2019 (12) TMI 1597 - AT - Companies Law

Seeking restoration of name of company in the Register of Companies - it is alleged that appellant company had failed to file financial statements and annual returns since 2011-12 - Section 248 of Companies Act, 2013 and Rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 - HELD THAT - Undisputedly the appellant company has not filed financial statements and returns since 2011-12 onwards. ROC has served the STK-1 notice on 11.3.2017 on appellant company. Thereafter STK-5 notice dated 27.4.2017 was served and when he has not received any response then as per STK-7 Company Appeal (AT) No. 203 of 2019 notice dated 11.7.2017 the name of the appellant company was struck off from the register of companies - Except the failure to file the financial statements and returns there is no complaint against the appellant company. Appellant has placed on record the report and financial statements from 2011-12 before the NCLT as well as before this Tribunal. On going through the reports and statements, it cannot be said that the appellant company is not carrying on any business since 2011-12. The appellant company is having assets and liabilities. In such circumstances, the order passed by the NCLT is not sustainable in law. Appeal allowed.

Summary

Issues:
- Appeal against order striking off company's name from register of companies
- Failure to file financial statements and annual returns
- Company's assets and liabilities
- Non-resident director's involvement and proposed voluntary winding up

Analysis:
The appeal was filed against the order passed by NCLT Mumbai affirming the Respondent/ROC's decision to strike off the appellant company's name from the register of companies. The company, incorporated in 2004, failed to submit annual returns and financial statements for the years 2011-2016. The ROC initiated proceedings under Section 248 of the Companies Act, leading to the company's name being struck off. NCLT Mumbai found that the company did not generate any income and was not actively conducting business operations, upholding the ROC's decision.

The appellant argued that the company had assets and liabilities, including land valued at Rs. 2 crores, and had pending tax liabilities. They also mentioned a non-resident director based in Dubai and a resident director handling day-to-day operations. The appellant sought restoration of the company's name for voluntary winding up after clearing all creditors. Financial statements and annual returns were prepared and submitted post the ROC's decision. The appellant highlighted the intention to settle government dues and proceed with voluntary winding up.

The ROC contended that the company's failure to file financial statements and returns warranted the name being struck off as per the Companies Act and relevant rules. Despite the lack of business activity, the appellant company had assets and liabilities, which were acknowledged in the submissions. The NCLT's decision was supported by the ROC based on the procedural compliance and the company's non-compliance with filing requirements.

After considering the arguments, the Tribunal noted the company's purchase of land and outstanding tax liabilities. While the company failed to file financial statements and returns, it was observed that assets and liabilities existed. The Tribunal found the NCLT's decision unsustainable in law due to the company's business activities and assets. Consequently, the Tribunal directed the restoration of the company's name to the register, subject to specified compliances, including payment of costs, tax liabilities, and filing pending returns. The ROC was authorized to take further punitive actions for any non-compliance post-restoration.

In conclusion, the appeal was allowed, and the Tribunal issued detailed directions for the restoration of the company's name, emphasizing compliance with financial obligations and statutory requirements.