Companies Act Section 137: Filing of Financial Statements with the Registrar of Companies (ROC)

Companies Act Section 137: Filing of Financial Statements with the Registrar of Companies (ROC) . MCA imposed penalty for Non-Filing of Financial Statements
The Companies Act, 2013, seeks to ensure transparency and accountability in corporate governance by mandating timely disclosure of financial information. Among these obligations, Section 137 requires every company to file its financial statements with the Registrar within thirty days of its Annual General Meeting (AGM). This provision serves as a safeguard for stakeholders, regulators, and the public by enabling access to a company’s financial health. Non-compliance attracts stringent penalties under Section 137(3), applicable to both the company and its officers in default.
In the present case, Sapphire Media & Infrastructure Limited defaulted in filing its financial statements for the financial year 2014 -15. The ROC initiated legal proceedings due to this prolonged non-compliance, which extended to over two years. Though the matter was initially pursued before a criminal court, it was subsequently withdrawn and redirected to the Adjudicating Authority as per Section 454. The company’s repeated failure to engage in the adjudication process reflects a disregard for statutory compliance and procedural fairness. This case thus serves as a pertinent example of regulatory enforcement under the Companies Act, 2013, particularly in relation to financial statement filing and the consequences of persistent default.
Facts
Sapphire Media & Infrastructure Limited (CIN: L93090TN1997PLC039630) held its Annual General Meeting on 30 September 2015 for the financial year ending 31 March 2015. Under Section 137 of the Companies Act, 2013, the company was required to file its financial statements with the Registrar of Companies within thirty days of the AGM, i.e., by 29 October 2015. However, the company failed to file the financial statements within the prescribed time. The Registrar of Companies, Chennai, issued a Show Cause Notice on 24 October 2016 and subsequently filed a complaint under Section 137(1) read with Section 137(3) before the Court of the Additional Chief Metropolitan Magistrate, Egmore, Chennai, registered as EOCC No. 51/2017, against the company and its directors. Despite these proceedings, the company filed its AOC-4 only on 29 March 2018 through SRN G81535999, with a delay of 882 days from the statutory due date. Thereafter, by an order dated 7 September 2023, the criminal court permitted the withdrawal of the complaint upon the request of the complainant and transferred the matter to the Registrar of Companies/Adjudicating Authority for adjudication under Section 454 of the Companies Act, 2013, closing EOCC No. 51/2017 as withdrawn. The Adjudicating Authority issued a notice for e-adjudication on 13 February 2025, to which no reply was received from the company or its directors, and subsequently issued another notice on 18 March 2025 for an e-hearing scheduled on 20 March 2025. Neither the company’s directors nor any authorized representatives appeared for the hearing. Consequently, as per Rule 3(8) of the Companies (Adjudication of Penalties) Rules, 2014, the matter is being proceeded with ex-parte. Thus, the facts reveal that the company committed a continuing default of 882 days in filing its financial statements, attracting liability under Section 137(3) of the Companies Act, 2013, for both the company and the officers in default.
Legal Issues

Whether Sapphire Media & Infrastructure Limited violated Section 137 of the Companies Act, 2013

Whether the directors and officers of Dashboard Account Aggregation Services Private Limited fall within the ambit of “officers in default” as defined under Section 2(60) of the Companies Act, 2013, thereby rendering them personally liable for penalty under Section 137(3) for failure to file the financial statements within the prescribed period.

What is the quantum of penalty applicable to the company and its officers?

Whether the adjudication can proceed ex-parte in the absence of the company and directors.

Penalities
In view of the facts and circumstances of the case, and after considering the provisions of Section 137(3) of the Companies Act, 2013, it is noted that the company and its officers in default have failed to file the financial statements within the prescribed time. Therefore, in exercise of the powers conferred under Section 454 of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) Rules, 2014, the following penalties are imposed. Having considered the violation committed under Section 137 of the Companies Act, 2013 and in terms of Section 137(3), the company and every officer in default are liable for penalties as prescribed under law. Accordingly, the penalty is imposed as follows:
SAPPHIRE MEDIA & INFRASTRUCTU RE LIMITED- 98200
KOMMA REDDY TARUN KUMAR- 50000
AKKINENI SRIRAMULU- 50000

The Adjudicating Officer finds the company and its officer guilty of the violation of provisions of this act.

Penalities are imposed under Section 454 of the Act

The penalty must be paid within 90 days through MCA e- Adjudication portal.

The officers are required to pay the penalty from their personal funds.

Under section 454(5) and (6) the regional director, Ahemdabad has the right to appeal within 60 days

Final Note of the Article
From the above facts, it is evident that Sapphire Media & Infrastructure Limited failed to comply with the mandatory requirement of filing its financial statements for the financial year 2014 -15 within the prescribed time under Section 137(1) of the Companies Act, 2013. The company eventually filed the financial statements with a delay of 882 days, thereby attracting penal provisions under Section 137(3).
The complaint initially filed before the Hon’ble Court was later withdrawn and transferred to the Adjudicating Authority under Section 454 of the Act. Despite issuance of notices for e-Adjudication and e-hearing, the company and its directors failed to submit any reply or appear, and hence, the matter has been proceeded ex-parte.
Accordingly, both the company and the officers in default are held liable for penalty under Section 137(3). The penalty is to be imposed in line with the statutory limits, ensuring accountability of the company as well as its directors for non-compliance.
Download MCA Adjudication Order

MCA imposed penalty for Non-Filing of Financial Statements

The Companies Act, 2013, seeks to ensure transparency and accountability in corporate governance by mandating timely disclosure of financial information. Among these obligations, Section 137 requires every company to file its financial statements with the Registrar within thirty days of its Annual General Meeting (AGM). This provision serves as a safeguard for stakeholders, regulators, and the public by enabling access to a company’s financial health. Non-compliance attracts stringent penalties under Section 137(3), applicable to both the company and its officers in default.

