Chapter XXIX - Miscellaneous

Section 454

Section 454: adjudication of penalties

Section 454 provides the machinery for imposing penalties under the Act. The Central Government appoints officers not below the rank of Registrar as adjudicating officers and specifies their jurisdiction.

Official text

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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.

Statutory text

Bare law

(1) The Central Government may, by an order published in the Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers for adjudging penalty under the provisions of this Act in the manner as may be prescribed. (2) The Central Government shall while appointing adjudicating officers, specify their jurisdiction in the order under sub-section (1). (3) The adjudicating officer may, by an order—(a) impose the penalty on the company, the officer who is in default, or any other person, as the case may be, stating therein any non-compliance or default under the relevant provisions of this Act; and (b) direct such company, or officer who is in default, or any other person, as the case may be, to rectify the default, wherever he considers fit. 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. (4) The adjudicating officer shall, before imposing any penalty, give a reasonable opportunity of being heard to such company, the officer who is in default or any other person. (5) Any person aggrieved by an order made by the adjudicating officer under sub-section (3) may prefer an appeal to the Regional Director having jurisdiction in the matter. (6) Every appeal under sub-section (5) shall be filed within sixty days from the date on which the copy of the order made by the adjudicating officer is received by the aggrieved person and shall be in such form, manner and be accompanied by such fees as may be prescribed. (7) The Regional Director may, after giving the parties to the appeal an opportunity of being heard, pass such order as he thinks fit, confirming, modifying or setting aside the order appealed against. (8) (i) Where company fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be, within a period of ninety days from the date of the receipt of the copy of the order, 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. (ii) Where an officer of a company or any other person who is in default fails to comply with the order made under sub-section (3) or sub-section (7), as the case may be, within a period of ninety days from the date of the receipt of the copy of the order, such officer 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.

Introduction

The adjudicating officer may impose the penalty on the company, the officer in default or any other person, and direct rectification of the default, after giving a reasonable opportunity of being heard. An appeal lies to the Regional Director within sixty days of receiving the order. No penalty is imposed for an annual return or financial statement filing default that is rectified before, or within thirty days of, the notice.

Section 454 commenced on 1 April 2014 under S.O. 902(E). The Companies (Amendment) Act, 2019, deemed in force from 2 November 2018, substituted sub-section (3) and extended sub-sections (4) and (8) to any other person. The Companies (Amendment) Act, 2020 added the proviso to sub-section (3) from 22 January 2021 under S.O. 325(E).

Key takeaways

Hearing first

No penalty is imposed without a reasonable opportunity of being heard.

Thirty-day cure

Defaults under section 92(4) or section 137(1) or (2), rectified before or within thirty days of the notice, attract no penalty.

Comply within ninety days

Failing to comply with the order within ninety days is an offence: fine for the company; imprisonment, fine or both for an officer or other person in default.

Adjudicating officers and orders

The Central Government appoints, by order published in the Official Gazette, officers not below the rank of Registrar as adjudicating officers, specifying their jurisdiction. By order, the adjudicating officer may impose the penalty on the company, the officer in default or any other person, stating the non-compliance or default under the relevant provisions, and direct them to rectify the default where he considers fit. Before imposing any penalty, the adjudicating officer must give a reasonable opportunity of being heard.

No penalty for timely rectification of certain filings

Where the default is non-compliance with section 92(4) (filing of the annual return) or section 137(1) or (2) (filing of financial statements), and it has been rectified either before, or within thirty days of, the issue of the adjudicating officer’s notice, no penalty is imposed and all proceedings in respect of that default are deemed to be concluded.

Appeal to the Regional Director

A person aggrieved by an order under sub-section (3) may appeal to the Regional Director having jurisdiction, within sixty days from the date of receiving a copy of the order, in the form and manner and with the fees prescribed. The Regional Director may confirm, modify or set aside the order after hearing the parties.

Consequences of not complying

If a company fails to comply with the order under sub-section (3) or (7) within ninety days of receiving it, the company is punishable with fine of not less than twenty-five thousand rupees, up to five lakh rupees. An officer or any other person in default who fails to comply within that period is punishable with imprisonment up to six months, or fine of not less than twenty-five thousand rupees up to one lakh rupees, or both.

Practical preparation

Reply to the adjudicating officer’s notice and attend the hearing; for annual return or financial statement defaults, file within thirty days of the notice; diary sixty days for any appeal; pay the penalty and rectify within ninety days of the order; check whether section 446B reduces the penalty.

Practical checklist

Do

File overdue annual returns or financial statements within thirty days of the notice to use the proviso.
Comply with the final order within ninety days of receiving it.

Avoid

Do not miss the sixty-day appeal window.
Do not ignore the order; non-compliance becomes a criminal offence under sub-section (8).

Illustrative example

Hypothetical: late financial statements

A company has not filed its financial statements under section 137. The adjudicating officer issues a notice.

Notice
The notice proposes a penalty for the section 137 default.
Cure
The company files the financial statements within thirty days of the notice.
Result
Under the proviso, no penalty is imposed and the proceedings are deemed concluded.

Outcome

Had the company not filed in time, the officer could have imposed the penalty and directed rectification, with an appeal to the Regional Director available.

Glossary

Adjudicating officer: An officer of the Central Government, not below the rank of Registrar, appointed to adjudge penalties under the Act.
Regional Director: The appellate authority for orders of the adjudicating officer under sub-section (5).

Frequently asked questions

Is there a penalty if a late annual return is filed after the notice?

Not if it is filed within thirty days of the issue of the adjudicating officer’s notice; the proviso to sub-section (3) then deems the proceedings concluded.

How long is there to appeal?

Sixty days from the date on which the aggrieved person receives a copy of the order.

What if the company does not pay the penalty?

Failure to comply with the order within ninety days is punishable with fine of twenty-five thousand rupees to five lakh rupees for the company, and imprisonment up to six months or fine of twenty-five thousand rupees to one lakh rupees, or both, for an officer or other person in default.

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Last updated 11 October 2026

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