2024 (2) TMI 95 - AT - Companies Law

Company struck off for non-filing returns gets restoration after tribunal applies Shailendra Bafna precedent for mental healthcare business

The NCLAT Chennai allowed an appeal by a company struck off from the RoC register for failure to file returns. The company sought restoration to the ... Seeking to restore the name of the Company in the Register of the Respondent / Registrar of Companies (RoC), Chennai - Failure to file returns - seeking a direction to be allowed to file the remaining Financial Returns without being saddled with additional Fees and also to be allowed to Scan and Upload all the physically filed Returns of the Company till 2017 - HELD THAT:- The CODS Scheme 2018 is meant for providing an opportunity for the disqualified Director who has defaulted by not filing the Annual Return or Financial Statement for a continuous period of three years. Therefore, this Tribunal is of the considered view the CODS Scheme 2018 is not applicable to the facts of this case, where due to the non-filing of Returns, the Company was `Struck Off’ from the Register of RoC. It is also interesting to note that the Hon’ble Madras High Court Order dated 26.03.2018, relied upon by the Learned Company Secretary is only an Interim Order whereunder, the Hon’ble Madras High Court has directed the matter to be posted after a period of 8 weeks. There are force in the contention of the Learned Counsel for the Respondent that in AMALRAJ BARNABAS VERSUS UNION OF INDIA, REPRESENTED BY ITS MINISTRY OF CORPORATE AFFAIRS, NEW DELHI; THE REGISTRAR OF COMPANIES, CHENNAI [2019 (11) TMI 1813 - MADRAS HIGH COURT], it is held by the Hon’ble High Court, that a Director can be appointed in any other Company without hindrance, once the CODS Scheme has been complied with and therefore the direction given by the Hon’ble High Court in the Section 164 (2) (a) is distinctly different from any Notice / Direction issued under Section 248 of the Companies Act, 2013. Having regard to the nature of the business of the Appellant Company which provides Mental Healthcare & Services to the Members of the Society apart from the fact that a bare perusal of the Financial Statements shows that the Company has Creditors and Loans and was in the process of setting up a Hospital, this Tribunal is of the considered view that the ratio of the Three Judge Bench Judgment in Shailendra Bafna Versus The Registrar of Companies, Bilaspur Chhattisgarh [2022 (12) TMI 919 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] can be made applicable to the facts of this case. This Appeal is Allowed. Issues Involved:1. Restoration of the Company's name in the Register of the Registrar of Companies (RoC).2. Applicability of the Condonation of Delay Scheme (CODS) 2018.3. Compliance with statutory requirements under the Companies Act, 2013.4. Payment of requisite and late charges/fees.5. Punitive steps for non-filing/late filing of statutory returns/documents.Summary:Restoration of the Company's Name:The Appellant, represented by Mr. K. Gaurav Kumar, sought to restore the name of Manasanthi Mental Health Care Private Limited in the Register of the RoC, Chennai, which was struck off due to non-filing of Annual Returns and Balance Sheets. The NCLT dismissed the Application, leading to this appeal.Applicability of CODS 2018:The Appellant argued that the Hon'ble Madras High Court had exempted them from using Section 252 of the Companies Act for revival and allowed them to use the CODS Scheme 2018. The Appellant claimed that the Scheme was applicable to companies struck off and whose directors had filed writ petitions. They contended that asking them to pay penalties under both CODS and Section 252 would constitute 'Doctrine of Double Jeopardy.'Compliance with Statutory Requirements:The Respondent, represented by Mr. Avinash Krishnan Ravi, argued that the Appellant failed to file Annual Returns and Financial Statements for several financial years, thus violating Sections 92(4) and 137 of the Companies Act, 2013. The company was struck off under Section 248(5) of the Act. The Respondent also stated that the CODS Scheme 2018 did not confer any specific privilege for the restoration of struck-off companies.Payment of Requisite and Late Charges/Fees:The Tribunal noted that the CODS Scheme 2018 was meant for providing an opportunity for disqualified directors to become compliant but was not applicable to the facts of this case. The Appellant consented to comply with all provisions of the law and pay the requisite charges/fees as well as late charges/fees.Punitive Steps for Non-Filing/Late Filing:The Tribunal directed the Appellant to pay a cost of Rs. 1 Lakh to the RoC, Chennai, within 4 weeks. After restoration of the company's name, the Appellant must file all Annual Returns and Balance Sheets and pay the requisite charges/fees within 4 weeks thereafter. The RoC is free to take any punitive steps for non-filing/late filing of statutory returns/documents against the company and its directors.Conclusion:The appeal was allowed, and the impugned order was set aside with specific directions for compliance and payment of costs and fees. The Registry was directed to upload the judgment on the Appellate Tribunal's website without delay.