No Penalty Shall Be Imposed For Failure To File Annual Return If The Company Has Filed Return Before Issuance Of Notice
Held by Office of Registrar of Companies, Mumbai
In the matter of M/s Arrow Electronics India Private Limited
Summary
M/s Arrow Electronics India Private Limited (“The Company”) failed to file its Annual return for FY 2018-19, 2019-20, 2020-21 and 2021-22 in accordance with Section 92(4) of the Companies Act. The Company filed an application for adjudication of violation of provisions of Section 92(4) of Companies Act.
The Hon’ble RoC, Mumbai held that the Company has filed all its pending annual return before the issuance of notice by the adjudicating officer. Therefore, in accordance with proviso to Section 454(3) of Companies Act, 2013, no penalty should be imposed on the company.
1. Brief facts of the case
- M/s Arrow Electronics India Private Limited (“The Company”) is having registered office in the state of Maharashtra, India.
- The Company filed a suo-moto application for adjudication of violation of the provision of Section 92(4) of the Companies Act, 2013.
- The Company has not filed its Annual Return for the FY 2018-19, 2019-20, 2020-21 and 2021-22 as required under section 92( 5) of the Companies Act, 2013.
2. Relevant Legal Extracts:
Relevant Extract of Companies Act, 2013 is reiterated below for ready reference:
- Section 92-Annual Return
“...
4) Every company shall file with the Registrar a copy of the annual return, within sixty days from the date on which the annual general meeting is held or where no annual general meeting is held in any year within sixty days from the date on which the annual general meeting should have been held together with the statement specifying the reasons for not holding the annual general meeting, with such fees or additional fees as may be prescribed.
(5) If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default 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 during which such failure continues, subject to a maximum of two lakh rupees in case of a company and fifty thousand rupees in case of an officer who is in default.
….”
- Section 454- Adjudication of penalties
“ (3) The Adjudication officer may, by an order-
…
Provided that in case the default relates to non-compliance of sub-section (4) of section 92 or sub-section (1) or sub-section (2) of section 137 and such default has been rectified either prior to, or within thirty days of, the issue of the notice by the adjudicating officer, no penalty shall be imposed in this regard and all proceedings under this section in respect of such default shall be deemed to be concluded.”
3. Finding and observation by Registrar of Companies, Mumbai
- Factors to be considered by Adjudicating Authority:
Hon’ble RoC has held that while adjudging quantum of penalty, the adjudicating officer shall consider following factors:
- Amount of disproportionate gain or unfair advantage, wherever quantifiable, has been made as a result of such default.
- Loss incurred to investors or other stakeholders due to such default
- Repetitive nature of default
In the given case, it is difficult to quantify the unfair advantage made by the company or loss incurred to the stakeholders.
- Nature of Default
- The Company was liable to file Annual return for FY 2018-19, 2019-20, 2020-21 and 2021-21 in accordance with Section 92(4) of Companies Act, 2013.
- However, the company has failed to do the same for all such years and therefore, such default is repetitive in nature.
4. Order
The RoC, Mumbai has held that:Considering the facts of the case and amendment made in section 454(3) of Companies Act, 2013, no penalty shall be imposed on the company for delay in filing of Annual return as the company has already filed the Annual Return for all applicable years prior to issue of notice by Adjudicating officer.
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