Tribunal Upholds NCLT Decision on Company Name Restoration

The appeal was dismissed by the Tribunal, upholding the NCLT's decision to not restore the company's name under Section 252(3) of the Companies Act. The appellant's claims of fixed assets and involvement in business were refuted by the ROC's report showing non-filing of financial returns since 2015. The NCLT found the company non-functional and lacking valid reasons for restoration. The divergent opinions within the Tribunal were resolved under Section 98 of CPC, resulting in the dismissal of the appeal for failure to substantiate the need for restoration.

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Issues Involved:
1. Restoration of the company's name under Section 252(3) of the Companies Act, 2013.
2. Divergent judgments by the Division Bench of the Tribunal.
3. Procedural aspects under the Companies Act and NCLAT Rules.
4. Applicability of Section 98 of CPC in the context of divergent opinions.

Issue-wise Detailed Analysis:

1. Restoration of the Company's Name under Section 252(3) of the Companies Act, 2013:
The appeal was filed against the order of the NCLT, which dismissed the appeal for restoration of the company's name, "Shri Laxmi Spinners Pvt. Ltd.," struck off by the ROC under Section 248 of the Companies Act. The appellant contended that the company had fixed assets and was in the business of spinning and weaving but had not filed balance sheets and annual returns since 2015 due to lack of professional guidance. The ROC issued a notice under Section 248(1), and the appellant claimed to have replied but later found the company's name struck off. The NCLT dismissed the appeal, noting the company was not carrying on business at the time of being struck off and had not provided cogent reasons or documents to substantiate its claim.

2. Divergent Judgments by the Division Bench of the Tribunal:
The Division Bench delivered divergent judgments on 26th November 2020. The Member (Technical) found the NCLT's decision to dismiss the appeal correct, while the Member (Judicial) believed the appeal deserved to be allowed, restoring the company's name with formalities and costs. Both members analyzed the law under Section 252(3) and came to different conclusions based on what they considered "just."

3. Procedural Aspects under the Companies Act and NCLAT Rules:
The procedural aspects under Section 419(5) of the Companies Act for NCLT were considered, which states that divergent opinions should be decided by the majority. However, no similar provision exists for the Appellate Tribunal. Section 424 allows the Tribunal to regulate its own procedure, guided by principles of natural justice. Rule 104 of the NCLAT Rules, 2016, allows the Chairperson to issue directions to remove difficulties, but no such direction was available in this case.

4. Applicability of Section 98 of CPC in the Context of Divergent Opinions:
Section 98 of CPC was considered, which provides that if there is no majority opinion in an appeal, the decree appealed from shall be confirmed unless the difference is on a point of law. The Constitution Bench of the Supreme Court in "Pankajakshi and Ors. vs. Chandrika and Ors." clarified that if judges differ on a point of law, the matter should be referred to a third judge or more judges. In this case, the difference was not on a point of law but on whether it was "just" to restore the company's name. Thus, the appeal should be dismissed, confirming the NCLT's order.

Opinion on Merits:
The appellant claimed the company had fixed assets and was involved in various litigations. However, the ROC's report stated that financial and annual returns were not filed since 2015, and no reply was given to the notice under Section 248(1). The NCLT found that the company was not carrying on business at the time of being struck off and did not provide sufficient reasons or documents to justify restoration. The appellant's new claims in the appeal were unsupported by evidence. The NCLT's decision to dismiss the appeal was based on the company's non-functionality and lack of substantial reasons for restoration.

Conclusion:
The appeal should be dismissed, confirming the NCLT's order, as the appellant failed to provide sufficient evidence or reasons to justify the restoration of the company's name. The procedural aspects under Section 98 of CPC and the principles of natural justice support this conclusion. The opinion should be placed before the regular bench for final orders.

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