1958 (12) TMI 23 - HC - Companies Law

Court dismisses application to restore defunct company; assets vested in Union of India

The court dismissed the application seeking restoration or winding up of the company, as the applicant lacked locus standi and failed to demonstrate ... Winding up – Application for and Power of registrar to strike defunct company off register Issues Involved:1. Locus Standi of the Applicant2. Restoration or Winding Up of the Company3. Company's Ownership of Properties4. Pending Proceedings and Book Debts5. Justification for Striking Off by the Registrar6. Court's Discretion in Restoring the Company7. Bona Vacantia and Assets of Dissolved CompaniesIssue-Wise Detailed Analysis:1. Locus Standi of the Applicant:The court determined that Biswanath Mandal had no locus standi as he was neither a registered shareholder, member, nor director of the company, Rai Saheb U.N. Mandal's Estate Private Ltd. Consequently, his application was dismissed with costs.2. Restoration or Winding Up of the Company:The applicant, Nagendra Nath Mandal, sought either the restoration of the company or its winding up by the court. The court analyzed the company's history and found that it had never functioned properly, held no meetings, and had no banking accounts. The company had been struck off the register by the Registrar of Joint Stock Companies due to non-compliance with statutory requirements. The court concluded that the facts did not support the arguments for restoration or winding up, as the company had not carried on any business or been in operation for a significant period.3. Company's Ownership of Properties:The court examined the company's ownership of properties and found that although certain properties were transferred to the company, it never took possession of them. The original owners continued to possess and enjoy these properties individually. The court noted that the company was merely a name, and the properties were treated as personal assets by the family members. The court concluded that the company did not act as the owner of any property.4. Pending Proceedings and Book Debts:The court found no evidence of any pending proceedings or book debts that justified the restoration of the company. The alleged pending proceedings, such as certificate proceedings and land revenue settlement proceedings, were either not against the company or were insignificant. The court also noted that the company kept no books of account to show any book debts.5. Justification for Striking Off by the Registrar:The court held that the Registrar was justified in striking off the company from the register under section 560 of the Companies Act, 1956. The company had failed to carry on any business or be in operation, and no cause to the contrary was shown by the applicant or anyone else. The Registrar had followed the proper procedure and provided ample opportunity for objections.6. Court's Discretion in Restoring the Company:The court emphasized that the power to restore a company under section 560(6) of the Companies Act, 1956, is discretionary. The court must be satisfied that the company was carrying on business or in operation at the time it was struck off or that it is just to restore the company. The court found that the company had not carried on any business and that restoring it would be futile due to the ongoing disputes among family members. Therefore, the court declined to restore the company.7. Bona Vacantia and Assets of Dissolved Companies:The court discussed the doctrine of bona vacantia, which applies to the assets of a dissolved company. In the absence of specific statutory provisions in the Indian Companies Act, 1956, the court opined that the assets of a dissolved company would vest in the Union of India under Article 296 of the Constitution of India. However, the court found no evidence of any assets or properties belonging to the defunct company in this case.Conclusion:The application was dismissed with costs, as the court found no grounds to restore the company or wind it up. The court concluded that the company was defunct, had not carried on any business, and had no assets or pending proceedings that justified its restoration. The Registrar's decision to strike off the company was upheld.