2020 (9) TMI 900 - Tri - Companies Law

Company name restored with conditions: Compliance required for pending litigation, financial accountability.

Moh. Iqbal, Hartford Academy of Insurance and Education Private Limited Versus The Registrar of Companies

Moh. Iqbal, Hartford Academy of Insurance and Education Private Limited Versus The Registrar of Companies - TMI Issues Involved:1. Application for restoration of a company's name struck off by the Registrar of Companies (RoC).2. Compliance with statutory requirements and filing of returns.3. Financial and operational status of the company.4. Legal precedents and 'just ground' for restoration.5. Imposition of exemplary costs and conditions for restoration.Issue-wise Detailed Analysis:1. Application for Restoration of a Company's Name Struck Off by the RoC:The application was filed under Section 252(3) of the Companies Act, 2013, by a shareholder of the company, seeking restoration of the company's name, which was struck off by the RoC under Section 248 of the Companies Act, 2013. The application was supported by affidavits from other shareholders holding 100% paid-up share capital, consenting to the restoration.2. Compliance with Statutory Requirements and Filing of Returns:The RoC's report highlighted that the company failed to file its Annual Return and Balance Sheet from the year 2003-2004 onwards and did not furnish cogent reasons for such defaults. The company also did not provide Income Tax Acknowledgement copies for the Assessment Years 2003-2019. The Tribunal directed the company to file all pending financial statements and annual returns within a specified time and to ensure that the accounts were not used for transacting tainted money during demonetization.3. Financial and Operational Status of the Company:The company was engaged in providing training services, accredited by the Insurance Regulatory Development Authority (IRDA). It had a significant financial claim against an insurance company, which was upheld by the Hon'ble High Court of Madras, directing the insurance company to pay Rs. 1,62,68,011/- with interest. The insurance company appealed, and a conditional stay was granted, requiring the deposit of 50% of the decreed amount in court. The company argued that its restoration was necessary to prosecute the case and recover the dues.4. Legal Precedents and 'Just Ground' for Restoration:The applicant relied on precedents, including judgments from the Hon'ble NCLT, New Delhi Bench-III, and the Hon'ble High Court of Gauhati, which emphasized restoring companies to enable pending litigations to reach logical conclusions. The Tribunal considered these precedents and the 'just ground' under Section 252(3) of the Companies Act, 2013, to restore the company’s name.5. Imposition of Exemplary Costs and Conditions for Restoration:The Tribunal imposed an exemplary cost of Rs. 50,000/- payable to the PM CARES Fund. The company was directed to file all pending returns and financial statements within 15 days of restoration and to deposit Rs. 2,00,000/- with the RoC for statutory fees and expenses. The company was also prohibited from alienating or disposing of any valuable assets until compliance was achieved. An affidavit of compliance and an undertaking regarding the non-use of accounts for tainted money during demonetization were also required.Conclusion:The Tribunal allowed the application for restoration of the company's name, subject to compliance with the specified conditions and payment of exemplary costs. The order emphasized the importance of enabling the company to pursue its pending litigation and recover dues, while also ensuring compliance with statutory requirements.