MCA Penalizes Company and Directors for Financial Statement Delay Filing

MCA Penalizes Company and Directors for Financial Statement Delay Filing. The article will guide readers through all essential requirements that companies must follow under Section 137 of the Companies Act 2013. All companies need to submit their financial statements to the Registrar of Companies before the established deadline. The law requires both the company and its defaulting officers to face penalties under Section 137(3) of the Act when they fail to comply. The company faces a maximum penalty of Rs.2,00,000 while each director who fails to comply must pay a maximum of Rs.50,000.
In this case, the company and its directors of Hardees Restro International Pvt. Ltd. submitted all outstanding financial statements before the ROC Chandigarh issued the show cause notice and requested Suo Moto adjudication. The ROC Chandigarh chose not to impose penalties on the company or its directors because they took voluntary action to correct their errors without showing any intent to deceive.
Every company needs to meet Section 137 requirements by submitting financial statements annually within the specified timeframe. The exercise of discretion by adjudicating officers for voluntary rectification cases remains risky because it depends on their individual decisions. Companies that fail to comply with Section 137 face substantial financial penalties together with legal repercussions. 
Applicable Provisions
According to Section 137 of the Companies Act of 2013, each company must submit to the Registrar of Companies (ROC) within the allotted time frame a copy of its financial statements, including any consolidated financial statements, and all necessary documents that were properly adopted at the company's annual general meeting.
It is a mandatory requirement under the Companies Act, 2013, that companies must submit their financial statements each year to the ROC. This ensures transparency, regulatory oversight, and compliance with statutory obligations.
The documents referred to in this section would include the balance sheet, profit and loss account/income statement, cash flow statement, notes to accounts, board’s report, auditor’s report, and other prescribed attachments. These filings must be submitted electronically using the designated forms (such as Form AOC-4 and its variations) via the MCA portal.
Facts Of The Case
The case concerns Hardees Restro International Private Limited (CIN: U55101CH2016PTC035918) and its directors Amandeep Singh Kohli, Amandeep Kaur, and Harkirat Marwaha who were found in default for not filing the company’s financial statements for the financial years 2016–17, 2017–18, 2018–19, and 2022–23, as required under Section 137(3) of the Companies Act, 2013. The company and its directors filed a suo motu application for adjudication under Section 454 of the Act, admitting the default but explaining that the non-compliance was unintentional and without any malafide intent. Since the company had subsequently rectified the default by filing the pending financial statements before the issuance of a show-cause notice, the Registrar of Companies, Chandigarh, determined that no penalty was warranted under the proviso to Section 454(3) of the Act. Consequently, no monetary penalty was imposed on the company or its directors, though they were advised to ensure timely compliance in the future.
Penal Provisions under Section 137(3) of the Companies Act, 2013
As per Section 137(3) of the Companies Act, 2013, if a company fails to file its financial statements within the prescribed time:

The company shall be liable to a penalty of Rs.10,000, and in case of continuing failure, a further penalty of Rs.100 for each day during which such failure continues, subject to a maximum of Rs.2,00,000.

Every officer in default (including directors) shall be liable to a penalty of Rs.10,000, and in case of continuing failure, a further penalty of Rs.100 for each day after the first during which such failure continues, subject to a maximum of Rs.50,000.

Penalty Imposed by Registrar of Companies on Company and Officers in Default
After considering the facts and circumstances of the case and the submissions made through the suo motu application filed by the company and its directors, the Registrar of Companies, Chandigarh, passed an order under Section 454 of the Companies Act, 2013, for violation of Section 137(3) of the Act relating to non-filing of financial statements for the financial years 2016–17, 2017–18, 2018–19, and 2022–23.
The matter was examined on the basis of documents and affidavits submitted by the company and its officers. Since the default had been rectified prior to the issuance of the show-cause notice, and the non-compliance was found to be unintentional and without malafide intention, the Registrar, in terms of the proviso to Section 454(3) of the Companies Act, 2013, decided not to impose any monetary penalty on the company and its officers.