In the present case, Sapphire Media & Infrastructure Limited defaulted in filing its financial statements for the financial year 2014 -15. The ROC initiated legal proceedings due to this prolonged non-compliance, which extended to over two years. Though the matter was initially pursued before a criminal court, it was subsequently withdrawn and redirected to the Adjudicating Authority as per Section 454. The company’s repeated failure to engage in the adjudication process reflects a disregard for statutory compliance and procedural fairness. This case thus serves as a pertinent example of regulatory enforcement under the Companies Act, 2013, particularly in relation to financial statement filing and the consequences of persistent default.

Facts

Sapphire Media & Infrastructure Limited (CIN: L93090TN1997PLC039630) held its Annual General Meeting on 30 September 2015 for the financial year ending 31 March 2015. Under Section 137 of the Companies Act, 2013, the company was required to file its financial statements with the Registrar of Companies within thirty days of the AGM, i.e., by 29 October 2015. However, the company failed to file the financial statements within the prescribed time. The Registrar of Companies, Chennai, issued a Show Cause Notice on 24 October 2016 and subsequently filed a complaint under Section 137(1) read with Section 137(3) before the Court of the Additional Chief Metropolitan Magistrate, Egmore, Chennai, registered as EOCC No. 51/2017, against the company and its directors. Despite these proceedings, the company filed its AOC-4 only on 29 March 2018 through SRN G81535999, with a delay of 882 days from the statutory due date. Thereafter, by an order dated 7 September 2023, the criminal court permitted the withdrawal of the complaint upon the request of the complainant and transferred the matter to the Registrar of Companies/Adjudicating Authority for adjudication under Section 454 of the Companies Act, 2013, closing EOCC No. 51/2017 as withdrawn. The Adjudicating Authority issued a notice for e-adjudication on 13 February 2025, to which no reply was received from the company or its directors, and subsequently issued another notice on 18 March 2025 for an e-hearing scheduled on 20 March 2025. Neither the company’s directors nor any authorized representatives appeared for the hearing. Consequently, as per Rule 3(8) of the Companies (Adjudication of Penalties) Rules, 2014, the matter is being proceeded with ex-parte. Thus, the facts reveal that the company committed a continuing default of 882 days in filing its financial statements, attracting liability under Section 137(3) of the Companies Act, 2013, for both the company and the officers in default.

Legal Issues

Whether Sapphire Media & Infrastructure Limited violated Section 137 of the Companies Act, 2013
Whether the directors and officers of Dashboard Account Aggregation Services Private Limited fall within the ambit of “officers in default” as defined under Section 2(60) of the Companies Act, 2013, thereby rendering them personally liable for penalty under Section 137(3) for failure to file the financial statements within the prescribed period.
What is the quantum of penalty applicable to the company and its officers?
Whether the adjudication can proceed ex-parte in the absence of the company and directors.

Penalities

In view of the facts and circumstances of the case, and after considering the provisions of Section 137(3) of the Companies Act, 2013, it is noted that the company and its officers in default have failed to file the financial statements within the prescribed time. Therefore, in exercise of the powers conferred under Section 454 of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) Rules, 2014, the following penalties are imposed. Having considered the violation committed under Section 137 of the Companies Act, 2013 and in terms of Section 137(3), the company and every officer in default are liable for penalties as prescribed under law. Accordingly, the penalty is imposed as follows:

SAPPHIRE MEDIA & INFRASTRUCTU RE LIMITED- 98200

KOMMA REDDY TARUN KUMAR- 50000

AKKINENI SRIRAMULU- 50000

The Adjudicating Officer finds the company and its officer guilty of the violation of provisions of this act.
Penalities are imposed under Section 454 of the Act
The penalty must be paid within 90 days through MCA e- Adjudication portal.
The officers are required to pay the penalty from their personal funds.
Under section 454(5) and (6) the regional director, Ahemdabad has the right to appeal within 60 days

Final Note of the Article

From the above facts, it is evident that Sapphire Media & Infrastructure Limited failed to comply with the mandatory requirement of filing its financial statements for the financial year 2014 -15 within the prescribed time under Section 137(1) of the Companies Act, 2013. The company eventually filed the financial statements with a delay of 882 days, thereby attracting penal provisions under Section 137(3).

The complaint initially filed before the Hon’ble Court was later withdrawn and transferred to the Adjudicating Authority under Section 454 of the Act. Despite issuance of notices for e-Adjudication and e-hearing, the company and its directors failed to submit any reply or appear, and hence, the matter has been proceeded ex-parte.

Accordingly, both the company and the officers in default are held liable for penalty under Section 137(3). The penalty is to be imposed in line with the statutory limits, ensuring accountability of the company as well as its directors for non-compliance.