2021 (9) TMI 789 - Tri - Companies Law

Company name restored after proving financial activity; compliance required.

The National Company Law Tribunal, in a case concerning the revocation of a company's name struck off for non-compliance with statutory filing ... Restoration of name of the company in the register of companies - revocation of notification dated June 21, 2017 issued by them under section 248(5) of the Companies Act, 2013 - default in filing its statutory returns, i. e., balance-sheets and annual returns since the financial year ended March 31, 2010 onwards - HELD THAT:- Apart from generating revenues, the company has recorded profits in all the defaulting years. It is also evident from the financial statements that the struck off company has fixed assets and substantial long-term loans and advances. It has also some finance costs during the period under default. Further, the company had spent certain amounts on employee benefits. This prima facie suggests that during the relevant time the company had people in its employment and was carrying its business activities - the details prima facie suggest that the company has carrying on its business activities and is a going concern. The appellant submitted that the company will comply with all the statutory obligations. And prayed that the Registrar of Companies, Odisha may be directed to restore the company's name in the register. The contention of the appellant is accepted that the company was a going concern when its name was struck off. Therefore, in the facts and circumstances of the case and the documents/details on record, we accept the request of the appellant and direct the Registrar of Companies, Odisha to restore name of the company. The Registrar of Companies, the respondent herein, is ordered to restore the original status of the appellant-company - application allowed. Issues:1. Application under section 252(3) of the Companies Act, 2013 to revoke the notification striking off a company's name.2. Compliance with statutory requirements for filing financial statements and annual returns.3. Evidence of the company's business activities and going concern status.4. Restoration of the company's name in the register by the National Company Law Tribunal.Analysis:1. The application was filed under section 252(3) of the Companies Act, 2013, seeking to revoke the notification issued by the Registrar of Companies striking off the name of the company due to default in filing statutory returns. The company, a private limited company, was struck off for not filing balance-sheets and annual returns since March 31, 2010, and was observed to not be conducting business operations.2. The appellant contended that the company's accounts were prepared and audited on time, but there was negligence in monitoring the filing of statutory returns. The company generated revenues and profits in the years in question and presented evidence such as audited accounts, income tax returns, and bank statements to support its claim of compliance with financial obligations.3. The Tribunal examined the financial records provided by the appellant, showing revenue, profits, fixed assets, long-term loans, and business expenses during the defaulting years. The company maintained a bank account with regular transactions, filed income tax returns, and demonstrated ongoing business activities, indicating it was a going concern at the time of striking off.4. Considering the evidence and submissions, the Tribunal directed the Registrar of Companies to restore the company's name in the register, changing its status from 'strike off' to 'active.' The company was instructed to file pending statutory documents within 30 days of restoration, pay a specified cost, and comply with all regulatory requirements. The restoration order was subject to the company's compliance and did not preclude further actions for any other violations committed.This detailed analysis of the judgment highlights the legal grounds, evidence presented, and the Tribunal's decision to restore the company's name based on the proof of ongoing business activities and compliance with statutory obligations.