2019 (8) TMI 1460 - Tri - Companies Law

Restoration of name of the company by the Registrar of Companies - allegation that appellant had not filed its balance sheet and annual return for the FY starting from 31/3/2013 - appellant, whether going concern or not? - HELD THAT - We do not find any material to prove that the appellant company was a going concern or was doing business during the above said period. We are not at all convinced as to pass an order in favour of the appellant by restoring the name of the appellant. From the evidence available, we can have a legitimate inference that it is a sham company having deliberately not filed the Annual Return and financial statement from the date of incorporation because, the company was not in operation. Accordingly, there are no justifiable reason to allow this appeal as prayed for. Appeal dismissed.

Summary

Issues involved:
1. Restoration of the name of a company struck off by the Registrar of Companies, Jharkhand under Sec.252(2) of the Companies Act, 2013.

Detailed Analysis:
The appellant, a shareholder of a company engaged in cutting and polishing of granite, filed an appeal seeking restoration of the company's name after it was struck off by the Registrar of Companies, Jharkhand. The appellant argued that the company was operational and had not been informed about the show cause notice issued by ROC Sec.248 (1) of the Companies Act, 2013. The appellant claimed that upon learning about the striking off, they promptly submitted the required statutory documents, but the ROC expressed inability to make corrections. The appellant presented financial statements, director's report, bank account statement, and IT returns to support the appeal.

The ROC, in response, stated that the appellant had not filed the balance sheet and annual return for the financial year starting from 31/3/2013, leading to the presumption that the company was not operational. The ROC issued a striking off notice under Sec.248 (1) after the appellant did not reply, resulting in the removal of the company's name from the register. The ROC requested the Tribunal to pass appropriate orders.

Upon review, the Tribunal found that the appellant had failed to file annual returns and financial statements from the date of incorporation until the name was struck off in 2017. The appellant's claim that an employee responsible for filings had left the job was deemed unsubstantiated as no details were provided. The financial statements did not show any employee expenses or evidence of business operations. Despite claims of business activities, the financial records indicated zero revenue generation and lack of employee-related expenses.

The Tribunal examined the appellant's financial position based on the submitted statements, revealing no operational activities or revenue generation. Documents such as land sale deeds and bank account statements failed to prove the company's business operations. Consequently, the Tribunal concluded that there was insufficient evidence to support the appellant's claim of being a going concern or engaged in business activities. The Tribunal dismissed the appeal, stating that the company appeared to be non-operational and deliberately avoided filing annual returns and financial statements, leading to the rejection of the restoration plea.

In conclusion, the Tribunal dismissed the appeal, stating that there was no justification to restore the name of the company. The decision was based on the lack of evidence supporting the company's operational status and business activities, as indicated by the financial records and related documents.

This detailed analysis provides an overview of the issues involved and the Tribunal's comprehensive assessment leading to the dismissal of the appeal seeking restoration of the company's name.