2023 (2) TMI 328 - AT - Companies Law

Appellate tribunal overturns NCLT order, restoring company name in Register

The appellate tribunal allowed the appeal under Section 421 of the Companies Act, 2013, challenging the NCLT's order for restoration of the company's name ... Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), NCT of Delhi and Haryana - Respondent did not send notices/Form STK 1 to the Company and its all of directors as contemplated under Section 248(1) of the Companies Act, 2013 - failure to consider that the Appellant has already annexed the property papers which are the only assets of the company - HELD THAT:- Going through the pleadings made on behalf of the parties and in view of the fact that the Audited Financial Balance Sheets of the Year 2015-16, 2016-17, 2017-18, 2018-19 & 2019-20 of the Appellant / Company shows that the Appellant/Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant/Company is not carrying on any business or operations. Hence, the order passed by the National Company Law Tribunal (New Delhi, Bench-V) as well as Registrar of Companies, NCT Delhi & Haryana is not sustainable in law. The impugned order is set aside - The name of the Appellant/Company be restored to the Register of Companies subject to the compliances fulfilled. Appeal allowed. Issues:- Appeal under Section 421 of the Companies Act, 2013 against the order of National Company Law Tribunal (NCLT) for restoration of company name in Register maintained by Registrar of Companies (RoC).- Failure to send notices/Form STK 1 to the Company and directors as per Section 248(1) of the Companies Act, 2013.- Disregard to the assets of the company worth crores of Rupees and implications of company strike-off.- Allegations of non-filing of financial returns due to extraneous circumstances and inadvertence.- Respondent's position based on non-operation of the company and dissolution under Section 248(1).- Appellant's claim of substantial movable and immovable assets indicating business operations.Analysis:1. The appeal was filed under Section 421 of the Companies Act, 2013, challenging the NCLT's order dismissing the appeal for restoration of the company's name in the Register maintained by RoC. The company, GRS Properties Pvt. Ltd., faced strike-off due to non-filing of returns and documents, leading to the current appeal.2. The appellant argued that the NCLT's order disregarded the provisions of the Companies Act, 2013, specifically the failure to send notices/Form STK 1 to the company and its directors as required under Section 248(1). The appellant emphasized the substantial value of the company's assets, primarily the property worth crores of Rupees, and the impact of strike-off on shareholders' valuation security.3. The appellant contended that the company's inability to file financial returns was due to extraneous circumstances and inadvertence. They highlighted efforts to comply, engagement of professionals, and the revelation of strike-off only in March 2021, indicating a lack of willful default.4. The respondent, RoC, justified the strike-off based on the company's non-operation, supported by records of non-filing of financial statements. The respondent followed due process under Section 248(1) by sending notices and ultimately dissolving the company. Lack of evidence of business operations or just and equitable grounds for revival were cited.5. The appellate tribunal, after considering the arguments and financial records of the company, concluded that the company possessed substantial movable and immovable assets, contradicting the notion of non-operation. The tribunal found the NCLT's and RoC's orders unsustainable in law and allowed the appeal for restoration of the company's name in the Register.6. The tribunal set conditions for compliance, including payment of costs to RoC, filing of annual returns and balance sheets, and adherence to statutory requirements post-restoration. RoC retained the authority to take punitive actions for non-compliance with filing obligations.7. The judgment emphasized the importance of maintaining due process and considering the company's assets and operations before resorting to strike-off actions, ensuring fairness and adherence to legal provisions in company law.