2012 (3) TMI 92 - HC - Companies Law

Restoration of name of companies in the register maintained by the Registrar of Companies. - Sectio 560(6) - the expression just would mean that it is fair and prudent from a commercial point of view to restore the company. The Court has to examine the concept of justness not exclusively from the prospective of a creditor or a shareholder or a debtor, but from the prospective of the society as a whole. Once this Court is convinced that it is just to restore the company, then to refuse the relief because some thirty party may be inconvenienced by it, would be harsh. Since today the respondent No. 2 company has a Foreign Award of more than a million dollars in its favour, it would be just, fair and prudent to restore the company to its original status. The ex-management of the respondent No. 2 company are directed to file all statutory returns along with prescribed fees in compliance with all statutory requirements. In the event of their failure to do so, the petitioners are directed to fulfil the aforesaid obligation.

Summary

Issues:
1. Application for impleadment/intervention by ZTE Corporation under Order 1 Rule 10 read with Section 151 Code of Civil Procedure.
2. Petition under Section 560(6) of the Companies Act, 1956 seeking restoration of a company in the register maintained by the Registrar of Companies.

Analysis:
1. The application for impleadment/intervention by ZTE Corporation under Order 1 Rule 10 read with Section 151 Code of Civil Procedure was filed but became infructuous as the applicant was already heard on merits. Thus, the application was disposed of.

2. The petition under Section 560(6) of the Companies Act, 1956 sought restoration of a company in the register maintained by the Registrar of Companies. The petitioners claimed to have worked as consultants to the company and had outstanding salaries. The petition highlighted that the company had won an arbitration case against another company and was not taking steps to enforce the Foreign Award. The petitioners sought restoration of the company to the register and to be placed in the same position as if its name had never been struck off.

3. The court examined the scope of Section 560(6) of the Act, emphasizing that restoration should be allowed unless there are special circumstances against it. Referring to legal precedents, the court noted that restoration should be the norm rather than the exception. The court interpreted 'just' as fair and prudent commercially, considering the societal impact.

4. The court found that the petitioners had standing to file the petition as creditors, and rejected claims of collusion with the company. The court also dismissed the plea of res judicata, noting that the petitioners were not parties to the earlier proceedings. Consequently, the court allowed the petition, restoring the company to its original status.

5. The court directed the ex-management of the company to fulfill statutory obligations, and left open the issue of concealment by the company to be decided by the concerned court. The rights and contentions of both parties regarding this issue were left open for further proceedings. The petition was disposed of with these observations.