2015 (7) TMI 1232 - HC - Companies Law

Revival upon the company s name being struck off - application of a person who did not qualify under sub-section (6) of the relevant provision and without notice to the others who may have been interested in the company - Held that - As to the company s contention that the present application has been filed with ulterior motive, it does not matter if the applicant is guided by some other motive once it is demonstrated that the applicant had an interest in the matter pertaining to the order which is sought to be recalled and the applicant had no notice of the proceedings at the relevant point of time. Since it was the company which had applied to have its name struck off under the relevant scheme, the company could not have applied under Section 560(6) of the Act unless such application was made within a short time of its name being struck off and an obvious mistake on the part of the company to apply under the scheme was demonstrated. Though the company seeks to assert that the word company in Section 560(6) of the Act has to be given a wider meaning, it is not possible to accept that a company whose name had been struck off on its invitation six or seven years back would be permitted to apply under such provision for the striking-off to be undone. In such a situation, it would be only a creditor or a shareholder of the company who may apply within 20 years of the company s name being struck off for its revival. In any event, the petition under Section 560(6) of the Act was not filed by the company. Since neither a shareholder nor a creditor of the company applied for its revival upon the company s name being struck off on the company s application, and a shareholder of the company is in Court today seeking the order of revival to be recalled, no ground is made out to resist the same.

Summary

Issues involved:
1. Application for recalling an order passed under Section 560(6) of the Companies Act, 1956 permitting the revival of a company whose name had been struck off.

Analysis:
The judgment concerns an application for recalling an order allowing the revival of a company whose name had been struck off under a simplified exit scheme in 2005. The applicant, a shareholder of the company, argued that the petition under Section 560(6) was not filed by a qualified party and was done without their knowledge. The company's name was struck off based on its application under the exit scheme, not due to default in filing returns. The petitioner, claiming to be a director, sought revival for business purposes, which was opposed by the applicant, alleging ulterior motives.

The Court differentiated between recalling an order and reviewing it. The applicant, being a shareholder, should have been notified before the company's revival. The Court noted that the order was passed without considering the circumstances of the company's name being struck off voluntarily. The judgment emphasized the need for proper notice to interested parties and the limitations on who can apply for revival under Section 560(6).

The Court found that the application for revival was not made by a shareholder or creditor, warranting the order's recall. It was ruled that the company could not apply for revival after voluntarily striking off its name, and only qualified parties could do so within a specified period. Consequently, the order restoring the company's name was recalled, and the company's legal existence ceased since its initial striking off in 2007. The applicant was awarded costs, and urgent copies of the order were to be provided to the parties.

Overall, the judgment highlights the importance of proper application of legal provisions, the necessity of notice to affected parties, and the limitations on reviving companies under the Companies Act, 1956.