2023 (2) TMI 380 - AT - Companies Law

Tribunal Reverses Registrar's Decision to Strike Off Company Name, Emphasizes Compliance

The National Company Law Tribunal upheld the Registrar of Companies' decision to strike off a company's name due to non-compliance with the Companies Act, ... Striking off and restoration of company name - company not carrying on business or operations - compliance with removal of name procedure under Section 248 - restoration subject to compliance and costsCompany not carrying on business or operations - striking off and restoration of company name - Whether striking off of the company's name was justified on the ground that the company was not carrying on any business or operations. - HELD THAT: - The Appellate Tribunal examined the Balance Sheets and Income Tax Returns for the Financial Years 2015-16 to 2018-19 and concluded that the records disclose substantial movable and immovable assets, ongoing projects and prospects of revenue, and filed Income Tax Returns for 2016-17 to 2018-19. On that recorded material the Tribunal found that it could not be said that the company was not carrying on any business or operations and held that the orders of the Registrar of Companies and the National Company Law Tribunal striking off the company's name were not sustainable in law. [Paras 8, 9]Impugned orders striking off the company's name set aside; on merits the company found not to be non-operational.Compliance with removal of name procedure under Section 248 - restoration subject to compliance and costs - Consequent relief and conditions for restoration of the company's name in the Register of Companies. - HELD THAT: - Having set aside the strike-off, the Tribunal directed restoration of the company's name subject to specified conditions: payment of costs to the Registrar within eight weeks; filing of all outstanding Annual Returns and Balance Sheets and payment of requisite fees and late charges; and preservation of the Registrar's liberty to take any other punitive or regulatory steps under the Companies Act for non-filing or late filing. The order therefore restores the company but makes restoration conditional on compliance and payment of costs. [Paras 9]Company's name to be restored to the Register subject to payment of costs and compliance with filing and fee requirements; RoC permitted to take further steps as permissible under the Act.Final Conclusion: The appeal is allowed to the extent that the orders striking off the company's name are set aside and the company's name is ordered to be restored to the Register of Companies, subject to payment of costs and compliance with filing and fee conditions, while preserving the Registrar's authority to initiate further action under the Companies Act. Issues Involved:1. Appeal under Section 421 of the Companies Act, 2013 against the order of the National Company Law Tribunal (Mumbai Bench) dismissing a Company Petition for restoration of a company's name in the Register maintained by the Registrar of Companies.2. Compliance with Section 248 of the Companies Act, 2013 regarding striking off the name of a company by the Registrar of Companies.3. Allegation of non-compliance by the Appellant leading to the company's name being struck off.4. Appellant's contention of procedural irregularities and lack of notice before striking off the company's name.5. Appellant's claim of the company being operational and having substantial assets despite non-filing of certain documents.6. Respondent's defense of following due process and issuing notices before striking off the company's name.7. Tribunal's assessment of the company's business activities and assets based on financial records.8. Decision on whether the company's name should be restored to the Register of Companies.Analysis:1. The Appellant, a Director of a company struck off by the Registrar of Companies, filed an Appeal against the National Company Law Tribunal's order dismissing a Company Petition for restoration of the company's name. The Tribunal upheld the Registrar's decision due to the company's alleged non-compliance with Section 248 of the Companies Act, 2013.2. The Appellant argued that the striking off was contrary to Section 248(1) of the Act, emphasizing that the company was operational and had future business prospects. The Respondent justified the action based on continuous non-filing of statutory returns and lack of business operations for two preceding financial years.3. The Appellant contended that the non-filing of certain documents was unintentional and due to lack of compliance knowledge, asserting that the company was actively maintaining records as required by the Companies Act.4. The Respondent defended the strike-off, citing due process followed, including issuing notices and publishing the company's name for objections. The Respondent argued that the Appellant's delay in filing statutory returns led to the company's removal from the Register.5. The Tribunal reviewed the financial records of the company, noting substantial assets and business activities, contrary to the Registrar's assertion of non-operation. Consequently, the Tribunal set aside the earlier order and directed the restoration of the company's name to the Register, subject to specified compliances and costs.6. The judgment highlighted the importance of statutory compliance, due process in striking off company names, and the need for accurate assessment of a company's operations before taking such actions. The decision aimed to balance regulatory requirements with the rights of companies to rectify inadvertent non-compliances and continue their business activities within the legal framework.