2018 (9) TMI 1847 - HC - Companies Law

Striking off/removal of the names of defunct companies issued by the Ministry of Company Affairs, Government of India - HELD THAT - Admittedly the respondent/complainant ought to have followed the procedures as per the Companies Act. Further the application should be accompanied by an affidavit by the applicants mentioned in paragraph 5(1) sworn before a Magistrate/Executive Magistrate/Oath Commissioner/Notary, to the effect that the company has not carried on any business or the company did some business for a period up to a date and then discontinued its operations, as the case may be, and has no assets or liabilities. The draft of the affidavit is as per draft prescribed and enclosed at annexure B to this circular. The purpose of the scheme is to allow eligible companies to avail of this opportunity to exit from the Registrar of Companies after fulfilling the requirements laid down in this circular. No penal action would be initiated against eligible companies availing this scheme from the date of filing of the application for simplified exist. After the scheme ends, the Ministry would take necessary penal action under the Companies Act, 1956 against such defunct companies which have not availed of this opportunity and have not complied with the provisions of the Companies Act, 1956 or are not filing documents with the Registrar of Companies in a timely manner. The applicant-company under this scheme would be deemed to be struck off from register of companies from the date of issue of order/notification by the Registrar of Companies. The accused-company has filed the copies of the balance-sheets profit and loss account with the complainant. The accused-company and accused being the officers complied with the statutory requirements of section 220 of the Act. Both show-cause notices dated September 19, 2008 was issued by the complainant in this behalf which is seen from the annexures filed in the typed set. Therefore no valid ground existed against the petitioners/ accused in continuing the proceedings before the lower court. Petition allowed.

Summary

Issues:
1. Alleged non-compliance with Companies Act provisions regarding annual general meeting and annual return filing.
2. Application of Simplified Exit Scheme, 2005 for striking off company's name.
3. Claim of civil nature of the matter and absence of criminality.
4. Time-barred complaint and absence of offense.
5. Legal arguments and case laws cited in support of the petition.

Analysis:

1. The petitioners were accused of not filing the annual return by the due date, leading to alleged offenses under sections 159 and 162 of the Companies Act. The offense was considered continuing, with no limitation period applying. The petitioners sought to quash the proceedings based on these allegations.

2. The petitioners invoked the Simplified Exit Scheme, 2005 to strike off the company's name, following the prescribed procedures and submitting the necessary documents to the concerned authorities. They argued that the delay in response from the respondent and subsequent communication did not warrant criminal proceedings, emphasizing the civil nature of the matter.

3. The defense contended that there was no criminal intent or violation of Companies Act provisions by the petitioners. They highlighted that similar companies under the scheme were not penalized and questioned the respondent's motive in pursuing criminal charges. The absence of key elements under sections 159, 162, and 220 was emphasized to challenge the validity of the complaints.

4. The petitioners raised the issue of the complaint being time-barred, filed after the winding up of the company beyond the limitation period. They argued that the complaint lacked clarity on the closure date, further supporting their stance that no offense was committed. Case laws were cited to strengthen their position on the procedural and substantive aspects of the case.

5. After considering the arguments presented by both parties and examining the relevant provisions of the Companies Act, the judge concluded that the complaints lacked merit. The court allowed the petitions, quashing the proceedings against the petitioners in the criminal cases. The judgment highlighted the compliance of the accused company with statutory requirements, leading to the dismissal of the complaints and closure of the connected petitions.