What Is Condonation of Delay Under Section 460?
Condonation of delay under section 460 of the Companies Act, 2013 is two sentences of statutory text, and it is the provision that lets a missed deadline be excused after the fact. It is also narrower than its name suggests, and the narrowness is worth setting out precisely.
Definition
Condonation of delay under section 460
is the Central Government's power, notwithstanding anything in the Companies Act, 2013, to condone a delay for reasons recorded in writing, where an application required to be made to it, or a document required to be filed with the Registrar, was not made or filed in the time specified. Source: Companies Act, 2013, section 460.
What is condonation of delay under section 460 for?
The section opens with a non-obstante clause, notwithstanding anything contained in this Act, and then splits into two clauses that cover different things.
Clause (a): applications to the Central Government. Where any application required to be made to the Central Government under any provision of the Act in respect of any matter is not made within the time specified therein, that Government may, for reasons to be recorded in writing, condone the delay.
Clause (b): documents filed with the Registrar. Where any document required to be filed with the Registrar under any provision of the Act is not filed within the time specified therein, the Central Government may, for reasons to be recorded in writing, condone the delay.
Two features of the drafting matter more than they look.
The first is who holds the power. Clause (b) is about the Registrar's records, but the condoning authority named in it is the Central Government, in exactly the same words as clause (a). The Registrar receives the document; it does not excuse the lateness.
The second is the reasons requirement. Both clauses say for reasons to be recorded in writing. That is a condition on the exercise of the power, not a formality, and it is the part of the section a reader can actually test against an order.
What section 460 does not do
The section condones the delay. It says nothing about money, and nothing about liability. Both of those live in section 403.
Section 403(1) requires a document to be filed within the time specified in the relevant provision on payment of the prescribed fee, and its provisos then allow late filing on payment of an additional fee. For documents under section 92 and section 137, the first proviso prescribes an additional fee which shall not be less than one hundred rupees per day, with different amounts permitted for different classes of company. A further proviso allows a higher additional fee where there has been default on two or more occasions.
Not less than ₹100 per day
The floor on the additional fee prescribed for late submission of a document, fact or information under section 92 or section 137, under the first proviso to section 403(1)
Source: Companies Act, 2013, section 403(1), first proviso, India Code consolidation
Sub-section (2) of section 403 then closes the gap explicitly. Where a company fails to file within the period specified, the company and the officers in default are, without prejudice to the liability for the payment of fee and additional fee, liable for the penalty or punishment provided under the Act for that failure. So an additional fee is not a substitute for the penalty, and by the same logic a condonation under section 460 is not an answer to one either. No provision of the Act says that condoning a delay extinguishes a penalty already attracted.
Section 460 against the other ways a default gets forgiven
The Act has three quite different mechanisms that a reader can easily conflate. They sit at different points in the sequence and are exercised by different authorities.
| Section 460 condonation | Section 454(3) proviso | Section 403 additional fee | |
|---|---|---|---|
| What it addresses | The lateness of an application or filing | The penalty for two named defaults | The fee for a late filing |
| Who exercises it | The Central Government | The adjudicating officer, by operation of the proviso | Automatic on payment |
| Timing | After the deadline has passed | Rectification before, or within thirty days of, the notice | On filing late |
| Scope | Any application to the CG, any document filed with the Registrar | Non-compliance of section 92(4) or section 137(1) or (2) only | Any document under section 403(1) |
| Effect | The delay is condoned, for recorded reasons | no penalty shall be imposed in this regard and proceedings are deemed to be concluded | Late filing is accepted on payment |
The proviso in the middle column is set out in full on the adjudication of penalties under section 454 page. It is the only one of the three that says in terms that no penalty shall be imposed, and it reaches only two filings.
Why this appears in filings work
Two reasons. The first is which filings the Act singles out: the annual return under section 92 and the financial statements under section 137 are the two named in the first proviso to section 403(1) and the only two named in the section 454(3) proviso, so both of the Act's own concessions for lateness point at the same pair.
The second is that a condonation order is a public, dated, reasoned document. Because section 460 requires reasons to be recorded in writing, the order carries a statement of why the delay was excused, which is a disclosure the section itself compels.
- The residual penalty in section 450 is what applies where a contravention carries no penalty of its own, and a condoned delay does not by itself displace it.
- Strike off of a company runs on its own grounds in section 248(1), which are about a company not commencing or not carrying on business rather than about late filing, so a condonation under section 460 does not touch it.
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Frequently asked questions
What is condonation of delay under section 460?
A power of the Central Government to condone a delay, for reasons to be recorded in writing, where an application required to be made to it under the Act was not made in time, or where a document required to be filed with the Registrar was not filed within the time specified. Source: Companies Act, 2013, section 460.
Who condones a late filing with the Registrar?
The Central Government, not the Registrar. Clause (b) of section 460 deals with documents required to be filed with the Registrar, but the power to condone the delay in filing them is given to the Central Government in the same words as clause (a). Source: Companies Act, 2013, section 460(b).
Does condonation of delay remove the additional fee or the penalty?
Section 460 says nothing about either. Additional fees for late filing sit in section 403, and section 403(2) states that a company and its officers in default remain liable for the penalty or punishment provided under the Act without prejudice to the liability for fee and additional fee. Source: Companies Act, 2013, sections 460 and 403.
Is condonation of delay the same as the section 454 rectification proviso?
No. The proviso to section 454(3) prevents a penalty where an annual return or financial statement default is rectified before, or within thirty days of, the adjudicating officer's notice. Section 460 condones lateness itself and is exercised by the Central Government. Source: Companies Act, 2013, sections 454(3) and 460.
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