2019 (12) TMI 342 - AT - Companies Law

NCLAT orders restoration of company name after finding non-compliance with Companies Act

Calcutta Rubber Factory Pvt Ltd, Ranbir Singh and Charanjeet Singh Versus Registrar of Companies, Delhi and Haryana

Calcutta Rubber Factory Pvt Ltd, Ranbir Singh and Charanjeet Singh Versus Registrar of Companies, Delhi and Haryana - TMI Issues:1. Appeal against order striking off company's name from the register of companies.2. Compliance with mandatory provisions of Section 248(1) of Companies Act, 2013.3. Non-functional status of the company.4. Ownership of immovable property by the company.5. Financial status and filing of annual returns.Issue 1: Appeal against order striking off company's name from the register of companiesThe appeal was filed by Calcutta Rubber Factory Pvt Ltd and its directors/shareholders against the order of NCLT, New Delhi, affirming the decision of ROC to strike off the company's name from the register. The NCLT found the company to be non-functional at the time of strike off, based on the Income Tax Department's report. However, the appellants argued that the ROC did not follow the prescribed procedure under Section 248(1) of the Companies Act, 2013, and failed to record satisfaction as per Section 248(6).Issue 2: Compliance with mandatory provisions of Section 248(1) of Companies Act, 2013The appellants contended that the ROC did not comply with the mandatory provisions of Section 248(1) as notices were not served to the directors as required. The NCLAT agreed that the ROC's actions did not meet the statutory requirements, leading to the appellants being unable to submit their representations along with relevant documents before the ROC.Issue 3: Non-functional status of the companyDespite the company being non-functional at the time of strike off, the NCLAT considered the fact that the company owned a leasehold plot allotted by HUDA and had intentions to file returns and financial statements after the period ending in 2012-13. The accumulated losses were also taken into account to determine the company's operational status.Issue 4: Ownership of immovable property by the companyThe company's ownership of a 300 sq meters plot allotted by HUDA was highlighted, along with evidence of property tax payments. The NCLAT considered this ownership as a factor in the decision to restore the company's name to the register.Issue 5: Financial status and filing of annual returnsThe appellants argued that although the company had not filed annual returns and financial reports after March 31, 2013, they were prepared and ready for submission. The NCLAT agreed that the non-filing of returns did not necessarily indicate that the company was not carrying on any business, especially considering the financial difficulties faced by the company.In conclusion, the NCLAT allowed the appeal, quashed the impugned order, and directed the restoration of the company's name to the register, subject to specified compliances and costs to be paid. The judgment emphasized the importance of compliance with statutory provisions and considered factors such as ownership of property and financial status in reaching the decision.