2020 (10) TMI 698 - Tri - Companies Law

Company name restored by Tribunal under Companies Act, 2013 - balancing compliance and operations

Vijayanand Shiva Shankarappa Kashappanavar, Director of SRK Sugars Private Limited Versus The Registrar of Companies, Karnataka

The Tribunal granted the restoration of the Company's name in the Register of Companies under Section 252(3) of the Companies Act, 2013. Despite the ... Restoration of name of the Company namely M/s. SRK Sugars Private Limited in the Register of Companies maintained by the Registrar of Companies - section 252 of the Companies Act, 2013 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bonafide contentions of Petitioner seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. The Registrar of Companies, Karnataka, the Respondent herein, is ordered to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register with restoration of all consequential action by Registrar of Companies, which includes restoration of DINs of its Directors - name restored - application allowed. Issues:1. Restoration of the name of the Company in the Register of Companies as per Section 252 of the Companies Act, 2013.Analysis:The case involved a Company Petition filed under Section 252 of the Companies Act, 2013, seeking restoration of the name of the Company in the Register of Companies. The Company, involved in sugar production, had its name struck off by the Registrar of Companies due to failure to file Financial Statements and Annual Returns for multiple years. The Petitioner contended that the non-filing was inadvertent, with no ill intentions, and sought restoration to fulfill pending obligations. The Registrar of Companies initiated the striking off process under Section 248(1) of the Act, following non-compliance. The Respondent did not oppose the restoration, subject to compliance with statutory requirements and costs.The Tribunal noted that while the Registrar had the authority to strike off non-compliant companies, it was essential to ensure due provision for liabilities before doing so. Despite the legal basis for the striking off, the Tribunal considered the Petitioner's genuine intentions and the absence of pending investigations against the Company. In the interest of justice and ease of doing business, the Tribunal decided to restore the Company's name, subject to specific conditions. The restoration order included directions for filing statutory documents, payment of costs, and resumption of operations promptly upon restoration. The Registrar was instructed to publish the restoration order, and the Company was warned that the restoration did not absolve it from other violations or offenses committed previously.In conclusion, the Tribunal, exercising its powers under Section 252(3) of the Companies Act, 2013, granted the restoration of the Company's name in the Register of Companies, emphasizing compliance with statutory requirements and costs. The decision aimed to balance legal provisions with the Petitioner's circumstances, facilitating the Company's return to operations while upholding regulatory standards.