2022 (7) TMI 52 - Tri - Companies Law

Company name restored in Register of Companies with conditions to comply with statutory requirements

Venkateswarlu Kanala Versus The Registrar of Companies, Vijayawada

The Tribunal allowed the application for restoration of the company's name in the Register of Companies, emphasizing compliance with statutory ... Seeking restoration of name in the Register of Companies - Section 252 of the Companies Act, 2013 - HELD THAT:- The material available on record indicates that the failure of the Company to furnish the statutory returns with the RoC was not intentional. Apparently the Company has been carrying on its operations, as the financial statements would indicate. Unless the Company's name is restored, it will prejudicially affect its prospects and adversely influence the Directors in their future endeavours. The Shareholders of the Company as well as the Applicant are keen to carry on and perform the objects of the Company in right earnest. There have been substantial investments in the project. The Company is continuing its business. Unless the name of the Company is restored in the Register of Companies, it would suffer financially and may go out of business. The directors of the company would also face disqualification. As regards the locus standi of the Applicant to file the Application according to Section 252, it is only the company, a member, creditor or workman that has to file the Application. But this Application is filed by a Director who does not hold any shares in the Company. However, the Applicant, subsequent to the filing of the Application, filed an authorization of the shareholder by name Mr. Tirumala Satya Sridhar Kandavalli who is shown as the 90% shareholder of the Company in the annual returns - considering that the authorization is given by shareholder, who according to Section 252 of the Companies Act, 2013 can file the Application, it is held that the name of the Company should be restored in the Register of Companies. Application allowed. Issues Involved:Application under Section 252 of the Companies Act, 2013 seeking restoration of company's name in the Register of Companies.Analysis:Issue 1: Restoration of Company's NameThe Applicant, a shareholder, filed an application seeking restoration of the company's name in the Register of Companies. The company failed to file annual returns and financial statements for the financial years 2018-2019, 2019-2020, and 2020-2021, resulting in its name being struck off. The Registrar of Companies issued notices for striking off and dissolution of the company. The Applicant provided audited financial statements and bank statements to prove the company's existence and requested restoration. The RoC submitted a report stating the company's non-compliance and recommended restoration with conditions. The Tribunal observed that the company's failure to file returns was not intentional, and restoration was crucial for its operations and directors' disqualification. The Tribunal allowed the application, setting aside the RoC's order and ordering restoration of the company's name.Issue 2: Locus Standi of ApplicantThe issue of locus standi arose as the application was filed by a director who did not hold shares in the company. However, the Applicant later submitted an authorization from a shareholder holding 90% shares, allowing the application to be filed. The Tribunal considered this authorization sufficient under Section 252 of the Companies Act, 2013, which allows a shareholder to file such applications. Consequently, the Tribunal ordered the restoration of the company's name in the Register of Companies.Conclusion:The Tribunal allowed the application for restoration of the company's name, emphasizing the importance of compliance with statutory requirements. The restoration was subject to fulfilling conditions, including filing pending financial statements, paying costs, and complying with regulations. Failure to meet these conditions would nullify the restoration order. The Tribunal's decision aimed to protect the company's operations, directors, and shareholders while ensuring future compliance with the Companies Act, 2013.