2010 (9) TMI 234 - HC - Companies Law

Petition under section 560(6) of the Companies Act, 1956, seeks restoration of the name of the petitioner company to the Register of Companies Held that - The facts and circumstances of this case show that this is not a case where the interests of justice and requirements of the statute would be met merely by the payment of costs of the respondent. The whole matter has obviously been handled in a very casual manner and must be deprecated. To my mind, such conduct does not display sound and responsible business functioning expected of companies. The non-filing of returns and balance sheets with the respondent had also made it impossible for any interested party to find out about the financial health of the company over a span of almost ten years. Thus the restoration of the company s name to the Register maintained by the respondent will be subject to the payment of ₹ 75,000 as exemplary costs, payable to the common pool fund of the Official Liquidator. In addition, further costs of ₹ 25,000 be paid to the respondent.the restoration of the company s name to the Register maintained by the respondent will be subject to the payment of ₹ 75,000 as exemplary costs, payable to the common pool fund of the Official Liquidator. In addition, further costs of ₹ 25,000 be paid to the respondent.

Summary

Issues:
Restoration of company name to Register of Companies under section 560(6) of the Companies Act, 1956 due to defaults in statutory compliances.

Analysis:
1. The petitioner company sought restoration of its name in the Register of Companies after the Registrar of Companies struck it off due to defaults in filing annual returns and balance sheets from 1999-2000 to 2006-07. The respondent followed the procedure under section 560 of the Companies Act, issuing notices as required. The name discrepancy in the Official Gazette was clarified by the respondent, stating that the name "Mage Plastronics Pvt. Ltd." was erroneously recorded instead of the petitioner's correct name. The petitioner claimed it did not receive show-cause notices but examination revealed the correct address was on record, presuming proper service of notices.

2. The petitioner contended it had been active since incorporation, providing evidence of operational activities through various receipts. It maintained statutory documentation and engaged a Chartered Accountant firm for filing, which failed to do so. The petitioner only discovered its name removal in March 2009 while attempting to file electronically. The respondent did not object to revival, subject to the petitioner filing all outstanding documents and paying applicable fees, with directors' no objection certificates submitted.

3. Referring to the case law of Purushottamdass v. Registrar of Companies, the judge emphasized the importance of giving companies an opportunity to revive within 20 years of being struck off, if deemed necessary in the interest of justice. Despite the petitioner's reliance on the Chartered Accountant firm, the management bore primary responsibility for statutory compliances. Considering the functional status of the company and the Bombay High Court's decision, the judge ruled in favor of allowing the petition for restoration.

4. The judge highlighted rule 94 of the Companies (Court) Rules, stating the normal requirement for petitioners to pay the Registrar's costs but allowing the court to issue specific orders regarding costs based on circumstances. In this case, due to the casual handling of matters, the judge imposed exemplary costs of Rs. 75,000 to the Official Liquidator's common pool fund and additional costs of Rs. 25,000 to the respondent. The restoration was subject to payment of costs, filing outstanding documents, and completion of formalities as per the law.

5. The judgment concluded by granting liberty to the respondent for penal action against the company for alleged defaults, disposing of the petition with restoration subject to specified conditions and costs, emphasizing the importance of responsible business conduct and compliance with statutory requirements.