2019 (9) TMI 1462 - Tri - Companies Law

Restoration of the name of the Company in the Register of Companies - Section 252(3) of the Companies Act, 2013 - whether the Company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored in the Register of Companies? - HELD THAT - The present petition is filed by the shareholder of the Company and is within the period of 20 years from publication in the Official Gazette of notice under Section 248(5) of the Act. Despite of the fact that the company has no revenue from operations in the Financial Years 2013-14 to 2016-17, the Company has recently acquired the ownership of property bearing No. 52 A, Friends Colony East, New Delhi as a result of Arbitral Award passed by Sole Arbitrator. Now, the company has acquired this property and can utilize it to carry on its business activities. Copy of the Arbitral Award dated 28.03.2018 is a part and parcel of the record. Hence, the company has been able to show that it was carrying on business or in operation or in operation at the time of its name being struck off from the Register of Companies. In the submissions made on behalf of the ROC and the Income Tax Department, no objection to the restoration of the name of the Company, has been raised - the ingredients provided for in Section 252(3) of the Act, are satisfied. The petition is allowed and the name of the company be restored in the Register of Companies, subject to deposit of ₹ 20,000/- as costs.

Summary

Issues:
1. Restoration of company name in Register of Companies under Section 252(3) of the Companies Act, 2013 due to default in statutory compliance.
2. Verification of company's business activities and operations at the time of name strike-off.
3. Consideration of financial statements, income tax returns, and ownership of property as evidence of company's business activities.
4. Approval of restoration and imposition of costs and compliance requirements.

Issue 1: Restoration of Company Name

The petition was filed seeking restoration of the company's name in the Register of Companies under Section 252(3) of the Companies Act, 2013 due to default in statutory compliance, specifically failure to file financial statements and annual returns for multiple financial years. The Registrar of Companies had struck off the company's name from the register under Section 248(5) of the Act. The petitioner company maintained that it was active since incorporation and had last filed its financial statements for the financial year 2012-13.

Issue 2: Verification of Business Activities

The tribunal examined the reasons behind the non-filing of statutory documents, attributing it to the disqualification of a director resulting in the deactivation of Director Identification Numbers (DINs) necessary for filing with the ROC. The death of another director was also cited as a reason for non-compliance. The company highlighted its lack of income but significant liabilities and assets, including an arbitral award confirming ownership of a property in New Delhi, which was now available for business activities.

Issue 3: Consideration of Financial Evidence

Despite the lack of revenue from operations in the relevant financial years, the company presented audited financial statements and income tax returns for assessment years 2016-17 and 2017-18. The acquisition of a property through an arbitral award was emphasized as evidence of the company's business activities. The ROC and Income Tax Department did not raise objections to the restoration of the company's name based on the submissions made.

Issue 4: Approval of Restoration and Imposition of Costs

The tribunal found that the company met the requirements of Section 252(3) of the Act and allowed the petition for restoration. It ordered the company to deposit costs, deliver a copy of the order to the ROC for publication, pay fees for filing balance sheets and annual returns, and comply with all statutory requirements within specified timelines. The ROC was authorized to take action for delays, and the Income Tax Department could act for non-compliance with tax filing obligations.

This detailed analysis of the judgment showcases the thorough consideration of evidence and legal provisions leading to the restoration of the company's name in the Register of Companies.