Violation of Section

Penalty Imposed on Company/Directors

Rectification of Default

Penalty Amount (Rs.)

Maximum Limit under the Act (Rs.)

Section 137(3) – Non-filing of Financial Statements

Hardees Restro International Private Limited (CIN: U55101CH2016PTC035918)

Rectified

2,00,000

Section 137(3) – Same

Amandeep Singh Kohli (DIN: 07414432)

Rectified

50,000

Section 137(3) – Same

Amandeep Kaur (DIN: 07418002)

Rectified

50,000

Section 137(3) – Same

Harkirat Marwaha (DIN: 07418003)

Rectified

50,000

Exemption under Section 446B of the Companies Act, 2013
As per Section 446B of the Companies Act, 2013, where a penalty is payable for non-compliance of any provision of the Act by a One Person Company, Small Company, Start-up Company, or Producer Company, or by any of its officers in default, such company or officer shall be liable to a penalty not exceeding one-half of the penalty specified, subject to a maximum of Rs.2,00,000 in the case of a company and Rs.1,00,000 in the case of an officer in default.
However, in the present case, Hardees Restro International Private Limited does not qualify as a Small Company, One Person Company, or Start-up Company under the provisions of the Act. Therefore, the benefit of reduced penalty under Section 446B is not applicable in this instance. 
Final Word
The company and its directors must ensure timely filing of financial statements and other statutory documents with the Registrar of Companies as mandated under Section 137 of the Companies Act, 2013. Regular and accurate filing of financial statements is essential for maintaining transparency, statutory compliance, and corporate accountability.
In this case, although Hardees Restro International Private Limited and its directors had initially failed to file financial statements for several financial years, they subsequently rectified the default and submitted all pending documents on their own initiative. The Registrar of Companies, considering the bona fide conduct and voluntary compliance, refrained from imposing any monetary penalty.
To prevent such instances in the future, the company’s directors and compliance officers must adopt a proactive approach towards timely filings, maintain proper financial records, and regularly review statutory due dates. Ensuring consistent compliance will help the company avoid legal complications, penalties, and reputational risks under the Companies Act, 2013. 
Download MCA Adjudication Order

The article will guide readers through all essential requirements that companies must follow under Section 137 of the Companies Act 2013. All companies need to submit their financial statements to the Registrar of Companies before the established deadline. The law requires both the company and its defaulting officers to face penalties under Section 137(3) of the Act when they fail to comply. The company faces a maximum penalty of Rs.2,00,000 while each director who fails to comply must pay a maximum of Rs.50,000.

In this case, the company and its directors of Hardees Restro International Pvt. Ltd. submitted all outstanding financial statements before the ROC Chandigarh issued the show cause notice and requested Suo Moto adjudication. The ROC Chandigarh chose not to impose penalties on the company or its directors because they took voluntary action to correct their errors without showing any intent to deceive.

Every company needs to meet Section 137 requirements by submitting financial statements annually within the specified timeframe. The exercise of discretion by adjudicating officers for voluntary rectification cases remains risky because it depends on their individual decisions. Companies that fail to comply with Section 137 face substantial financial penalties together with legal repercussions.

Applicable Provisions

According to Section 137 of the Companies Act of 2013, each company must submit to the Registrar of Companies (ROC) within the allotted time frame a copy of its financial statements, including any consolidated financial statements, and all necessary documents that were properly adopted at the company's annual general meeting.

It is a mandatory requirement under the Companies Act, 2013, that companies must submit their financial statements each year to the ROC. This ensures transparency, regulatory oversight, and compliance with statutory obligations.

The documents referred to in this section would include the balance sheet, profit and loss account/income statement, cash flow statement, notes to accounts, board’s report, auditor’s report, and other prescribed attachments. These filings must be submitted electronically using the designated forms (such as Form AOC-4 and its variations) via the MCA portal.

