2009 (10) TMI 529 - HC - Companies Law

Gazette Notification No. 43 dated October 12, 2007 published in the Gazette of India dated October 12, 2007, by which the name of the company, Gautam Buddha Children s Hospital Private Limited has been struck off from the Register of Companies under section 560(5) of the Companies Act, 1956 seeked to be quashed Held that - in view of the audit reports of accounts submitted by the petitioner-company and the statements of the bank annexed that the company has been carrying on its business and is in operation continuously and it is certainly not a defunct company. Had the Registrar taken care by following the mandatory provisions prescribed under the Act, he would have discovered that the company was not defunct and its name could not have been struck off by the Registrar of Companies in exercise of his power under section 560(5) of the Act. The Registrar of Companies has further shown non-application of mind as the very filing of the subsequent application for change of name of the petitioner-company, which was allowed by the Registrar, would show that the earlier application dated August 29, 2000, was impliedly withdrawn by the said action of the directors of the company and the plea taken by the Registrar in his reply that no such letter of withdrawal was filed is without any basis. Thus striking off the name of the company from the Registrar of Companies is illegal and non est.

Summary

Issues:
1. Quashing of Gazette Notification striking off company's name from Register of Companies under section 560(5) of the Companies Act, 1956.

Analysis:
The petitioner sought to quash the Gazette Notification that struck off the name of the company from the Register of Companies under section 560(5) of the Companies Act, 1956. The company, initially registered as Gautam Buddha Children's Hospital Private Limited, faced disputes among directors leading to a request for name strike-off. However, some directors later sought to continue operations under a new name. The company presented audited financial statements from 2003 to 2008, demonstrating continuous operation. The Registrar of Companies, acting on government instructions due to non-filing of statutory returns, struck off the company's name. The petitioner argued that the company was functional, and the strike-off lacked proper procedure and notice as mandated by section 560 of the Companies Act.

The Registrar of Companies contended that the company failed to file statutory returns from inception and that the strike-off was justified based on director's initial request and government instructions. Despite no withdrawal of the strike-off request, the Registrar proceeded with the action. However, the court found the Registrar's actions unjustified as they contravened section 560 requirements. The Registrar failed to follow the prescribed procedure of sending notices and warnings before striking off a company's name, rendering the action illegal and non est.

The court held that the strike-off notification was to be quashed, reinstating the company's name in the Register of Companies. The company's continuous operation, evidenced by financial records and bank transactions, proved it was not defunct. The Registrar's oversight of subsequent name change application and failure to consider the legal implications of the name change further invalidated the strike-off decision. The court concluded that the strike-off was illegal and non est, ensuring the company's name remained as Gautam Buddha Hospital and Research Institute (P.) Ltd. in the Register of Companies.