2021 (3) TMI 514 - Tri - Companies Law

Appeal Denied: Company Name Struck Off for Non-Compliance.

The Bench rejected the appeal for restoration of the company's name in the Register maintained by the Registrar of Companies, Mumbai. The company's ... Striking off of company name - publication and service of notices for removal of name - carrying on business or operations under section 248(1)(c) - restoration of company namePublication and service of notices for removal of name - striking off of company name - Validity of the Registrar's procedures and notices in striking off the company's name - HELD THAT: - The Tribunal examined the steps taken by the Registrar of Companies prior to striking the company's name and found that notices in Form STK-1 and STK-5 were issued, the proposed removal was published on the Ministry website, the name appeared in the Official Gazette and in leading newspapers, and the dissolution order was published on the Ministry website. In the absence of any representation from the company, the Registrar proceeded to strike off the name. The petitioner's contention that notices were not sent was rejected on the basis of these publications and issued notices, and the Bench found no infirmity in the Registrar's action in this regard. [Paras 11, 12]The Registrar complied with the prescribed notice and publication requirements and there is no ground to set aside the striking off on procedural grounds.Carrying on business or operations under section 248(1)(c) - restoration of company name - Whether the company was carrying on business or operations so as to preclude striking off and warrant restoration - HELD THAT: - On the materials before it, including audited accounts and income-tax acknowledgements, the Tribunal observed that the company had no turnover for the past five years, modest cash and loan figures in the 2018-19 accounts, and the petitioner failed to produce proof of existing or prospective business when queried at the hearing. The Bench concluded that the company was not carrying on business or operations as contemplated by section 248(1)(c) and that the criteria for restoration were not met. Consequently, the contention that the striking off caused loss of legal status was insufficient to disturb the Registrar's order. [Paras 13, 14, 15]The company was not carrying on business or operations; restoration of the name is not warranted and the appeal is rejected.Final Conclusion: The appeal seeking restoration of the company's name is dismissed: the Registrar properly complied with notice and publication requirements, and the company was held not to be carrying on business or operations making the strike-off justified. Issues:- Restoration of company's name in the Register maintained by the Registrar of Companies, Mumbai.- Compliance with statutory requirements under the Companies Act, 1956 and Companies Act, 2013.- Failure to file Financial Statements and Annual Returns for the Financial Years 2016-2017 to 2018-2019.- Allegation of lack of notice from the Respondent.- Company's claim of being active in business operations.- Unintentional delay in filing statutory documents.- Observations on company's financial status and business activities.- Justification of striking off the company's name by the Registrar of Companies.Detailed Analysis:1. The petition was filed seeking restoration of the company's name in the Register maintained by the Registrar of Companies, Mumbai, under Section 252(1) of the Companies Act, 1956. The company had failed to file its Financial Statements and Annual Returns for the Financial Years 2016-2017 to 2018-2019, leading to the striking off of its name from the register.2. The Petitioner claimed that despite efforts to file the necessary documents, they were unable to do so due to the company's status being shown as struck off. They argued that the company was actively operating and not defunct, emphasizing the need for the name restoration to maintain legal status for business activities.3. The Petitioner further contended that the delay in filing the required documents was unintentional, citing lack of knowledge and inadvertence as reasons. They provided audited accounts and Income-Tax Returns to demonstrate the company's active involvement in business operations during the relevant period.4. The Respondent, Registrar of Companies, explained the sequence of events leading to the striking off of the company's name, including issuance of notices and publication in official gazettes and newspapers. The Respondent's affidavit countered the Petitioner's claim of lack of notice, highlighting the steps taken before the striking off.5. Upon review, the Bench found that the company had failed to comply with statutory requirements and was not actively engaged in business operations as defined by the Companies Act, 2013. The Petitioner could not provide evidence of existing or prospective business, and the company had no turnover for the past five years.6. Consequently, the Bench rejected the appeal for restoration of the company's name, upholding the Registrar's decision to strike off the name. The Bench emphasized the importance of companies complying with regulatory requirements and the burden placed on the system when non-compliance occurs, justifying the Registrar's action.7. The Bench concluded that there were no justifiable grounds to interfere with the striking off of the company's name, considering practical aspects and the need for companies to fulfill statutory obligations to avoid burdening the regulatory system.This detailed analysis covers the key issues involved in the judgment, providing a comprehensive overview of the legal proceedings and the reasoning behind the decision.