2020 (1) TMI 1225 - Tri - Companies Law

Restoration of name of the Company in the Register of Companies maintained by the Registrar of Companies - Section 252 of the Companies Act 2013 - HELD THAT - Ministry of Corporate Affairs vide communications dated 25-06-2019 had instructed all Regional Directors and Registrar of Companies to take strike off action against companies which have failed to file Financial Statements or Annual Returns for immediately two preceding Financial years i.e. 2016-2017 2017-2018 and have also not filed application under Section 455 (1) of the Companies Act 2013 for making them as Dormant . On 03-01-2020 learned counsel for the petitioner prayed for an interim relief to issue direction to the bankers of the company (i.e. ICICI Bank Limited Thrikkara Branch) to allow operations of the bank accounts of the company for day to day business operations only. We have considered the copy of undertaking produced before the Tribunal and the submissions made by the learned counsel. We directed ICICI Bank Limited Thrikkara Branch to allow operations in Bank Account No. 268505000506 of the company solely for the purpose to carry out the Company s day to day business and Company s current operations until further orders - Having satisfied with the reasons mentioned in the Application the Tribunal is of the opinion that it would be just and proper to order restoration of the name of the Company in the Register of Companies. Application allowed - Dated the 9th day of January 2020.

Summary

Issues:
- Restoration of company name in the Register of Companies under Section 252 of the Companies Act, 2013.
- Compliance with statutory requirements for restoration.
- Justification for striking off the company's name.
- Procedural fairness and principles of natural justice in striking off action.

Analysis:
1. Restoration of Company Name: The appeal sought direction to restore the company's name in the Register of Companies. The appellant, a shareholder, highlighted defaults in statutory compliances leading to the striking off. The present directors, facing financial challenges and frozen bank accounts, claimed genuine belief in prior compliance. The company had filed GST and IT returns, emphasizing the hasty and unjustified strike off by the respondent.

2. Compliance with Statutory Requirements: The RoC reported non-filing of financial statements and annual returns, with defaults since 2016. The company's violation of Sections 92 and 137 of the Companies Act, 2013, led to the strike off under Section 248(5) after due procedural compliance. The RoC attributed the action to directorial negligence and lack of diligence, justifying the strike off as per Section 248 of the Act.

3. Justification for Striking Off: The RoC's actions were in line with notifications instructing strike off for non-compliant companies. Notices were issued to the company and directors, with publications for objections. The strike off, effective from 19-10-2019, was duly published. The RoC defended the action as necessary due to prolonged non-compliance and lack of response to notices.

4. Procedural Fairness and Natural Justice: The Tribunal considered interim relief for bank account operations, directing the bank to allow day-to-day transactions. After evaluating submissions and documents, the Tribunal ordered restoration of the company's name, subject to fulfilling statutory requirements and payment of costs. The order emphasized compliance within specified timelines, with personal responsibility on the company's representative.

5. Final Directions: The order mandated filing of statutory documents with fees, a declaration on demonetization deposits, payment of costs, and compliance responsibility. The Registrar was directed to publish the restoration order in the official gazette. Any director disqualification would prevent reactivation of DINs. The order, limited to previous violations, allowed further actions for any other offenses committed.

In conclusion, the Tribunal's judgment addressed the restoration of the company's name, emphasizing compliance with statutory requirements, justifying the strike off, ensuring procedural fairness, and outlining final directions for restoration and ongoing compliance.