2010 (6) TMI 322 - HC - Companies Law

Restoration of the name of the petitioner company to the Register of Companies maintained by the Registrar of Companies Held that - The restoration of the company s name to the Register maintained by the respondent will be subject to the payment of ₹ 1,00,000 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. The name of the company, its directors and members shall then, as a consequence, stand restored to the Register of the Registrar of Companies, as if the name of the company had not been struck off, in accordance with section 560(6) of the Companies Act, 1956.

Issues:
Restoration of the petitioner company's name to the Register of Companies under section 560(6) of the Companies Act, 1956.

Detailed Analysis:

1. Background and Default: The petitioner company sought restoration of its name to the Register of Companies maintained by the Registrar of Companies under section 560(6) of the Companies Act, 1956. The company's name was struck off the Register due to defaults in statutory compliances, specifically the failure to file annual returns and balance sheets for the relevant periods.

2. Petitioner's Claims: The petitioner contended that the company had been active since its incorporation and provided supporting documents to demonstrate its continued existence. Allegations were made that the company did not receive show-cause notices due to interference by neighboring occupants, preventing correspondence from reaching the company.

3. Limitation Period and Reasons for Non-Compliance: The petitioner asserted that the petition was within the limitation period as per section 560(6) of the Companies Act, 1956. Various factors such as director's illnesses, construction delays, financial constraints, recession, and market conditions were cited as reasons for the company's inability to file statutory documents since 1995-96.

4. Registrar's Response and Conditions for Restoration: The respondent did not oppose the revival of the petitioner company, subject to the filing of all outstanding statutory documents and payment of requisite fees. The certificates of 'No Objection' from the Directors were submitted as well.

5. Legal Precedents and Commercial Viability: Reference was made to a Bombay High Court judgment emphasizing the objective of section 560(6) to allow revival of struck-off companies in the interest of justice. The court noted the company's improved financial position since 2006, solvency, and profitability in 2009, indicating the potential for continued operations.

6. Court's Decision and Costs Imposition: Despite acknowledging the company's commercial viability, the court criticized the casual handling of statutory obligations over fourteen years. The restoration was granted subject to payment of exemplary costs and completion of all formalities, including filing outstanding documents and clearing any late fees or charges.

7. Penal Action and Conclusion: The court granted liberty to the respondent for penal action against the company for alleged non-compliance with section 162 of the Companies Act, 1956. The petition was disposed of with specific directives regarding costs, document filings, and restoration procedures to the Register of Companies.

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