Tribunal Upholds Strike Off for Failure to File Financial Statements

The Tribunal upheld the Registrar of Companies' decision to strike off the Appellant Company for failure to file financial statements, as the company failed to provide sufficient evidence of business activities during the default period. Despite submitting balance sheets, the lack of concrete proof prior to a specified date raised doubts about the company's operations. The Tribunal emphasized the need for companies seeking restoration to demonstrate ongoing business activities, leading to the dismissal of the appeal.

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Issues:
Restoration of name of the Appellant Company in the register maintained by the Registrar of Companies due to defaults in statutory compliances.

Analysis:
The Appellant Company invoked Section 252 of the Companies Act, 2013 seeking restoration of its name in the register. The company was struck off by RoC Delhi and Haryana for failure to file Financial Statements & Annual Returns since 31.03.2007. The Appellant Company claimed to be in operation since its incorporation and submitted various documents to support its claim, including financial statements, lease agreement, income tax return, and bank statements. However, the ROC stated that the striking off was legal due to non-filing of financial statements for two or more years.

The Tribunal observed that the Appellant Company had not filed Income Tax Returns after 2006-07, with the return for that year showing nil income. Bank statements presented did not show significant transactions for a specific period. The balance sheets provided were prepared after the striking off date, raising doubts about their authenticity. The Tribunal requested additional evidence to prove the company's operation during the defaulting years.

Despite the Appellant filing balance sheets from 2006-07 to 2018-19, no substantial evidence was presented to establish the company's business activities during the default period. The Tribunal referred to Section 252(3) of the Companies Act, 2013, emphasizing that the company must be carrying out business or in operation for restoration. The absence of concrete proof prior to 01.09.2017 led to a lack of certainty regarding the company's operations.

Citing a judgment from the NCLAT, the Tribunal highlighted the need for the company to demonstrate business activities or operations for restoration. The term "or otherwise" in the law was interpreted to prevent arbitrary restoration of companies not fulfilling operational requirements. Given the lack of evidence of business operations and compliance, the Tribunal upheld the ROC's decision to strike off the Appellant Company. The appeal was dismissed, and the parties were directed to receive a copy of the order.

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