NON-FILING OF ANNUAL RETURN: MCA IMPOSES PENALTY OF Rs.17.23 LAKH

INTRODUCTION

Recently, the Ministry of Corporate Affairs (MCA) used its regulatory power to penalize PRISM ORGANIC GREENS LIMITED heavily for failing to file yearly returns, which was against Section 92 of the Companies Act of 2013. This directive, dated December 26, 2023, is a harsh reminder to businesses of the regulatory compliance requirements that they must follow.

DETAILED ANALYSIS

Legal Provisions invoked:

The Companies (Adjudication of Penalties) Rules, 2014 and Section 454 of the Companies Act, 2013 are cited by the MCA through its adjudicating officer. Under Section 92(4) of the Act, which requires annual returns to be filed within sixty days of the date of the annual general meeting, the order appoints an adjudicating officer to assess penalties for noncompliance.

Concerned Company:

The concerned company is called PRISM ORGANIC GREENS LIMITED. The Himachal Pradesh-registered corporation is under scrutiny from the authorities. The order describes the company’s persistent failure to file yearly returns from the financial year 2015–2016 to the financial year 2021–2022, and it is located in H.NO. 196–197 ROURA SECTOR, Bilaspur.

Penalties and Violations

According to Section 92(4) of the Companies Act, the infraction carries penalties under Section 92(5). Every financial year, the penalty amounts are carefully determined taking into account the number of days of default. The order imposes a total penalty of Rs. 332,200 and gives a detailed breakdown of fines for each fiscal year.

Director Response

Two of the three directors, Sh. Rajesh Kumar Aggarwal and Sh. Ramesh Chandra Mal, have responses mentioned in the order. Citing fraudulent appointments and lack of consent, both directors distance themselves from the business. On the other hand, compliance is the responsibility of Sh. Navin Pratap Singh, who is designated as the Managing Director.

Legal Repercussions and Appeal

The order specifies the procedures for filing an appeal, giving the business and its officials sixty days to do so. It also emphasizes the possible legal repercussions for failing to pay fines and/or incarceration.

Payment and Compliance:

The order places a strong emphasis on following the prescribed payment procedure by stating that the penalty must be paid via the Ministry of Corporate Affairs online. It further stipulates that the officers in default must use their personal funds or sources of income to pay the fine.

CONCLUSION

The MCA took quick action against PRISM ORGANIC GREENS LIMITED’s non-compliance with annual return filing obligations by imposing a hefty penalty on the company. This case highlights how crucial it is to promptly comply with regulatory standards and how accountable corporate officers must be. This order should serve as a warning to businesses navigating the complex regulatory environment, as it requires thorough compliance to avoid legal ramifications.

GOVERNMENT OF INDIA

MINISTRY OF CORPORATE AFFAIRS

OFFICE OF THE REGISTRAR OF COMPANIES CUM OFFICIAL

LIQUIDATOR

HP CORPORATE BHAWAN

PLOT NO.4-B, SECTOR 27B

CHANDIGARH

PHONE NO.172-2639415, 2639416

Email roc.himachalQmca.gov.in

ORDER UNDER SECTION 454 FOR
VIOLATION OF SECTION 92 OF THE
COMPANIES ACT, 2013, READ
WITH COMPANIES (ADJUDICATION OF
PENALTIES) RULES, 2014
IN THE MATTER OF M/s PRISM ORGANIC GREENS LIMITED
(CIN: U74140HP2014PLC000676)

The Ministry of Corporate Affairs vide its gazette notification no.S.0.831(E) dated 24.3.2015, has appointed the undersigned as Adjudicating Officer (AO) in exercise of the powers conferred by section 454 of the Companies Act, 2013 (hereinafter known as an Act) read with Companies (Adjudication of Penalties) Rules, 2014 for adjudging penalties under the provisions of this Act.
Whereas M/s PRISM ORGANIC GREENS LIMITED (hereinafter referred to as “the Company”) is a company registered with this office under the Provisions of the Companies Act, 2013/1956 (or previous Acts in force, as applicable) having its registered office situated at H.NO. 196-197 ROURA SECTOR, Bilaspur, BILASPUR, Himachal Pradesh, India, 174001 as per MCA website.

PROVISIONS OF THE ACT

As per Section 92(4) Each company must submit a copy of its annual return to the Registrar within sixty days of the date of the annual general meeting, or within sixty days of the date on which the annual general meeting should have taken place in the event that one is not held. The annual return must also include a statement outlining the reasons for the absence of the annual general meeting, along with any additional fees that may be required.

