2017 (12) TMI 1034 - Tri - Companies Law

Appeal successful: Company name restored, ROC to issue new certificate. Rs. 50,000 penalty for non-filing.

The Tribunal allowed the appeal, deeming the striking off of the appellant company's name illegal. The company's name was restored, and it was directed to ... Striking of name of company from registrar of companies - reasonableness for the Registrar to assume that the appellant company was not carrying on any business or operation - Held that:- The appellant company has been carrying on its operation which is evident from the fact that it made payment to its employees (para 5), it provided services to Hitachi Systems Micro Clinic Private Limited (para 5), it received payment for the services provided to various clients of the company as per details given in preceding para 5 and it has availed services from various agencies as revealed in preceding para 6. The appellant company has also taken on lease office space for running its operation and has also reflected its turnover for the financial year 2014-15, 2015-16 and 2016-17 (para 6). It has even entered into Memorandum of understanding with various entities as extracted in preceding para 8. There are assets available as is mentioned in supra para 9. In the face of the aforesaid it would not be reasonable for the Registrar to assume that the appellant company was not carrying on any business or operation for a period of two immediately preceding financial year. The appellant company cannot thus be regarded as a defunct company. The fact remains that there is no plausible explanation as to why it has not filed its annual returns and balance sheets before the ROC. There is thus a serious lapse on the part of the appellant company. In the facts and circumstances explained in the preceding paras we are of the view that the appellant company fulfils the requirement of Section 252(1) read with Section 252(3) of the Companies Act which overwhelming warrant its restoration. As a sequel to the above discussion this appeal is allowed. The appellant company is restored to its original name. Issues Involved:1. Legality of striking off the appellant company's name from the Register of Companies.2. Compliance with the procedural requirements under Section 248 of the Companies Act, 2013.3. Justification for the restoration of the appellant company's name under Section 252 of the Companies Act, 2013.4. Financial and operational status of the appellant company at the time of striking off.5. Costs and penalties associated with non-filing of statutory documents.Issue-wise Detailed Analysis:1. Legality of Striking Off the Appellant Company's Name:The appellant, MicroTech Infoserve Private Limited, challenged the order dated 30.06.2017, published in the Gazette of India, which struck off its name from the Register of Companies under Section 248(5) of the Companies Act, 2013. The Registrar of Companies (ROC) issued a notice to the appellant, expressing doubt that the company was not carrying on any business or operations for two preceding financial years and had not applied for dormant status under Section 455.2. Compliance with Procedural Requirements under Section 248:The ROC followed the procedural requirements by issuing a notice (DEL/248(1)/STK-1) and a public notice (ROC-DEL/248/STK-5/108) inviting objections. Despite these notices, the appellant company did not respond due to the illness of its Chartered Accountant, who was responsible for compliance. The ROC completed all formal steps, including public notices and notifications to various authorities, before striking off the company's name.3. Justification for Restoration under Section 252:Under Section 252(1) of the Companies Act, the Tribunal can restore a company's name if the removal was not justified. The appellant provided evidence of ongoing business activities, including employee payments, service provisions, and financial transactions. The Tribunal found that the appellant company was indeed carrying on business and operations, making the ROC's assumption of inactivity unreasonable. Thus, the Tribunal deemed the striking off unjustified and ordered the restoration of the company's name.4. Financial and Operational Status at the Time of Striking Off:The appellant demonstrated ongoing operations with 84 employees, significant financial transactions, and active business engagements, including Memorandums of Understanding with various entities. The company's turnover increased significantly over the years, and it maintained assets and liabilities, evidencing active business operations.5. Costs and Penalties for Non-filing of Statutory Documents:Despite ongoing operations, the appellant failed to file annual returns and balance sheets timely, leading to the ROC's action. The Tribunal acknowledged this lapse and imposed a cost of Rs. 50,000 on the appellant, to be deposited with the ROC. This cost does not preclude other penal actions that may be initiated for the default.Conclusion:The Tribunal allowed the appeal, declaring the order and notification striking off the appellant's name illegal. The appellant company's name was restored, and it was deemed to have never been struck off. The appellant was ordered to file a copy of the Tribunal's order with the ROC within thirty days, and the ROC was directed to restore the company's name and issue a fresh certificate of incorporation. The appellant was also saddled with a cost of Rs. 50,000 for non-filing of statutory documents.