Most companies discover a default long after it happened — during a due diligence, on receipt of a notice from the Registrar, or when a bank asks why a charge is still showing as open. The question at that point is not whether there was a breach. It is how to close it, on the record, at the lowest cost and in the shortest time.
This practice group does exactly that. We regularise defaults under the Companies Act, 2013 through compounding, adjudication and condonation, and we appear for companies and their officers before the Registrar of Companies, the Regional Director, the Ministry of Corporate Affairs and the National Company Law Tribunal.
Compounding of Offences
Compounding is the settlement of an offence that is punishable with fine, by payment of a sum determined by the compounding authority, without prosecution and without a conviction. It converts an open exposure — for the company and, importantly, for the directors and officers in default — into a concluded order that can be disclosed and put behind the company.
Whether an application succeeds and what it costs turns almost entirely on how it is drafted: how the default is described, how the period is computed, what mitigation is placed on record and whether the suo motu nature of the disclosure is properly established.
- Assessing whether the offence is compoundable at all, and identifying every officer in default who must be covered
- Computing the period of default precisely, and the maximum fine that determines which authority hears the application
- Preparing the board resolution, the application, the affidavits and the complete annexure set
- Filing the application with the Registrar of Companies for onward transmission, in Form GNL-1
- Appearing before the Regional Director or the National Company Law Tribunal at the hearing
- Placing mitigation on record — voluntary disclosure, absence of loss to any person, first default, subsequent rectification
- Filing the compounding order with the Registrar in Form INC-28 and completing the consequential filings
- Handling compounding of offences under the erstwhile Companies Act, 1956 where the default period falls under that Act
We tell you at the outset what the realistic exposure is. A compounding application is a voluntary admission, and it should only be made where the arithmetic favours it — we say so plainly when it does not.
Applications are made for the company and each officer in default together, so that a director is not left personally exposed after the company’s position has been settled. This is the single most common omission we see in applications drafted elsewhere.
We appear at the hearing ourselves. The partner who drafted the application is the person who answers the Regional Director’s questions on it.
Compounding is governed by Section 441 of the Companies Act, 2013. An offence punishable with fine only may be compounded by the Regional Director where the maximum amount of fine does not exceed ₹25 lakh, and by the National Company Law Tribunal where it exceeds that amount. Applications are routed through the Registrar of Companies.
The corresponding provision for defaults arising under the earlier statute is Section 621A of the Companies Act, 1956.
Section 432 of the Companies Act, 2013 permits a party to any proceeding before the Tribunal to be represented by a company secretary, a chartered accountant, a cost accountant or a legal practitioner. Rule 45 of the NCLT Rules, 2016 governs the authorised representative. We appear in that capacity, and where a matter is contested our Associate Partner – Legal appears as an Advocate.
Adjudication of Penalties
A large number of contraventions that were once criminal offences are now civil defaults carrying a monetary penalty, imposed by an adjudicating officer rather than a court. The Registrar of Companies issues a notice, hears the company and its officers, and passes an order imposing penalty.
These proceedings move quickly and are decided largely on the written reply. A well-prepared reply, filed on time and supported by the right documents, is frequently the difference between a penalty at the minimum and a penalty computed for the full period of default on every officer.
- Analysing the show-cause notice and identifying exactly which provision, period and persons are in issue
- Verifying the department’s computation of the penalty, which is frequently overstated on the period or the number of officers
- Drafting and filing the reply to the show-cause notice with supporting evidence
- Appearing for the company and its officers in the personal hearing before the Registrar as adjudicating officer
- Advising on rectification before the order, where the default is capable of being cured
- Paying the penalty and completing the consequential filings on the MCA portal
- Preparing and filing appeals to the Regional Director against an adjudication order, and appearing at the appeal hearing
- Advising on the consequences of non-payment, including the escalated liability that follows
The first thing we do is check the arithmetic. Penalty notices routinely compute the period of default from the wrong date or apply the continuing-default rate beyond what the section allows, and the reduction available on that ground alone is often substantial.
Smaller companies and start-ups are entitled to a reduced penalty under the Act. Where the company qualifies we establish that on the record with evidence, rather than asserting it.
