2015 (11) TMI 547 - HC - Companies Law

Court stays prosecution, considers Fast Track Exit Scheme, lifts charge, and resolves winding up application.

The Court directed the Registrar of Companies to consider the Fast Track Exit Scheme application while staying prosecution proceedings until such ... Winding up petition - petitioner contending that the petitioner-Company has been defunct for long - Held that:- Registrar of Companies had declined the consideration under the Fast Track Exit Scheme, since the petitioner-Company's assets are said to have been encumbered and charged to the 3rd respondent, which was recorded by the Registrar of Companies as provided under the Companies Act. The petitioner asserted that there is no such due to the 3rd respondent and it is only for the reason of the Company being defunct that the charge was not lifted, after clearing the dues to the 3rd respondent. The 3rd respondent has also filed a counter affidavit, clearly indicating that there is no amount outstanding in the name of the petitioner herein and that no recovery proceedings are also pending. The charge noticed in favour of 3rd respondent, in the above circumstance, shall stand lifted. Thus it is only proper that the application under the Fast Track Exit Scheme be considered by the 1st respondent. Till such time, the proceedings at Exhibit P1 shall stand stayed. Issues:Petitioner's defunct company status, winding up application, prosecution by Registrar of Companies, Fast Track Exit Scheme consideration, charge to 3rd respondent, stay on prosecution proceedings.1. Petitioner's Defunct Company Status and Winding Up Application:The petitioner, a defunct company since 2010, applied for winding up under a Scheme by the Central Government due to defaulted returns and failure to convene Annual General Body Meetings. The Registrar of Companies initiated prosecution for non-filing of annual returns and AGM non-convening. The petitioner sought a stay on prosecution till a decision on winding up application.2. Consideration under Fast Track Exit Scheme:The Registrar of Companies refused consideration under the Fast Track Exit Scheme citing encumbrance of the petitioner's assets to the 3rd respondent. The petitioner disputed any dues to the 3rd respondent and claimed the charge remained due to the company's defunct status, not outstanding debts. The 3rd respondent confirmed no outstanding amounts and no pending recovery proceedings, leading to the lifting of the charge.3. Stay on Prosecution Proceedings:Given the circumstances, the Court directed the 1st respondent to consider the Fast Track Exit Scheme application while staying the prosecution proceedings until such consideration. The writ petition was disposed of with no costs incurred.This judgment addresses the defunct status of the petitioner's company, the winding up application, the prosecution by the Registrar of Companies, the Fast Track Exit Scheme consideration, the charge to the 3rd respondent, and the stay on prosecution proceedings, ensuring due process and resolution of the legal issues at hand.