2022 (2) TMI 365 - Tri - Companies Law

Tribunal orders restoration of company name in Register of Companies, upholds compliance directives

M/s Septagon Builders & Developers Private Limited Versus The Registrar of Companies, Kerala

The tribunal ordered the restoration of the appellant company's name in the Register of Companies, subject to compliance with specific directives, ... Seeking to restore the original status of the Appellant as if the name of the company has not been struck off from the Register of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT:- The ROC stated that on verification of the documents of the subject company it was found that the company had not filed Balance Sheets and Annual Returns since 2016. It had been defaulting in its Annual Returns and Financial Statements for the financial years ending 31/3/2017 and 31/3/2018. Hence notice in Form STK-1 under Section 248(1) read with Rule 3 of the Companies (Removal of Names of Companies from the Register of Companies) Rule 2016 was issued to the company and its directors on 10/7/2019. Even though notice was issued by registered post, to the company and all its directors giving 30 days’ notice period, no positive response had been received from them - It can be seen that the name of the subject company had been struck off under Section 248 after complying with all the procedural requirements and formalities as contemplated under Section 248 of the Act and relevant Rules made thereunder. The ROC stated that the action initiated by the Registrar of Companies for striking off of the name of the subject company was triggered due to negligence and lack of due diligence on the part of the Directors of the Company for not discharging their statutory duties in filing the statutory returns within the due date stipulated under the Companies Act and also for not responding to the several periodical notices within the notice period. Therefore, the action of strike off of the name of the company is fully substantiated within the authority under the Provisions of Section 248 of the Act and deserves the protection of this Tribunal. The provisions of Companies Act, 2013, it would be just and equitable to order restoration of the name of the Company in the Register of Companies - the name is restored - application allowed. Issues Involved:1. Restoration of the company's name in the Register of Companies.2. Filing of statutory documents and compliance with regulatory requirements.3. Payment of costs and compliance with tribunal orders.4. Authority and procedural compliance by the Registrar of Companies.Detailed Analysis:1. Restoration of the Company's Name in the Register of Companies:The appellant company sought the tribunal's intervention to restore its name, which was struck off by the Registrar of Companies (ROC) under Section 248(5) of the Companies Act, 2013. The company argued that it was active and had submitted financial statements and annual returns, albeit with delays. The tribunal noted that the company had shown prima facie cause for not being dissolved, as it was fulfilling statutory requirements and had not applied for dormant status. The tribunal, satisfying itself with the reasons provided, ordered the restoration of the company's name, directing the ROC to change the company's status from 'Strike off' to 'Active' and take necessary consequential actions, including defreezing the company's bank accounts.2. Filing of Statutory Documents and Compliance with Regulatory Requirements:The appellant company admitted to delays in filing financial statements and annual returns for the years 2015-16 but had submitted them by 2018 and 2019. The tribunal directed the company to file all pending statutory documents along with the prescribed fees within 30 days from the date of restoration. Additionally, the shareholders/directors were required to submit an undertaking that the company's accounts were not used for transacting tainted money during demonetization.3. Payment of Costs and Compliance with Tribunal Orders:The tribunal imposed a cost of Rs. 60,000 on the appellant company, payable to the Central Government's account. The company was directed to provide proof of payment to the ROC within three weeks, failing which the order would lapse. The company's representative was tasked with ensuring compliance with the tribunal's orders. Furthermore, the company was restricted from alienating or disposing of any valuable assets until all compliances were met.4. Authority and Procedural Compliance by the Registrar of Companies:The ROC had initiated action against the company under Section 248 due to non-filing of financial statements and annual returns for two consecutive years. Notices were issued and published as required, and the company's name was struck off following due process. The tribunal acknowledged that the ROC's actions were substantiated and within the authority under the Companies Act, 2013. Despite the restoration order, the tribunal clarified that the ROC retained the power to proceed against the company and its directors for any late filings or non-compliance with statutory requirements.Conclusion:The tribunal ordered the restoration of the appellant company's name in the Register of Companies, subject to compliance with specific directives, including filing pending statutory documents, paying costs, and ensuring no asset disposal until compliance. The ROC's procedural actions were validated, and its authority to enforce compliance was upheld. The appeal was disposed of on these terms, with the tribunal emphasizing the just and equitable nature of the restoration.