2021 (1) TMI 575 - Tri - Companies Law

Tribunal Orders Company Restoration After Appellant Shows Assets & Operations

The Tribunal ruled in favor of the Appellant in the appeal for restoration of the company's name, ordering the Registrar of Companies to change its status ... Seeking restoration of name in the Registrar of Companies - section 248 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 - HELD THAT:- The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the RoC to restore the name in its Register - The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. It is therefore the Registrar of Companies, the Respondent herein, is ordered to restore the Original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off' to 'Active' (for e-filing) etc. - Appellant Company is directed to file all the statutory document(s) along with prescribed fees/ additional fee/ fine as decided by RoC within thirty days from the date on which its name is restored on the Register of Companies by the RoC - Application allowed. Issues: Appeal for restoration of company name struck off by Registrar of Companies.Analysis:1. Background and Appellant's Submission:- The Appellant filed an appeal for the restoration of the company's name under Section 252(3) of the Companies Act, 2013, due to the Registrar of Companies striking off the name of the company for default in statutory compliances.- The Appellant company, engaged in real estate activities, stated that it has been continuously operating as per its Memorandum of Association without any statutory dues.2. Counter by Registrar of Companies and Income Tax Authorities:- The Registrar of Companies, in response, mentioned that the company's name was struck off after providing a reasonable opportunity of being heard, as the company failed to file its annual returns and balance sheets.- The Income Tax Authorities reported that on verification, there was no company found at the registered address, raising concerns about the company's existence.3. Evidence of Company's Operations and Assets:- The Appellant presented audited balance sheets and income tax returns for multiple years, demonstrating assets and ongoing operations of the company, despite showing nil revenue from operations.- The Tribunal noted that the company has substantial assets and is capable of restarting its business based on the available assets.4. Legal Analysis and Decision:- The Tribunal examined the provisions for restoration of a company's name under Section 252 of the Companies Act, 2013, emphasizing the interest of the company, shareholders, and creditors.- It was established that the Appellant satisfied the bench regarding its assets, justifying the restoration of its name in the Register of Companies.- The Tribunal ruled in favor of the Appellant, ordering the Registrar of Companies to restore the company's name and change its status from 'Strike Off' to 'Active.'- The Appellant was directed to file all outstanding statutory documents within thirty days of restoration, along with prescribed fees and costs for revival.5. Additional Directions and Compliance:- The Appellant was instructed to pay a cost of Rs. 50,000 for revival, deliver a certified copy of the order to the Registrar of Companies, and publish a notice in a leading newspaper regarding the restoration of the company.- The Registrar of Companies was directed to publish the order in the Official Gazette and bear the expenses of such publication.6. Conclusion:- The appeal was disposed of with the decision to restore the company's name, subject to compliance with the specified directions and payment of costs.This detailed analysis outlines the key aspects of the judgment, including submissions, counterarguments, evidence of company operations, legal analysis, decision, and compliance requirements.