As per Section 92(5) A company and any officer who is in default under sub-section (4) may be penalized ten thousand rupees and, if the failure persists, one hundred rupees per day, up to a maximum of two lakh rupees in the case of the company and fifty thousand rupees in the case of the officer. This penalty applies if the company fails to file its annual return by the deadline specified in the subsection.

FACTS ABOUT THE CASE

On the other hand, the records show that the corporation has not yet submitted its Annual Return for the fiscal years 2015–2016 through 2021–2022. This office has sent the company and its directors a Show Cause Notice pursuant to section 92(4) of the Companies Act, 2013 read with the Companies (Adjudication of Penalties) Rules, 2014 through office letter No. ROC/OL/HP/92/000676/112,113 dated June 20, 2023. Nevertheless, two of the three directors have responded to the show cause notice. In his letter dated July 6, 2023, Director Sh. Rajesh Kumar Aggarwal said that he had no affiliation with the firm or its executives and had never served as a director of the subject company. He added that his appointment was made without his permission or knowledge. In addition, Sh. Ramesh Chandra Mal, the director, responded in a letter dated NIL received on July 18, 2023, stating that he resigned in June 2016 because the company’s current directors had unlawfully nominated him as a director on December 19, 2015, without getting his permission.

It was determined that the directors’ responses were adequate. Nonetheless, the Company has recruited Sh. Navin Pratap Singh, MD, who is in charge of overseeing all adherence to the 2013 Companies Act.

Consequently, it follows that the company and its executives who are in default are subject to the penalties specified in Section 92(5) of the Act for failing to file the business’s annual return, PRISM ORGANIC GREENS LIMITED, for the following reasons:

Financial Year 2014-15 for 3222 days i.e., with effect from 31.12.2015 (last date of filing of annual return was 30.12.2015) to 26.12.2023 (date of order).
Financial Year 2015-16 for 2583 days i.e., with effect from 30.11.2016 (Last date of filing of annual return was 29.11.2016) to 26.12.2023 (till this date).
Financial Year 2016-17 for 2218 days i.e., with effect from 30.11.2017 (Last date of filing of annual return was 29.11.2017) to 26.12.2023 (till this date).
Financial Year 2017-18 for 1853 days i.e., with effect from 30.11.2018 (Last date of filing of annual return was 29.11.2018) to 26.12.2023 (till this date).
Financial Year 2018-19 for 1488 days i.e., with effect from 30.11.2019 (Last date of filing of annual return was 29.11.2019) to 26.12.2023 (till this date).
Financial Year 2019-20 for 1398 days i.e., with effect from 28.02.2021 (Last date of filing of annual return was 27.02.2021) to 26.21.2023 (till this date).
Financial Year 2020-21 for 695 days i.e., with effect from 31.01.2022 (Last date of filing of annual return was 30.01.2022) to 26.12.2023 (till this date).
Financial Year 2021-22 for 392 days i.e., with effect from 30.11.2022 (Last date of filing of annual return was 29.11.2022) to 26.12.2023 (till this date).

It is further directed that penalty imposed shall be paid through the Ministry of Corporate Affairs portal only as mentioned under Rule 3(14) of Company (Adjudication of Penalties) (Amendment) Rules, 2019 under intimation to this office.

Appeal against this order may be filed in writing with the Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi, within a period of sixty days from the date of receipt of this order, in Form ADJ setting forth the grounds of appeal and shall be accompanied by a certified copy of this order. [Section 454(5) & 454(6) of the Act, read with Companies (Adjudication of Penalties) Rules, 2014).
Your attention is also invited to Section 454(8)(i) and 454(8)(ii) of the Companies Act, 2013, which state that in case of non-payment of penalty amount, the company shall be punishable with fine which shall not be less than twenty five thousand rupees but which may extend to five lakh rupees and officer in default shall be punishable with imprisonment which may extend to six months or with fine which shall not be less than twenty five thousand rupees but which may extend to one lakh rupees or with both.
In terms of the provisions of sub-rule (9) of Rule 3 of the Companies (Adjudication of Penalties) Rules, 2014, copy of the order is being sent to: (1.) M/s Prism Organic Greens Limited, H.No. 196-197, Roura Sector, Bilaspur, Himachal Pradesh,174001, India, (2.) Sh. Navin Pratap Singh S/o Sh. Nagendra Singh and (3.) Regional Director (Northern Region), Ministry of Corporate Affairs, CGO Complex, Lodhi Road, New Delhi and will also be uploaded on website.