2020 (12) TMI 38 - Tri - Companies Law

Company Name Restoration Granted after Compliance Review

The Tribunal granted the Company Petition for restoration of the company's name in the Register of Companies. The Petitioner's company was struck off due ... Restoration of company name to Register of Companies - striking off and dissolution - failure to file financial statements and annual returns - notice in Form STK-1, STK-5 and STK-7 - opportunity to rectify defaults - power under section 252(3) of the Companies Act, 2013Striking off and dissolution - notice in Form STK-1, STK-5 and STK-7 - failure to file financial statements and annual returns - Validity of the Registrar's strike-off procedure and whether restoration is warranted despite defaults in statutory filings. - HELD THAT: - The Tribunal examined the Registrar of Companies' report and records and found that the Registrar had issued the statutory notices (Form STK-1) and published the public notices (STK-5 and STK-7) before striking off and publishing the dissolution. Although the petitioner contended that no notice was issued, the ROC's report recorded the issuance of the notices and the absence of any representation against the proposed strike-off. The Tribunal considered the petitioner's explanation of inadvertent non-filing and reviewed the audited financial statements and other documents filed by the petitioner which demonstrated revenue from operations, current and non-current assets and borrowings. Balancing the procedural compliance by the ROC with the petitioner's showing of continuing business activity and assets, the Tribunal concluded that it would be just and equitable to permit restoration so that the company may rectify its defaults and continue operations. [Paras 10, 11, 12, 13, 14]The strike-off was acknowledged to have followed notice and publication, but on the material placed before it and in the interest of justice the Tribunal allowed restoration of the company's name so the company may rectify defaults.Restoration of company name to Register of Companies - opportunity to rectify defaults - power under section 252(3) of the Companies Act, 2013 - Terms and consequences of restoration of the company's name to the Register of Companies. - HELD THAT: - Relying on its discretionary power under section 252(3) of the Companies Act, 2013, the Tribunal directed restoration of the petitioner's name to the Register of Companies subject to specified conditions. The Tribunal imposed a costs direction to be paid online to the Ministry of Corporate Affairs within thirty days of receipt of the order. It mandated that upon restoration the company must file all pending financial statements and annual returns with applicable fees and late fees within thirty days of restoration, failing which the order would stand vacated automatically. The Tribunal further directed that after restoration and compliance with terms, the Registrar shall communicate with bank authorities to facilitate defreezing of the company's accounts. [Paras 15, 16]Restoration allowed on terms: payment of costs, filing of all pending statutory documents within the stipulated time, automatic vacatur on non-compliance, and Registrar to inform banks to defreeze accounts upon restoration.Final Conclusion: The petition for restoration of Ensure Insurance Brokers Private Limited's name to the Register of Companies is allowed; restoration is ordered on payment of costs and subject to filing of pending financial statements and annual returns within the stipulated time, failing which the restoration will be vacated, and the ROC is directed to communicate with banks to effect defreezing upon compliance. Issues:1. Restoration of company name in the Register of Companies.2. Non-compliance leading to striking off the company's name.3. Lack of notice and opportunity to be heard before striking off.4. Financial statements and annual returns non-filing.5. Company's operations and financial status evaluation.6. Relief sought by the petitioner for restoration.Analysis:1. The Company Petition sought restoration of the company's name in the Register of Companies under section 252(3) of the Companies Act, 2013.2. The Petitioner company was struck off by the Respondent Registrar of Companies due to defaults in statutory compliances, specifically failure to file Financial Statements and Annual Returns for 2015-16 and 2016-17, and not carrying on any business for two preceding years.3. The Petitioner alleged lack of notice in Form STK-5 and absence of Public Notice and reasonable opportunity of being heard before the striking off action was initiated.4. The Petitioner admitted inadvertent non-filing of financial statements and provided Audited Accounts for the years 2015-16 to 2018-19, along with Income-Tax Returns acknowledgments for the relevant years.5. The Bench evaluated the financial statements of the company, noting revenue, expenses, assets, and borrowings for the financial years 2015-16 and 2016-17, concluding that the company had operations and financial standing.6. Considering the submissions, documents, and observations, the Bench found it just and equitable to allow the restoration prayer sought by the Petitioner company.7. The Tribunal directed the Respondent Registrar to restore the company's name upon payment of specified costs and filing pending financial statements and Annual Returns within a stipulated period post-restoration, failing which the order would stand vacated.8. Post-restoration, the Registrar was instructed to communicate with bank authorities for defreezing the company's accounts, ensuring operational continuity.This detailed analysis encapsulates the issues raised, the arguments presented, the evaluation conducted, and the relief granted in the Tribunal's judgment regarding the restoration of the company's name in the Register of Companies.