2020 (10) TMI 18 - HC - Companies Law

Court rules Registrar's company name strike-off illegal, violating procedural requirements. Petitioners allowed appeal without time limit.

Halindi Hydro Electric Project (P) Ltd., M/s Jogi Hydro Electric Power Project Private Ltd., M/s Shirgul Hydel Solutions Private Ltd., M/s Apna Hydro Electric Project (P) Ltd. Versus Union of India & others

The Court held that the Registrar's action of striking off company names without providing an opportunity to be heard and issuing proper notices was ... Restoration of names in the Register of Companies - sub-section (5) of Section 248 of Companies Act, 2013 - opportunity of being heard not given - violation of principles of natural justice - HELD THAT:- It is well established principle that no person shall be condemned unheard. Here, the petitioners-companies are registered in the year 2010. When such being the case, it is the duty of the Registrar to examine as to whether the petitioners-companies have any valid legal defence for the purpose of sub-Section (5) of Section 248 of the Act. Sub Section (5) is very clear that before publication in the Official Gazette about the striking off the name of company, notice has to be issued to the company and thereafter on the basis of the reply, the Registrar can pass an order, but, before passing an order, the grounds given or defence taken in the reply to the notice should have to be verified - When such being the case, the order of striking off the name of the company itself is bad in law and when the notices itself have not been issued, then it is a good ground for the petitioners-companies to prefer an appeal under Section 252 of the Act. - Petitioner are at liberty to approach the Tribunal u/s 252 of the Companies Act. Application disposed off. Issues:1. Compliance with procedural requirements under Section 248 of the Companies Act, 2013.2. Opportunity of being heard before striking off the name of a company from the register.3. Validity of orders passed by the Registrar under sub-section (5) of Section 248.4. Availability of appeal under Section 252 of the Companies Act against orders passed by the Registrar.Analysis:1. The petitioners, registered under the Companies Act in 2010, challenged notices issued under Section 248(5) for striking off their names from the register. The petitioners argued that no opportunity of being heard was provided, which is mandatory under the Act. They contended that the Registrar must issue a notice before striking off a company's name, and failure to do so renders the action illegal and contrary to the Act. The absence of an opportunity to present a defense before striking off the name was highlighted as a violation of procedural requirements.2. The petitioners further argued that the Registrar's action of striking off the names without issuing notices or providing an opportunity to present a defense was against the provisions of Section 248(5) of the Act. They emphasized that the Registrar must consider any cause shown by the company before passing such orders. The petitioners relied on a judgment from the Madras High Court to support their contention that proper notice is a prerequisite for issuing orders under Section 248(5).3. In response, the Assistant Solicitor General representing the respondents contended that appeals against the Registrar's orders under Section 248(5) lie with the Tribunal under Section 252 of the Act. The respondents argued that since the petitioners did not avail themselves of this appeal mechanism, their petitions should be dismissed. The respondents claimed that notices were indeed issued before passing orders under Section 248(5) and highlighted the petitioners' inactivity in commencing business or making applications under the Act.4. The Court emphasized the principle of audi alteram partem (no one shall be condemned unheard) and noted the lack of notices issued to the petitioners before striking off their names. The Court held that the absence of notices rendered the order of striking off the names illegal. While refraining from expressing an opinion on the case's merits, the Court disposed of the petitions, allowing the petitioners to approach the Tribunal under Section 252 of the Companies Act. Importantly, the Court clarified that the time spent on these petitions would not count towards the limitation period. Any pending applications were also disposed of by the Court.