2010 (8) TMI 166 - HC - Companies Law

Strike off the name of the first petitioner-company bearing registration No. 6168 of 1972 from the Register of Companies Held that - Taking into consideration all the facts and the documents submitted to the second respondent and in view of the fact that the petitioner-company has not increased its paid-up capital to ₹ 1,00,000 before 12-12-2002, the company shall be deemed to be a defunct company within the meaning of section 560 of the Companies Act and its name shall be required to be struck off from the register of the second respondent. In view of the above reasons, the second respondent shall take into consideration, the petitioner s letter dated 3-5-2001 received in the office of the second respondent on 8-5-2001, the notarised affidavit signed by the two directors, the indemnity bond executed by the two directors in favour of the second respondent dated 3-5-2001 and the balance sheet at 30-4-2001 and also taking into consideration that no claims/complaints have been received against the company during the pendency of the present writ petition may pass appropriate orders in accordance with law striking out the name of the first petitioner-company from the register maintained by the second respondent within a period of eight weeks from the date of receipt of a copy of this order.

Issues Involved:
1. Issuance of writ of mandamus to strike off the name of the petitioner-company from the Register of Companies.
2. Issuance of writ of declaration to declare General Circular No. 13 of 2003 as ultra vires the Constitution and the Companies Act, 1956.

Issue-Wise Detailed Analysis:

1. Issuance of writ of mandamus to strike off the name of the petitioner-company from the Register of Companies
The first petitioner is a company registered under the Indian Companies Act, 1956, and the second petitioner is one of its directors. The company ceased operations in 1979 but continued to file returns and statutory records until 1999. Amendments to the Companies Act in 2000 required private limited companies to have a minimum paid-up share capital of Rs. 1,00,000 within two years. The petitioner-company, with a paid-up capital of Rs. 80,000, did not meet this requirement and thus sought to be deemed defunct under Section 3(5) of the Act and struck off the register.

The petitioner-company passed a resolution and applied to the Registrar of Companies in May 2001 to be struck off. However, the application was not processed, and the company received notices for non-compliance with annual general meeting requirements. The petitioner responded, reiterating its request to be treated as defunct. The Government of India issued a circular in 2003 for the removal of defunct companies, which the petitioner challenged separately.

The court noted that the company did not increase its share capital within the stipulated time, making it a defunct company by operation of law under Section 3(5). The court referenced various legal interpretations of "deemed" to support this conclusion. The court found that the Registrar of Companies did not need to follow the procedures under Section 560 due to the statutory deeming provision.

The court observed that the petitioner-company had provided all necessary documentation, including affidavits, indemnity bonds, and balance sheets, to the Registrar. The Registrar had neither accepted nor rejected the request, and no claims or complaints were received against the company during the writ petition's pendency. The court directed the Registrar to consider the petitioner's application and supporting documents and strike off the company's name from the register within eight weeks.

2. Issuance of writ of declaration to declare General Circular No. 13 of 2003 as ultra vires the Constitution and the Companies Act, 1956
The prayer in W.P. No. 17120 of 2003 was to declare General Circular No. 13 of 2003, issued by the Government of India, as ultra vires the Constitution of India and various sections of the Companies Act, 1956. The circular aimed to simplify the procedure for removing the names of defunct companies. However, the scheme was operational only until December 31, 2003, and no evidence was presented to show its extension.

The court found that the circular was no longer in force and dismissed the writ petition as infructuous, requiring no further adjudication.

Conclusion:
The court disposed of the writ petitions by directing the Registrar of Companies to strike off the name of the petitioner-company from the register, based on the statutory deeming provision and the documentation provided by the petitioner. The writ petition challenging the circular was dismissed as it was no longer in force.

← Previous Next →