2018 (4) TMI 1703 - Tri - Companies Law

Restoration of name of the Petitioner Company in the Register of Companies - Section 252(3) of the Companies Act, 2013 - HELD THAT - The company has no revenue from operation. This reflects that, the company is not doing any business and they are in processing for allotment of land from KIADB, but the reasons known that, the matter is still under correspondence for taking possession of the land and as far as KIADB is concerned vide their letter dated 16th December 2016, it is stated that, if the possession of land is not taken within 30 days from the date of payment of the premium shall result in cancellation of allotment and of the amount paid towards premium and EMD shall stand forfeited. The amount which has been paid by the company as reflected in their letter dated 23rd November 2016 is not appeared in their Balance sheet as on 31/03/2017. There is no revenue from operations since incorporation i.e., from August 2010 to 2017. There are no grounds to order for restoration of the name of the Petitioner Company as no fixed or other substantial assets are available. No materials from the side of Petitioner Company to establish that, it was an ongoing concern at the time when its name was struck off - the name of the company cannot be restored and the Registrar of Companies, Karnataka, Bangalore had rightly removed the name of the company from the register of companies. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Restoration of the company’s name in the Register of Companies.
2. Compliance with statutory requirements for filing financial statements and annual returns.
3. Procedural adherence by the Registrar of Companies under Section 248(1) of the Companies Act, 2013.
4. Allegations of non-disclosure by the company secretary.
5. Impact of non-restoration on the petitioner company and its shareholders.
6. Evidence of ongoing business operations and possession of assets.

Issue-wise Detailed Analysis:

1. Restoration of the company’s name in the Register of Companies:
The petitioner company, Insys Instruments Systems (India) Private Limited, filed a petition under Section 252(3) of the Companies Act, 2013, seeking directions to restore its name in the Register of Companies. The company argued that it would suffer irreparable loss and hardship if not restored.

2. Compliance with statutory requirements for filing financial statements and annual returns:
The Registrar of Companies (RoC), Karnataka, struck off the petitioner company’s name due to defaults in statutory compliances, specifically the failure to file financial statements and annual returns from the date of incorporation till 2015-16. The petitioner acknowledged these defaults but attributed them to the company secretary’s failure to disclose the facts to the directors.

3. Procedural adherence by the Registrar of Companies under Section 248(1) of the Companies Act, 2013:
The RoC initiated action under Section 248(1) of the Companies Act, 2013, and issued notices in Form STK-1 to the company and its directors, providing 30 days to show cause against the proposed strike-off. Notices were also published on the MCA website, in the Official Gazette, and in newspapers. The RoC followed the procedure as per the law, and upon no response from the company or its directors, proceeded to strike off the company’s name.

4. Allegations of non-disclosure by the company secretary:
The petitioner alleged that the company secretary engaged to file returns did not reveal the defaults to the directors. This was cited as a reason for the non-compliance with statutory filing requirements. However, the tribunal found no substantial evidence to support this claim.

5. Impact of non-restoration on the petitioner company and its shareholders:
The petitioner argued that non-restoration would result in irreparable loss and hardship to the company and its shareholders. The company undertook to file all outstanding statutory documents if restored. However, the tribunal noted that the company had no revenue from operations since its incorporation and lacked substantial assets.

6. Evidence of ongoing business operations and possession of assets:
The tribunal reviewed the balance sheets from 2011-12 to 2016-17, which showed no revenue from operations and minimal current assets. The company was in the process of acquiring land from KIADB but had not finalized the allotment. The tribunal found no evidence of ongoing business operations or substantial assets, leading to the conclusion that the company was not an ongoing concern at the time of strike-off.

Judgment:
The tribunal concluded that the petitioner company did not provide sufficient grounds for restoration. The company had no revenue from operations, lacked substantial assets, and was not an ongoing concern. Therefore, the petition for restoration was dismissed, and the Registrar of Companies, Karnataka, was found to have rightly removed the company’s name from the register of companies. The petition was dismissed in its entirety.