2023 (4) TMI 1029 - AT - Companies Law

Appeal dismissed for company with invalid financial docs. Registrar's procedures followed, no restoration justified.

Tarik Klair, Director/Member Of M/s Opax Web Pvt Ltd Versus Registrar of Companies (Delhi & Haryana), Income Tax Department, Manpreet Singh Sachdeva

The tribunal dismissed the appeal, ruling that the company was not operational as claimed and that the financial documents presented were invalid. It was ... Seeking restoration of (struck off) name of company in the Register of Companies - section 252 of Companies Act - HELD THAT:- So far as striking off name of the company in question under the provisions of Section 248 of the Companies Act is concerned the appellant has not raised any dispute that procedure under the said provisions was not followed. In the written submission of the ROC also detail has been mentioned regarding following the procedure prescribed under Section 248 of the Companies Act which has not been disputed by the appellant otherwise the appellant would have preferred the appeal under Section 252(1) of the Companies Act. The appellant has filed application/appeal under Section 252(3) of the Companies Act which empowers the NCLT to pass an order of restoration of a striking off company if the NCLT is satisfied on the basis of plausible material that struck off company was carrying on business or in operation or even otherwise it was just that the company may be restored. Considering the fact that the company was having two directors with 50% shareholding which has not been disputed and one of the director who is Respondent No.3 has come forward with a stand that the company in question was not either doing business or operating, in such situation there is no reason in passing an order for restoring the appellant company. Another reason for not interfering with the impugned order is that out of two directors one director has taken a stand that the company is completely inoperative doing no business whereas the appellant who is also a director is taking the plea on the strength of balance sheet prepared by the CA that too without approval of the Board of Directors that company was in operation. If for the time being any direction is issued for restoration, certainly it will amount to generating further dispute/litigation. The appellant was not in a position to satisfy the NCLT that the company in question was doing business or was operational during the period for which the name of the company was struck off - Appeal dismissed. Issues Involved:1. Whether the company was operational or carrying on business at the time of its name being struck off.2. Whether the balance sheets and other financial documents submitted by the appellant were valid and substantiated.3. Whether the procedural requirements under Section 248 of the Companies Act, 2013 were followed by the Registrar of Companies.4. Whether it was 'just' to restore the name of the company considering the disputes between the directors and other relevant factors.Summary:1. Operational Status of the Company:The appellant claimed that the company was operational, citing balance sheets prepared by a Chartered Accountant. However, the NCLT found that the company had not filed financial statements since the financial year ending 31.03.2015. The respondent (another director with 50% shareholding) contended that the company was not in operation prior to the striking off. The tribunal noted the absence of trade receivables, payables, and fixed assets in the balance sheets for the relevant period, concluding that the company was not operational.2. Validity of Financial Documents:The appellant's balance sheets were challenged by the respondent, who argued they were prepared unilaterally and without board approval. The tribunal found that the balance sheets were not signed by both directors, lacked directors' reports, and were not approved in any board meeting. The tribunal deemed these documents as fabricated and not legally valid.3. Procedural Requirements Under Section 248:The appellant did not dispute that the procedural requirements under Section 248 were followed. The Registrar of Companies issued notices in Form STK-1, STK-5, and STK-7, which were not responded to by the company. The tribunal noted that the appellant did not raise any procedural issues and filed the appeal under Section 252(3), not Section 252(1), indicating no procedural lapse by the Registrar.4. Justness of Restoring the Company:The tribunal considered the ongoing disputes between the two directors, which created a deadlock in the company's operations. Given that one director opposed the restoration and the balance sheets were deemed invalid, the tribunal found no justifiable reason to restore the company's name. The tribunal also highlighted that restoring the company would likely lead to further disputes and litigation.Conclusion:The tribunal dismissed the appeal, concluding that the appellant failed to demonstrate that the company was operational or that it was just to restore the company's name. The procedural requirements for striking off the company were followed, and the financial documents presented were not substantiated.