NCLAT slammed ROC for adopting a blood thirsty approach and allowed LLPs to file forms without penalties

Recently, the National Company Law Appellate Tribunal (herein after referred as Tribunal), allowed the Limited Liability Partnerships (LLPs), to file the rectified forms without any penalty. In this case, respondents (cluster of LLPs) filed the application with National Company Law Tribunal (NCLT) for allowing them to remove the objections and file a fresh Form – 3 without penalties besides allowing them to file their Form - 8 and Form - 11.

Facts of the Case:

• Respondents pursuant to their Conversion into LLP in the year 2012 filed LLP agreement in Form -3, 
• Annual Return in Form- 11 and Statement of Account and Solvency in Form 8 with the concerned authorities 
• However, the Form 8 for F.Y. 2015-16 was not accepted by the system on the pretext that the form could not be filed until Form-3 for the initial agreement was filed despite the fact that Form-3 was filed in the way back in 2012 
• An important point to be noted here is that Form 8 and Form 11 were filed and accepted by the system from 2012 to 2016 without raising any objection with respect to Form 3 
• After filing RTI, Respondents came to know that Form – 3 filed earlier was not taken on record, because there were some objection to the Form 3 and due to non-rectification the same was declared invalid 
• Respondents were informed to file fresh Form-3 alongwith a penalty of Rs. 10,86,000/- for removal of objections as regard to each of respondents 
• Respondents state that they did not receive any correspondence since 2012 informing objections raised on Form 3 which were required to be removed 
• NCLT was of the view that there was no wilful default or the negligence from the side of the respondents and allowed the respondents to rectify the omissions, if any and file form 3 within a period of one month by passing the order on 6 September, 2018 
• The order which was challenged by ROC and filed appeal in NCLAT

Observation of Tribunal 

• Case of non-submissions but case of confusion in filing, that too due to change in the procedure originally prescribed 
• While switching over to a computerized system the Appellant were supposed to notify the affected persons and allow them to file the Rectified/ Revised Forms as mandated without slapping any penalty on them 
• Adopting a blood thirsty approach and that too against compliant entities is unwarranted moreso when such entities complied with the legal requirements and made compliances in accordance with the then prevailing system. 
• Compliance of a procedure is to be taken leniently if it is not disturbing the enacted law itself 
• No flaw can be found in the impugned order which does not suffer from any legal infirmity apart from being justice oriented and conforming to the spirit of law.

Order

The Tribunal dismissed appeal and allowed the Respondents to rectify omissions, if any, in their Form-3 within a period of one month and the Appellant was directed to accept the same without any fee or additional fee.