ROC Chennai Imposes Rs. 50,000 Penalty on Ex-Directors for Non-Filing of Financial Statements

J.K.S. Construction Private Limited failed to file its financial statements for FY 2017-18 with the Registrar of Companies within the prescribed time. The company’s AGM for the relevant year was held on 30.09.2018, making the due date for filing financial statements 29.10.2018. An inspection of the company’s books and records revealed this non-compliance.

The company was admitted into Corporate Insolvency Resolution Process (CIRP) by the NCLT, Chennai Bench on 11.03.2022. Based on the inspection findings, ROC initiated adjudication proceedings against the ex-directors for violation of Section 137 of the Companies Act, 2013. Despite the issuance of notice for e-adjudication and the scheduling of an e-hearing, no response or appearance was made by the ex-directors, and the matter proceeded ex parte.

Issue Raised: Whether the failure to file financial statements for FY 2017-18 attracts a penalty under Section 137(3) of the Companies Act, 2013, and whether ex-directors remain liable even after the commencement of CIRP.

ROC’s Decision: The Registrar of Companies held that the company had clearly contravened Section 137 by not filing its financial statements within the statutory timeline. Since the company was admitted to CIRP, the liability for the default fell upon the ex-directors. Exercising powers under Section 454, the ROC imposed the maximum penalty of Rs. 50,000 on each of the three ex-directors for continuing default.

The officers were directed to rectify the default and pay the penalty from their personal funds within 90 days, with liberty to file an appeal before the Regional Director, Chennai.

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