2010 (4) TMI 616 - HC - Companies Law

Restoration of the name of the petitioner company to the Register of Companies seeked - Held that - 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 eight years. For all these reasons, the restoration of the company s name to the Register maintained by the respondent will be subject to the payment of ₹ 50,000 as exemplary costs, payable to the common pool fund of the Official Liquidator. In addition, further costs of ₹ 25,000 be paid to the Registrar of Companies. Costs be paid within three weeks from today. The restoration of the petitioner-company s name to the Register will be subject to the petitioner filing all outstanding documents required by law and completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late filing of statutory returns.

Summary

Issues:
1. Restoration of company's name to the Register of Companies due to defaults in statutory compliances.
2. Compliance with section 560(6) of the Companies Act, 1956.
3. Responsibility for statutory compliances and change of registered office address notification.
4. Court's discretion in ordering costs in restoration cases.

Issue 1: Restoration of company's name to the Register of Companies due to defaults in statutory compliances

The petition was filed seeking restoration of the company's name to the Register of Companies as it was struck off due to defaults in filing annual returns and balance sheets. The company had been active and maintained necessary documentation. The respondent followed the procedure under section 560 of the Companies Act, 1956, issuing required notices. The petitioner argued that the company was unaware of the default as the Chartered Accountants failed to file returns and did not inform the directors. The respondent did not receive the change of address notification. The court noted that the company was running, and as per previous judgments, restoration was necessary in the interest of justice.

Issue 2: Compliance with section 560(6) of the Companies Act, 1956

The petitioner claimed that the present petition fell within the limitation period of 20 years as per section 560(6) of the Companies Act, 1956. The court acknowledged the importance of giving companies, members, and creditors a chance to revive the company within the stipulated time frame if restoration is deemed necessary for justice. The court referred to previous cases where restoration was allowed under similar circumstances.

Issue 3: Responsibility for statutory compliances and change of registered office address notification

The petitioner argued that the Chartered Accountants were responsible for filing returns, but they failed to do so, leading to the company's name being struck off. The court emphasized that the primary responsibility for ensuring statutory compliances lies with the management, even if employees are involved. The failure to inform the RoC about the change of registered office address was also highlighted as a lapse on the company's part.

Issue 4: Court's discretion in ordering costs in restoration cases

The court discussed the payment of costs to the Registrar of Companies and the possibility of issuing specific orders regarding costs. It highlighted the need for responsible business conduct and compliance with statutory requirements. The court imposed exemplary costs and additional fees as a deterrent for casual handling of statutory obligations. The restoration of the company's name was subject to the payment of costs, completion of formalities, and filing of outstanding documents as required by law.

In conclusion, the court allowed the petition for restoration of the company's name to the Register of Companies, subject to fulfilling statutory requirements and payment of costs. The judgment emphasized the importance of compliance with statutory obligations and responsible business practices to maintain transparency and financial health in corporate operations.