000
    • Continuing default: ₹100 per day
    • Maximum: ₹2,00,000

  • Officer Liability (MD/CFO/other responsible director/all directors, as applicable)

    • Base penalty: ₹10,000
    • Continuing default: ₹100 per day
    • Maximum: ₹50,000

Facts of the Case: Non-Filing and Non-Response

Company and Officer Involved

The adjudication proceedings were in respect of:

  • Company: MINANCE INVESTMENT ADVISORS PRIVATE LIMITED

    • CIN: U74999KA2017PTC108408
    • Registered office: NO. 35/37 (OLD NO. 598), 11TH MAIN ROAD JAYANAGAR 5TH BLOCK, NA BANGALORE BANGALORE KARNATAKA INDIA 560041

  • Officer in Default: ANURAG BHATIA

    • DIN: 07012878

Nature of Default

The key violation identified was:

  • Failure by the company to file its financial statements for FY 2022–23 as mandated under Section 137 of the Companies Act 2013.
  • No explanation, reply, or clarification was furnished by the company in response to ROC queries.

The ROC specifically recorded that:

  1. The company had not filed the financial statements for FY 2022–23.
  2. There was no response through the electronic (e-Adjudication) module to the communications issued.
  3. The default continued despite statutory requirements and opportunities to rectify the position.

Adjudication Proceedings under Section 454

Appointment of Adjudicating Officer

The adjudicating officer (Registrar of Companies, Bangalore) was appointed by the Ministry of Corporate Affairs through Gazette Notification No. S.O.