2022 (4) TMI 1576 - AT - Companies Law

Company name restored to register after striking off order reversed under Section 252(3) despite filing failures

NCLAT set aside the striking off order and restored the company's name to the ROC register. The company was struck off after failing to file annual ... Striking off of the Appellant/Company’s name from the Registrar of Companies - contention of the Appellant is that the 1st Respondent/Registrar of Companies has nowhere prayed that the Appellant/Company should remain struck off, rather it had prayed that the Appellant/Company be directed to file all the pending returns of the Appellant/Company. HELD THAT:- Section 252(3) of the Companies Act, 2013 points out that one of the three conditions need to be satisfied before exercising the ‘jurisdiction’ to restore a company to the ‘Registrar of Companies’ on the file of ‘Registrar of Companies’. In fact, the ‘Company’ at the time of its name was struck off was to carry on business, or it was in operation, or it is otherwise just that the ‘Name of the Company’ be restored on the ‘Register’. The ‘Liability’ under Section 92 of the Companies Act, 2013 is that even a defunct company, like every other Company is under an obligation to file the Statutory ‘Annual Returns’ till it is wound up or till such time, the Company is struck off by the Registrar u/s 248 of the Companies Act, 2013. As far as the present case is concerned, even though, the 1st Respondent/‘Registrar of Companies’ has come out with the plea that the ‘Company’ was incorporated on 25.08.1985 and the last Annual Return and Balance Sheet was submitted by the ‘Company’ to its office, before it was considered to be ‘struck off’, relate to the ‘Financial Year’ that ended on 31.03.2006 and later, no documents were filed by the ‘Company’ to claim the status of a ‘Dormant Company’ under Section 455 of the Companies Act, 2013, this ‘Tribunal’ taking note of the fact that the ‘Company’ has ‘Assets and Liabilities’ and more so, keeping in mind that the ‘right to seek restoration’ of the name of the ‘Company’ (to be entered in the ‘Register of Companies’) is not extinguished/lost as long as 20 years have not expired, and besides these, the 1st Respondent in its ‘Reply’ before the ‘Tribunal’ had mentioned that the ‘Tribunal’ may kindly issue directions to the ‘Appellant’/‘Petitioner’ to file all documents of the ‘subject company with it, of course, within the time specified by the ‘Tribunal’, in all ‘Fairness’ ‘Reasonableness’ and ‘Equitableness’ is of the earnest opinion that it is just and proper to restore the name of the Company and that the omissions/latches/failures on the part of the Management of the Company in not filing the ‘Annual Returns’ and ‘Financial Statements’ in time can be fastened with a levy of cause, to secure the ‘Ends of Justice’. Otherwise, it will cost ‘irreparable hardship’ and ‘Prejudice’ to the ‘Company’, as opined by this ‘Tribunal’. Impugned order set aside - appeal allowed. Issues Involved:1. Delay in filing the appeal.2. Legitimacy of the company's operations and financial activities.3. Justness of restoring the struck-off company to the Register of Companies.4. Compliance with statutory requirements and filing of pending documents.Issue-wise Detailed Analysis:1. Delay in Filing the Appeal:The appellant received the certified copy of the impugned order on 16.02.2021 and filed the appeal on 15.03.2021, within 45 days. The delay was attributed to the COVID-19 pandemic. The tribunal, considering the Supreme Court's order for the extension of limitation due to the pandemic, allowed the appeal and condoned the delay without costs.2. Legitimacy of the Company's Operations and Financial Activities:The appellant company claimed continuous operation since incorporation, supported by financial statements, a lease agreement, income tax returns, and bank statements. However, the tribunal noted the following:- No income tax returns filed after the assessment year 2006-07.- Bank statements showed no significant transactions from 08.06.2015 to 31.12.2019.- Balance sheets indicating revenue from operations seemed prepared post-striking off.The tribunal observed that the company failed to provide sufficient evidence of operations during the defaulting years and utilization of the leased plot.3. Justness of Restoring the Struck-off Company to the Register of Companies:The tribunal referred to Section 252(3) of the Companies Act, 2013, which allows restoration if the company was carrying on business or in operation or if it is just to restore. The tribunal cited previous judgments, emphasizing that the term 'or otherwise' should not be used to restore companies not complying with statutory requirements or indulging in unlawful activities. The tribunal concluded that the company's striking off was justified due to non-compliance and lack of operations.4. Compliance with Statutory Requirements and Filing of Pending Documents:The appellant argued that the company had substantial assets and liabilities, with continuous business operations hindered by external factors like construction and the pandemic. The appellant contended that the company intended to comply with statutory requirements and file pending returns. The tribunal noted that the Registrar of Companies and the Income Tax Department did not oppose the restoration but required the company to file all pending documents.Conclusion:The appellate tribunal allowed the appeal, set aside the impugned order, and directed the restoration of the company's name to the Register of Companies, subject to the filing of all outstanding documents and payment of costs. The tribunal emphasized the importance of compliance with statutory requirements and the justness of restoration in the interest of the company and stakeholders. The restoration was conditional upon the payment of Rs. 40,000 to the Prime Minister Relief Fund and completion of all statutory formalities.