2021 (1) TMI 345 - Tri - Companies Law

Restoration of Company Name: Tribunal Grants Relief under Companies Act

The Tribunal granted the restoration of a Private Limited Company's name under the Companies Act, 2013, considering the Company's history, intentions for ... Restoration of the name of the Company in the ROC - Section 252 of the Companies Act, 2013 Read with Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT:- It is not in dispute that the Registrar of Companies is conferred with power U/s.248(3) 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 order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the 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. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition and has left the issue to the Tribunal to consider the case subject to certain terms and conditions. The Registrar of Companies, Karnataka, the Respondent herein, is directed 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 taken by Registrar of Companies, which includes restoration of DINs of its Directors - Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies. Application allowed. Issues:1. Restoration of the name of the Company under Companies Act, 2013.2. Compliance with statutory requirements and filing of pending documents.3. Consideration of the Company's status and intentions for restoration.4. Examination of Registrar of Companies' powers and obligations.5. Evaluation of the Company's eligibility for restoration and its future plans.6. Determination of the impact of restoration on stakeholders and business operations.Issue 1: Restoration of the name of the Company under Companies Act, 2013:The case involved C.P. No. 106/BB/2020 seeking restoration of a Private Limited Company's name under the Companies Act, 2013. The Petitioner sought to restore the Company's name and file forms under the Companies Fresh Start Scheme, 2020. The Tribunal considered the Company's history, shareholding pattern, and the Petitioner's involvement in its operations. The Registrar of Companies had struck off the Company's name due to non-filing of Annual Returns and Financial Statements, leading to disqualification of directors. The Petitioner emphasized the bona fide intention to restore the Company for business opportunities and compliance with statutory requirements.Issue 2: Compliance with statutory requirements and filing of pending documents:The Registrar of Companies, Karnataka, had not opposed the Petition but highlighted the non-filing of Balance Sheets and Annual Returns by the Company. The Respondent expressed willingness to restore the Company subject to costs incurred and pending statutory returns. The Petitioner's representative argued that the non-filing was unintentional, seeking a sympathetic approach for restoration. The Tribunal analyzed the legal provisions empowering the Registrar to strike off a Company and the requirements for restoration, emphasizing the need for compliance with statutory obligations upon restoration.Issue 3: Consideration of the Company's status and intentions for restoration:The Tribunal acknowledged the Company's desire to benefit from the Companies Fresh Start Scheme, 2020, and generate employment post-restoration. It recognized the potential hardships faced by the Petitioner, directors, and shareholders due to the Company's struck-off status. The Tribunal considered the Company's going concern status, the reasons for its inability to earn revenue, and the potential benefits of restoration under the CFSS-2020. The Members of the Company committed to completing pending filings and resuming business operations post-restoration.Issue 4: Examination of Registrar of Companies' powers and obligations:The Tribunal evaluated the Registrar's powers under Section 248 of the Companies Act, 2013, to strike off a Company. It noted the Registrar's obligation to ensure realization of amounts due and discharge of liabilities before striking off a Company. While acknowledging the legality of the Registrar's action, the Tribunal emphasized the need to consider the Petitioner's contentions for restoration in the interest of justice and ease of doing business.Issue 5: Evaluation of the Company's eligibility for restoration and its future plans:The Tribunal found that the Company's restoration was justified, given its intention to comply with statutory requirements, benefit from the CFSS-2020, and resume business operations. It directed the Registrar to restore the Company's name, subject to specific conditions, including filing pending documents, payment of costs, and compliance with statutory obligations. The Tribunal emphasized the need for the Company to resume operations promptly post-restoration.Issue 6: Determination of the impact of restoration on stakeholders and business operations:The Tribunal recognized the potential adverse effects of the Company's struck-off status on the Petitioner, directors, and shareholders. It highlighted the importance of restoring the Company to facilitate business opportunities, generate revenue, and create employment. The Tribunal's decision aimed to balance legal requirements with the Company's intentions for restoration, ensuring compliance with statutory obligations and promoting business continuity post-restoration.