2016 (8) TMI 391 - HC - Companies Law

Restoration of company name struck off - Held that - A company, or any member or creditor as felt aggrieved by the Company having been struck off the Register, the Court might, on an application made by the Company, member or creditor, before expiry of 20 years from the date of publication in the official Gazette of the notice of striking off, the Court might pass orders and/or directions for placing the Company in the same position as nearly as may be, as if the name of the Company had not been struck off, provided the Court was satisfied that the Company was, at the time of striking off, carrying on business, or any operation or otherwise satisfied that it was just that the Company be restored to the Register. In view of the assertion made by the erstwhile directors of the Company, including Viswanath Agarwal, in their affidavits and indemnity bonds in support of their prayer for striking off the name of the Company from the Register, the Court could not have been satisfied that the Company was carrying on business or was in operation. The directors including the applicant under Section 560(6) had asserted to the contrary. The Order dated 13th November, 2014 does not disclose the reasons for arriving at the finding that it was just that the Company be restored to the Register. In any case, an application could have been filed under Section 560(6) only if a Company, or any member or creditor felt aggrieved by the Company having been struck off. The Company having been struck off on the prayer of the Company itself and/or its directors, there can be no question of the Company being aggrieved by the striking off. Viswanath Agarwal who had himself prayed for striking off also could not be aggrieved by the striking off. The appeal is dismissed and the judgment and the order under appeal is affirmed

Issues Involved:
1. Legality of the Company Court's Order dated 21st July 2015 recalling an earlier order dated 13th November 2014.
2. Validity of the application under Section 560(6) of the Companies Act, 1956 for restoring the name of Meghdoot Services Limited.
3. Locus standi of Calcutta Investment Ltd. in filing the application for recalling the restoration order.
4. Applicability and interpretation of Section 560(6) of the Companies Act, 1956.
5. Impact of prior affidavits and indemnity bonds by the directors on the application for restoration.

Detailed Analysis:

1. Legality of the Company Court's Order dated 21st July 2015:
The appeal challenges the Order dated 21st July 2015, which recalled a previous order from 13th November 2014 that restored the name of Meghdoot Services Limited to the Register of Companies. The initial restoration order did not consider that the company's name was struck off on the directors' application, including Viswanath Agarwal, who later applied for restoration. The Company Court found that the application for restoration lacked proper notice to shareholders and creditors, and the company had applied for striking off under the Easy Exit Scheme, which precluded it from applying for restoration after seven years.

2. Validity of the Application under Section 560(6):
The Company Court held that the application under Section 560(6) was invalid as it was not filed by a shareholder or creditor but by an erstwhile director, Viswanath Agarwal, who was not entitled to apply under this provision. Section 560(6) allows applications by a company, its shareholders, or creditors if they feel aggrieved by the company's name being struck off. The court emphasized that a company that voluntarily applied for striking off could not later seek restoration under this section.

3. Locus Standi of Calcutta Investment Ltd.:
Calcutta Investment Ltd., a shareholder holding 24,000 shares, applied to recall the restoration order, arguing that they were not notified of the application under Section 560(6). The Company Court agreed, stating that shareholders should have been notified. The court also noted that Calcutta Investment Ltd. had standing to file the application as the restoration order adversely affected them in ongoing proceedings before the Company Law Board.

4. Applicability and Interpretation of Section 560(6):
The court interpreted Section 560(6) to mean that only a company, its shareholders, or creditors could apply for restoration if they felt aggrieved by the striking off. The court found that the company, having applied for its own striking off, could not be considered aggrieved. The court also referenced judgments from other High Courts, agreeing with the Madras High Court's view that companies voluntarily striking off their names could not later seek restoration under this section.

5. Impact of Prior Affidavits and Indemnity Bonds:
The directors, including Viswanath Agarwal, had previously affirmed affidavits and indemnity bonds stating that the company had no assets or liabilities and did not intend to conduct business. These statements were crucial in the decision to strike off the company's name. The court found that these prior assertions contradicted the grounds for restoration and that the application for restoration did not provide sufficient reasons to justify reversing the striking off.

Conclusion:
The High Court dismissed the appeal, affirming the Company Court's order dated 21st July 2015, which recalled the restoration order of 13th November 2014. The court held that the application under Section 560(6) was invalid as it was not filed by a shareholder or creditor and that the company, having applied for its own striking off, could not later seek restoration. The court also emphasized the importance of notifying shareholders and creditors in such applications and found that the prior affidavits and indemnity bonds by the directors precluded the restoration.

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