Facts Of The Case

The case concerns Hardees Restro International Private Limited (CIN: U55101CH2016PTC035918) and its directors Amandeep Singh Kohli, Amandeep Kaur, and Harkirat Marwaha who were found in default for not filing the company’s financial statements for the financial years 2016–17, 2017–18, 2018–19, and 2022–23, as required under Section 137(3) of the Companies Act, 2013. The company and its directors filed a suo motu application for adjudication under Section 454 of the Act, admitting the default but explaining that the non-compliance was unintentional and without any malafide intent. Since the company had subsequently rectified the default by filing the pending financial statements before the issuance of a show-cause notice, the Registrar of Companies, Chandigarh, determined that no penalty was warranted under the proviso to Section 454(3) of the Act. Consequently, no monetary penalty was imposed on the company or its directors, though they were advised to ensure timely compliance in the future.

Penal Provisions under Section 137(3) of the Companies Act, 2013

As per Section 137(3) of the Companies Act, 2013, if a company fails to file its financial statements within the prescribed time:

The company shall be liable to a penalty of Rs.10,000, and in case of continuing failure, a further penalty of Rs.100 for each day during which such failure continues, subject to a maximum of Rs.2,00,000.
Every officer in default (including directors) shall be liable to a penalty of Rs.10,000, and in case of continuing failure, a further penalty of Rs.100 for each day after the first during which such failure continues, subject to a maximum of Rs.50,000.

Penalty Imposed by Registrar of Companies on Company and Officers in Default

After considering the facts and circumstances of the case and the submissions made through the suo motu application filed by the company and its directors, the Registrar of Companies, Chandigarh, passed an order under Section 454 of the Companies Act, 2013, for violation of Section 137(3) of the Act relating to non-filing of financial statements for the financial years 2016–17, 2017–18, 2018–19, and 2022–23.

The matter was examined on the basis of documents and affidavits submitted by the company and its officers. Since the default had been rectified prior to the issuance of the show-cause notice, and the non-compliance was found to be unintentional and without malafide intention, the Registrar, in terms of the proviso to Section 454(3) of the Companies Act, 2013, decided not to impose any monetary penalty on the company and its officers.

Violation of Section	Penalty Imposed on Company/Directors	Rectification of Default	Penalty Amount (Rs.)	Maximum Limit under the Act (Rs.)
Section 137(3) – Non-filing of Financial Statements	Hardees Restro International Private Limited (CIN: U55101CH2016PTC035918)	Rectified	0	2,00,000
Section 137(3) – Same	Amandeep Singh Kohli (DIN: 07414432)	Rectified	0	50,000
Section 137(3) – Same	Amandeep Kaur (DIN: 07418002)	Rectified	0	50,000
Section 137(3) – Same	Harkirat Marwaha (DIN: 07418003)	Rectified	0	50,000

Exemption under Section 446B of the Companies Act, 2013

As per Section 446B of the Companies Act, 2013, where a penalty is payable for non-compliance of any provision of the Act by a One Person Company, Small Company, Start-up Company, or Producer Company, or by any of its officers in default, such company or officer shall be liable to a penalty not exceeding one-half of the penalty specified, subject to a maximum of Rs.2,00,000 in the case of a company and Rs.1,00,000 in the case of an officer in default.

However, in the present case, Hardees Restro International Private Limited does not qualify as a Small Company, One Person Company, or Start-up Company under the provisions of the Act. Therefore, the benefit of reduced penalty under Section 446B is not applicable in this instance.

Final Word

The company and its directors must ensure timely filing of financial statements and other statutory documents with the Registrar of Companies as mandated under Section 137 of the Companies Act, 2013. Regular and accurate filing of financial statements is essential for maintaining transparency, statutory compliance, and corporate accountability.

In this case, although Hardees Restro International Private Limited and its directors had initially failed to file financial statements for several financial years, they subsequently rectified the default and submitted all pending documents on their own initiative. The Registrar of Companies, considering the bona fide conduct and voluntary compliance, refrained from imposing any monetary penalty.

To prevent such instances in the future, the company’s directors and compliance officers must adopt a proactive approach towards timely filings, maintain proper financial records, and regularly review statutory due dates. Ensuring consistent compliance will help the company avoid legal complications, penalties, and reputational risks under the Companies Act, 2013.