ROC Imposes Penalty on Company and MD for Non-Maintenance of audit trail (edit log) facility

The dispute is related to a company named Topsun Energy Limited and its managing director, Mr Chintan Gandabhai Patel. The company possesses a CIN U31900GJ2007PLC051489. The company is registered under the provisions of the Companies Act, 2013/1956, and is located at B-101, GIDC Electronic Estate Sector-25, Na Gandhinagar, Gujarat, India 382028.

In the present case, the company voluntarily informed us that it has not complied with Section 134(3)(f) of the Companies Act by filing the GNL-1 form on July 30, 2025. This section requires companies to give specific disclosures in their Board’s Report, including information connected to audit requirements. Moreover, he admitted that only the company and its managing director, Mr Chintan Patel, applied for a fair decision (adjudication), while all other responsible officers did not.

At the time of the internal check, the company discovered that its accounting software did not have an audit trail (edit log) facility, which was made obligatory from 2024 as per amended Rule 11 (g) of the Companies (Audit and Auditors) Rules, 2014. Because of this, the auditors also mentioned in their report that they could not verify whether the company’s accounting entries had been tampered with.

The company explained that the updated rules were introduced in 2024, and they have now purchased new software that meets legal requirements. They also said that proper disclosures will be included in the Annual Report 2024-25. However, the company was already involved in violations that occurred during the time period between April 01, 2023, to March 31, 2024; hence, the company is liable for a penalty under Section 134(8). The company accepted its mistake in their official application and stated they had since purchased new software that meets legal requirements. They also promised to disclose this in their 2024-25 annual report. The default occurred from April 2023 to March 2024.

Considering all the findings, the Registrar of Companies (ROC) Ahmedabad issued an order dated December 02, 2025, imposing a penalty of Rs. 300,000 and Rs. 50,000 on the company and Mr Chintan Patel, respectively, under section 454 of the Companies Act, 2013, for violating section 134(8) of the same Act. Both of them have been given a time limit of 90 days to pay the penalty amount at the ministry’s online e-Adjudication system and also provide proof of payment. They have also been directed that if they fail to pay the specified amount within the stated time limit, then further legal consequences will be taken against them under the Companies Act. They have the right to appeal within 60 days to the Regional Director in Ahmedabad.