2010 (4) TMI 1168 - HC - Companies Law

Strike of company name - Seeking restoration of the name of the Petitioner Company u/s 560(6) of the Companies Act, 1956 - Registrar of Companies struck the petitioner company's name off the Register due to defaults in statutory compliances, namely, annual returns for the period 30.09.2000 to 30.09.2008 and balance sheets for the period 31.03.2000 to 31.03.2008 - HELD THAT - Looking to the fact that the petitioner is a running company, that it has filed this petition within the stipulated limitation period, and to the decision of the Bombay High Court in PURUSHOTTAMDASS VERSUS REGISTRAR OF COMPANIES 1984 (4) TMI 247 - HIGH COURT OF BOMBAY which says that object of section 560(6) of the Companies Act is to give a chance to the company, its members and creditors to revive the company which has been struck off by the Registrar of Companies, within a period of 20 years, and to give them an opportunity of carrying on the business only after the company judge is satisfied that such restoration is necessary in the interests of justice. To my mind, this petition deserves to be allowed, although a greater degree of care was certainly required from the petitioner company in ensuring statutory compliances. Looking to the fact that annual returns and balance sheets were not filed for almost eight years, the primary responsibility for ensuring that proper returns and other statutory documents are filed, in terms of the statue and the rules, remains that of the management. To my mind, the expression shall otherwise order used in Rule 94, as reproduced above, means that costs may be imposed on the petitioning party which cover the costs of the Registrar of Companies involvement in the proceedings, but are not limited to the same, unless the Court otherwise orders. The restoration of the petitioner'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 ₹ 11,000/- be paid to the Registrar of Companies. Costs be paid within three weeks from today. The restoration of the petitioner's name to the Register will also be subject to the completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late deposit of statutory documents.

Summary

Issues:
1. Restoration of the name of the company on the Register of Companies under S.560(6) of the Companies Act, 1956.

Analysis:
The petitioner company, incorporated as a private limited company, sought restoration of its name on the Register of Companies after the Registrar of Companies struck its name off due to defaults in statutory compliances, specifically annual returns and balance sheets. The petitioner claimed to have been active since incorporation and maintained requisite documentation, including annual returns, balance sheets, and income tax returns. The counsel for the petitioner argued that the company did not receive any show cause notice before its name was struck off. The petitioner explained that due to changes in staff, including the Accountant, the necessary documents were prepared but not filed with the Registrar of Companies, leading to the company's name being struck off without its knowledge.

The counsel for the respondent did not object to the revival of the company, subject to the petitioner filing all outstanding statutory documents and paying the applicable fees. The judge referred to previous judgments emphasizing the opportunity for revival within a specified period and the need for restoration in the interests of justice. Despite acknowledging the petitioner's lack of care in ensuring statutory compliances, the judge deemed it appropriate to set aside the order striking off the company's name, considering the possibility of the company continuing to function.

The judge highlighted the responsibility of the management to ensure proper filings and noted that costs may be imposed on the petitioner beyond the Registrar of Companies' costs. Citing a previous case, the judge criticized the casual handling of statutory filings by the petitioner and imposed exemplary costs for such conduct. The restoration of the company's name was made conditional upon the payment of costs, completion of formalities, and payment of any late fees. The order dated May 31, 2007, striking off the company's name was set aside, and the name of the company, its directors, and members were to be restored to the Register of Companies.

The judge granted liberty to the respondent to proceed with penal action against the petitioner for alleged default in compliance with a specific section of the Companies Act, 1956. Finally, the petition was disposed of, concluding the legal proceedings related to the restoration of the company's name on the Register of Companies.