2020 (4) TMI 808 - HC - Companies Law

Court upholds Registrar's decision to strike off company for non-compliance with Companies Act.

The court upheld the Registrar of Companies' decision to strike off the petitioner company's name under Section 248 of the Companies Act, 2013. Despite ... Striking off the name of the petitioner company from the Registrar of Companies - main grievance of the petitioner is that there should have been an obligation on the respondents to pass an order under Sections 248 (5) and 248 (6) of the Companies Act, 2013 - HELD THAT:- As per Section 248 (6) of the Companies Act, 2013, before passing an order under Section 248(5) of the Companies Act, 2013 (to strike off) the Registrar shall satisfy himself that sufficient provision has been made for the release of all amounts due to the company for payment or discharge of its liability and obligations by the company and also shall obtain necessary undertakings from the Managing Directors/Directors or the person in-charge of the companies with respect to such discharge of liabilities. In the instant case, the records do not show that the petitioner had actually filed any application seeking to classify it as a dormant company or inactive company. Hence, the provision under Section 455 of the Companies Act, 2013 will not be applicable. Even otherwise, Section 245 (1) (c) of the Companies Act, an exemption from a company not to be struck off can be granted only, when the company voluntarily applied to the Registrar, seeking to declare it as a Dormant company. If it makes an application under Section 248 (c), then the Registrar will have to follow the procedure under Section 455 of the Companies Act, 2013 - In the present case, the petitioner had not taken recourse to the provisions of Section 248 (c) of the Companies Act, 2013. Petition dismissed. Issues:1. Invocation of Section 248 of the Companies Act, 2013 for striking off the name of the petitioner company.2. Compliance with the provisions of Section 248 (5) and 248 (6) of the Companies Act, 2013.3. Applicability of Section 455 of the Companies Act, 2013 regarding dormant companies.4. Justifiability of the Registrar of Companies' decision to strike off the petitioner company.Analysis:1. The petitioner company sought relief against the striking off of its name by invoking Section 248 of the Companies Act, 2013. The company had failed to commence business operations due to various reasons, leading to non-filing of financial statements or annual returns. The respondents justified their actions under Section 248, citing non-compliance by the petitioner company.2. The petitioner contended that the Registrar of Companies should have followed the provisions of Section 248 (5) and 248 (6) before striking off the company. The petitioner relied on a previous judgment emphasizing the necessity of an order under Section 248 (6) for validity. However, the court found that the Registrar's actions were in accordance with the law, as the necessary undertakings were not provided by the company's directors.3. The issue of dormant companies under Section 455 of the Companies Act, 2013 was raised, suggesting that the petitioner could have applied for dormant status to avoid being struck off. However, it was noted that the petitioner did not make such an application, making the provisions of Section 455 inapplicable to the case.4. The Registrar's decision to strike off the petitioner company was deemed justifiable by the court. Despite the petitioner's claims of incorporation for future business activities, evidence showed that the company existed only on paper, with no real business operations. The Registrar's efforts to notify and inquire about the company's status were hindered by the lack of response and the inability to locate the company's address, leading to the dismissal of the writ petition.In conclusion, the court dismissed the writ petition but allowed the petitioner company to seek recourse through appropriate channels. The judgment highlighted the importance of compliance with statutory provisions and the need for companies to fulfill their obligations to avoid being struck off.