2010 (2) TMI 1245 - HC - Companies Law

Restoration of the name of the company - Petition filed u/s 560(6) - business of manufacture and distribution of toys - struck the petitioner company's name off the Register - defaults in statutory compliances reqd. u/s 159 and 220 - HELD THAT - This case show that this is not merely a case where the interests of justice and requirements of the Statute would be met merely by payment of the costs of the Registrar of Companies. It is difficult to believe that although the company kept functioning for 8 long years along with a properly staffed secretarial department but the Director was so pre-occupied with his wife's illness for 8 years continuously that he was unable to spare even a minute or two to inquire from his staff as to whether the annual statutory returns were being filed. It is also equally improbable that the continuing illness, described as kidney problems , of the Director's wife, precluded the staff of the company from informing Mr. Neeraj Dhamija or even any of the other Directors of the fact that statutory returns mandated under the Companies Act are not being filed. The whole thing 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 with the Registrar of Companies had also made it impossible for interested parties to find out the current financial health of the company over a span of 8 years. Considering the facts, 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 ₹ 11,000/- be paid to the Registrar of companies. Costs be paid within three weeks from today, and subject to the completion of all formalities, including payment of any late fee or any other charges which are leviable by the Registrar of Companies for the late deposit of statutory documents. The impugned order for striking off the name of the petitioner company shall then stand set aside. The name of the petitioner company, its Directors and members shall, 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. The petition is disposed of.

Summary

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

Analysis:

Issue 1: Restoration of Company's Name
The petitioner, a private limited company, sought restoration of its name on the Register of Companies maintained by the Registrar of Companies under Section 560(6) of the Companies Act, 1956. The company, involved in the manufacture and distribution of toys, had its name struck off due to defaults in statutory compliances, specifically for not filing balance-sheets and annual returns for several years. The respondent followed the prescribed procedure under Section 560, issuing necessary notices before striking off the company's name. The petitioner claimed to have remained active since incorporation and submitted relevant documentation to support its claim. The petitioner argued that it did not receive any show cause notice before the action was taken by the respondent. The company attributed the non-compliance to the illness of a director's wife, leading to a lapse in filing statutory documents. The respondent did not object to the revival of the company, subject to the petitioner fulfilling outstanding statutory requirements and paying applicable fees.

In considering the case, the court referred to previous judgments emphasizing the opportunity for revival within a specified period and the need for restoration in the interest of justice. The court acknowledged the petitioner as a running company and noted the lapse in statutory compliances for almost eight years. While allowing the petition for restoration, the court highlighted the importance of ensuring proper compliance, stating that the responsibility lies with the management. The court imposed exemplary costs on the petitioner for the casual handling of statutory requirements, emphasizing the need for responsible business conduct. The restoration was subject to the payment of costs to the Official Liquidator and the Registrar of Companies within a specified timeframe, along with any late fees or charges. Upon compliance with all formalities, the company's name, directors, and members were to be restored to the Register as if the name had not been struck off, in accordance with Section 560(6) of the Companies Act, 1956.

In conclusion, the petition for restoration was allowed, subject to the payment of costs and completion of all formalities, leading to the reinstatement of the company's name on the Register of Companies.