Deadlines here are short and unforgiving. We diarise the reply date, the hearing date and the sixty-day appeal window from the day the notice reaches us, and we confirm each in writing to you.
Adjudication of penalties is governed by Section 454 of the Companies Act, 2013, read with the Companies (Adjudication of Penalties) Rules, 2014. The Central Government appoints Registrars of Companies as adjudicating officers with power to impose penalty on the company and on the officers in default.
An appeal against an order of the adjudicating officer lies to the Regional Director under Section 454(5), and must be filed within sixty days of receipt of the order in the prescribed form. Section 454(8) sets out the consequences of failure to pay the penalty within the time allowed.
The reduced penalty regime for One Person Companies, small companies, start-ups and certain producer companies is contained in Section 446B of the Act.
Appearance and representation are made in the capacity of a Company Secretary in Practice under the Company Secretaries Act, 1980, and, before the Tribunal, under Section 432 of the Companies Act, 2013.
Condonation of Delay
Where the Act prescribes a period for filing a document or making an application and that period has expired, the delay must be condoned by the competent authority before the filing can be accepted. This arises most often with satisfaction of charges, resolutions that were never filed, and applications for which the statutory window has closed.
An application for condonation is not a formality. It has to explain the delay credibly, establish that no person has been prejudiced by it, and demonstrate that the company acted as soon as the omission came to light. We prepare and argue these applications regularly.
- Identifying the correct route — condonation, compounding, adjudication, or a combination — before anything is filed
- Applications to the Central Government for condonation of delay, filed in Form CG-1
- Applications for condonation of delay in filing satisfaction of charge, in Form CHG-8, and appearance before the Regional Director
- Applications relating to delayed filing of resolutions and agreements under Section 117
- Drafting the petition, the affidavit verifying it and the supporting board and shareholder resolutions
- Serving the application on the Registrar and dealing with the Registrar’s report to the authority
- Appearing at the hearing before the Regional Director or the Central Government’s delegate
- Filing the order in Form INC-28 and completing the delayed filing once condonation is granted
Sequence matters more than speed. Filing a condonation application before the underlying position has been reconstructed — or filing a compounding application where condonation was the right route — wastes months. We settle the sequence first and then move.
The explanation of delay is the application. We take instructions properly, establish when the omission was actually discovered, and support it with contemporaneous evidence rather than a boilerplate paragraph.
For a company preparing for a transaction or a listing, we work backwards from your date and tell you whether condonation can realistically be concluded in the time available.
The general power is contained in Section 460 of the Companies Act, 2013, under which the Central Government may condone delay in filing an application or a document that was required to be filed with it within a prescribed period.
Condonation of delay in filing a memorandum of satisfaction of charge is governed by Section 87 of the Act, read with the Companies (Registration of Charges) Rules, 2014, on application to the Central Government, whose powers in this regard are exercised by the Regional Director.
Delay in filing resolutions and agreements is dealt with under Section 117 read with the Companies (Management and Administration) Rules, 2014, and forms and fees are prescribed by the Companies (Registration Offices and Fees) Rules, 2014.
Applications are prepared, certified and argued by a Company Secretary in Practice under the Company Secretaries Act, 1980, with our Associate Partner – Legal appearing as an Advocate where the matter is contested or proceeds to the Tribunal.
Working with us
Regularisation work is judged on outcomes and on the time it takes. We give an assessment of both before an application is drafted, we tell you where the exposure sits personally with the directors rather than only with the company, and we say clearly when the better course is to do nothing yet.
Applications are drafted, filed and argued by the same team, and every hearing is attended by the partner responsible for the file. Where a matter is contested or moves to the Tribunal, our Associate Partner – Legal, an Advocate enrolled with the Bar Council of India, appears alongside.
Related practice groups
Speak to us
Tell us what you are working on
Describe the matter in a line or two and we will tell you what it takes — the route, the papers, the authority it goes to and a realistic timeline — before you commit to anything.
This page describes the services offered by MPS & Associates, Company Secretaries, and the statutory provisions under which that work is carried out. It is general information about our practice and is not legal advice, an opinion or a solicitation. Statutory thresholds and procedures change; the position applicable to a particular company should be confirmed before it is acted upon.