2021 (5) TMI 410 - Tri - Companies Law

Company's Name Restoration Granted with Conditions Under Companies Act

The Tribunal granted the appeal for restoration of the Company's name in the Register of Companies under Section 252(1) of the Companies Act, 2013. The ... Restoration of name of struck off company - Validity of striking off - service and publication of notices under removal rules - Opportunity of hearing and fairness in striking off proceedings - Conditions for restoration - compliance with pending statutory filings and costs - Registrar's residual power to take action for prior violationsValidity of striking off - service and publication of notices under removal rules - Opportunity of hearing and fairness in striking off proceedings - Whether the striking off and dissolution of the company's name was effected in accordance with the statutory notice and publication requirements and whether the company was denied opportunity of being heard. - HELD THAT: - The Tribunal examined the sequence of statutory notices and publications relied upon by the Registrar and the Appellant's assertion that notices were not served and no opportunity to be heard was afforded. The Registrar produced records that Notice in Form STK 1 and STK 5 were issued and that the company's name was published on the Ministry website (STK 5 dated 19.07.2018), in leading newspapers on 21.07.2018 and in the Official Gazette on 04.08.2018; the dissolution order was published on the Ministry website (STK 7) on 12.09.2018. On that factual basis the Tribunal found the Appellant's contentions that no notice was given or that no opportunity to be heard was afforded to be frivolous and unacceptable. The Tribunal therefore concluded that the Registrar complied with the statutory publication and notice mechanism prescribed under the Rules, and that there was no denial of a fair hearing sufficient to sustain the striking off. [Paras 10, 12]The Tribunal held that the statutory notices and publications were issued as required and that the contention of denial of opportunity to be heard was not accepted; nevertheless, on broader considerations the Tribunal proceeded to allow restoration.Restoration of name of struck off company - Conditions for restoration - compliance with pending statutory filings and costs - Registrar's residual power to take action for prior violations - Whether the company's name should be restored and on what conditions restoration should be permitted. - HELD THAT: - Balancing the Registrar's compliance with removal procedure against the Appellant's request for relief and its stated readiness to regularise defaults, the Tribunal exercised its power to set aside the striking off order and to restore the company's name. Restoration was made conditional to secure compliance and protect public interest: the company must within specified short timelines file all pending financial statements and annual/statutory returns, deliver a certified copy of the order and pay costs to the Registrar, after which the Registrar will publish the order in the Official Gazette and restore the name. The Tribunal also expressly preserved the Registrar's authority to take appropriate action for any other violations prior to the cut off date or in the interregnum and warned that failure to comply with the conditions would nullify the restoration.The Tribunal allowed the appeal, set aside the striking off order and restored the company's name subject to conditions of filing pending returns, payment of costs and publication; the Registrar's residual powers were left unimpaired.Final Conclusion: Appeal allowed; impugned order striking off the company's name set aside and the name restored in the Registrar's register subject to the appellant filing all pending statutory returns within the prescribed timelines, delivering a certified copy of the order and payment of costs, with the Registrar to publish the order and retaining authority to take action for prior or other violations. Issues:1. Restoration of Company's name in the Register of Companies.2. Failure to file Financial Statements and Annual Returns.3. Allegations of lack of fair chance to represent before striking off.4. Company's activity status and lack of a Bank Account.5. Order for restoration and compliance conditions.Issue 1: Restoration of Company's name in the Register of CompaniesThe Appellant filed a Petition under Section 252(1) of the Companies Act, 2013 seeking restoration of the Company's name in the Register of Companies. The Company was incorporated in 1960 and had failed to file Financial Statements and Annual Returns for six consecutive financial years. The Appellant argued that the Respondent did not provide a fair opportunity to represent before striking off the Company's name.Issue 2: Failure to file Financial Statements and Annual ReturnsThe Company had not filed Financial Statements and Annual Returns for the financial years 2013-2014 to 2018-2019. The Appellant claimed that despite efforts to file the required forms, the Respondent published a notice under section 248(5) of the Act, leading to the Company's name being struck off and dissolved without proper representation.Issue 3: Allegations of lack of fair chance to represent before striking offThe Appellant contended that they were not given a fair chance to respond before the Company's name was struck off. However, the Respondent submitted a sequence of events leading to the striking off, including issuing notices and publishing the Company's name on various platforms for objections. The Tribunal found the Appellant's contentions regarding lack of notice to be frivolous.Issue 4: Company's activity status and lack of a Bank AccountDespite being an active Company, the Appellant did not have a Bank Account, raising doubts about its commercial activities. The Tribunal noted this discrepancy but allowed the restoration of the Company's name on the condition that all pending filings are completed and a voluntary striking off application is made after compliance.Issue 5: Order for restoration and compliance conditionsThe Tribunal allowed the Appellant's appeal, setting aside the order striking off the Company's name. The restoration was subject to conditions, including filing pending financial statements and returns, paying costs, and publishing the order in the official gazette. Failure to comply with the conditions would nullify the restoration order.In conclusion, the Tribunal granted the appeal for restoration of the Company's name in the Register of Companies, emphasizing the importance of compliance with pending filings and statutory requirements. The judgment highlighted the need for proper representation and adherence to regulatory obligations to maintain transparency and accountability in corporate governance.