2016 (6) TMI 5 - HC - Companies Law

Restoration of name in the register of companies maintained by the Registrar of Companies - Held that - Notice in respect of action under S.560 was not sent to the registered office of the company. Consequently, the condition precedent for the initiation of proceedings to strike off the name of petitioner from the Register maintained by the respondent was not satisfied. Looking to the fact that the petitioner is stated to be a running company; and that it has filed this petition within the stipulated limitation period, and to the decision of the Bombay High Court in Purushottamdass and Anr. (BulakidasMohta Co. P. Ltd.) v. Registrar of Companies, Maharashtra, &Ors. (1984 (4) TMI 247 - HIGH COURT OF BOMBAY ); it is only proper that the impugned order of the respondent dated 23.06.2007, which struck off the name of the petitioner from the Register of Companies, be set aside. At the same time, however, there is no gainsaying the fact that a greater degree of care was certainly required from the petitioner company in ensuring statutory compliances. Looking to the fact that annual returns and balance sheets were not filed for almost seventeen years, the primary responsibility for ensuring that proper returns and other statutory documents are filed, in terms of the statute and the rules, remains that of the management. Accordingly, the petition is allowed. The restoration of the company s name to the Register maintained by the Registrar of Companies will be subject to payment of costs of ₹ 22,000/- to be paid to the common pool fund of the Official Liquidator, and the completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late deposit of statutory documents within 8 weeks; the name of the petitioner company, its directors and members shall, stand restored to the Register of the respondent, as if the name of the company had not been struck off, in accordance with S.560(6) of the Companies Act, 1956.

Summary

Issues:
Petition for restoration of company's name in the register under Section 560(6) of the Companies Act, 1956 due to defaults in statutory compliances.

Analysis:
The petitioner, a company incorporated in 1984, faced proceedings initiated by the respondent to strike its name off the register due to non-compliance, specifically for not filing Annual Returns from 2000 to 2015 and Balance Sheets from 1998 to 2015. The respondent followed the procedure under Section 560 of the Companies Act, including sending notices and publishing a notification in the Official Gazette. However, the petitioner claimed it did not receive any notices or show-cause notices as required by law and was not given an opportunity to be heard. The petitioner also highlighted the lack of documentation supporting the decision to strike off its name.

The petitioner asserted that it has been continuously operational since its inception and provided evidence of its financial activities to support this claim. It was acknowledged that while the company's accounts were prepared and audited annually, there were lapses in filing necessary documents with the Registrar of Companies due to lack of legal knowledge and oversight by the directors and the accountant. Efforts to rectify the situation were made only after the directors discovered the company's name had been struck off.

In response, the respondent expressed no objection to restoring the petitioner's name, subject to the submission of all outstanding statutory documents and requisite fees. The court referenced a previous Bombay High Court decision emphasizing the opportunity for companies to be revived within 20 years if deemed necessary in the interest of justice. The court acknowledged the petitioner's active status and the timely filing of the restoration petition within the statutory limitation period.

Considering the circumstances, the court set aside the order striking off the petitioner's name from the register but emphasized the need for better compliance practices. The restoration was granted upon payment of costs and completion of formalities within a specified timeframe. The judgment also allowed the respondent to pursue penal action against the petitioner for non-compliance with certain provisions of the Companies Act, 1956.