2020 (11) TMI 627 - AT - Insolvency and Bankruptcy

Appellate Tribunal upholds company name restoration, denies fee waiver under Companies Act, 2013

The Appellate Tribunal upheld the restoration of the company's name in the register for the Corporate Insolvency Resolution Process but set aside the ... Restoration of name of a Company in the register of companies - requirement of pending Financial Statements and Annual Returns with the Registrar - HELD THAT:- It is to be remembered that Rule 12 of Companies (Registration Offices and Fees) Rules, 2014 says that the documents required to be submitted, registered or recorded or any fact or information required or authorised to be registered under the Companies Act shall be submitted, filed, registered or recorded on payment of the fee or on payment of such additional fee as applicable An ‘Appeal’ can be filed by a ‘person’ aggrieved by the ‘Registrar of Companies’ ‘Order’ notifying the dissolution of the Company, within three years from the date of order of the ‘Registrar of Companies’ communicating the reasons thereto - In Law, the dissolution of a Company will not result in removing the ‘Debtors’ liability of the Company for the purpose of discharging the dissolved Company’s obligations / liabilities /payment(s) it can carry on its operations. Direction issued to the Appellant / ROC, West Bengal to restore the name of the Company (M/s Goouksheer Farm Fresh Pvt. Ltd.) (First Respondent - in Appeal) for completion of ‘Corporate Insolvency Resolution Process’ effectively in the register of Companies cannot be found fault with. However, the further direction issued by the Tribunal, to the Appellant ‘not to levy any fee / penalty’ to the Company because Company is in ‘Corporate Insolvency Resolution Process’ is legally untenable - appeal allowed. Issues Involved:1. Restoration of the company's name in the register.2. Waiver of fees/penalty for filing pending documents.3. Jurisdiction and authority of the Tribunal.4. Limitation period for filing the appeal.5. Applicability of Section 403 of the Companies Act, 2013.6. Role and locus standi of the Interim Resolution Professional (IRP).Issue-wise Detailed Analysis:Restoration of the Company's Name:The Tribunal ordered the restoration of the company's name (M/s Goouksheer Farm Fresh Pvt. Ltd.) in the register maintained by the Registrar of Companies (ROC) to effectively complete the Corporate Insolvency Resolution Process (CIRP). The ROC had previously struck off the company's name after complying with Section 248 of the Companies Act, 2013. The Tribunal restored the company's name under Section 252(3) of the Companies Act, 2013, and directed the ROC to restore the name without levying any fee/penalty.Waiver of Fees/Penalty:The Appellant contended that there is no provision under the Companies Act, 2013, for the waiver of fees/penalty for filing documents. Section 403(1) specifies that documents required to be filed under the Act must be filed within the prescribed time, and any delay incurs an additional fee. The Tribunal's direction to waive fees/penalty was deemed legally untenable as there is no express provision for such a waiver in the Companies Act, 2013, or the relevant rules.Jurisdiction and Authority of the Tribunal:The Appellant argued that the Tribunal had no jurisdiction to issue a direction to waive the payment of fees/penalty. The Tribunal's power to restore a company's name is limited to ensuring compliance with the requirements of the Companies Act, 2013, and does not extend to waiving statutory fees. The Tribunal's direction to restore the company's name was upheld, but the direction to waive fees/penalty was set aside.Limitation Period for Filing the Appeal:The Appellant filed the appeal within the limitation period as per Section 421(3) of the Companies Act, 2013. The appeal was filed after the Appellant's office received the impugned order on 05.02.2020 and applied for a certified copy on 04.03.2020, which was received on 11.03.2020. The nationwide lockdown due to COVID-19 and the Supreme Court's direction for the extension of the limitation period were also considered. The Appellate Tribunal held that the appeal was filed within the limitation period.Applicability of Section 403 of the Companies Act, 2013:Section 403 deals with the fee for filing documents and specifies that any delay in filing incurs an additional fee. The Tribunal's direction to waive fees/penalty was contrary to the provisions of Section 403 and Rule 12 of the Companies (Registration Offices and Fees) Rules, 2014, which require payment of the prescribed fee and additional fee for delayed filings.Role and Locus Standi of the Interim Resolution Professional (IRP):The IRP, appointed by the Tribunal, filed the petition for the restoration of the company's name. The Appellant argued that the IRP had no locus standi to file such a petition. However, the Tribunal had directed the IRP to file the petition for restoration, making it maintainable in law. The restoration was necessary for the effective completion of the CIRP.Conclusion:The Appellate Tribunal upheld the Tribunal's order to restore the company's name for the completion of the CIRP but set aside the direction to waive fees/penalty. The appeal was allowed, and the Appellant's contention regarding the non-existence of a provision for waiving fees/penalty was accepted. The Tribunal's jurisdiction to restore the company's name was affirmed, but its authority to waive statutory fees was rejected.