2018 (5) TMI 226 - Tri - Companies Law

Restoration of name of Company strike off from the Register of Companies - Held that - The applicant Company has filed the present application within prescribed time under law, and also shown sufficient reasons to order Restoration of its name in the Register of Companies maintained by the Registrar of Companies. Therefore, the Company application deserves to be allowed, however, subject to filing all pending returns, Annual returns, Balance sheets, statements etc., along with prescribed and addl. fee under law. And also subject to giving undertaking that they would not resort to such type of violations in future. The Company application is disposed direction The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Applicant Company as if the name of the company has not been struck off from the Register of Companies and take all consequential actions like change of company's status from 'strike off' to Active (for e-filing), to restore and activate the DINs, to intimate the bankers about restoration of the name of the company so as to defreeze its accounts. The Applicant company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by ROC within 45 days from the date on which its name is restored on the Register of Companies by the ROC.

Summary

Issues Involved:

1. Validity of the order striking off the company's name from the Register of Companies.
2. Compliance with procedural requirements under the Companies Act, 2013.
3. Justification for the restoration of the company's name.
4. Consequences of the striking off on the company and its stakeholders.

Detailed Analysis:

1. Validity of the Order Striking Off the Company's Name:

The application was filed under Section 252(3) of the Companies Act, 2013, seeking to set aside the order of the Registrar of Companies (RoC) striking off the company's name. The company had failed to file annual returns for several years, leading to the issuance of notices by the RoC under Section 248(1), (4), and (5) of the Companies Act, 2013. The RoC followed the procedure by issuing notices in Form STK-1, STK-5, and STK-7, but the applicants claimed they did not receive the initial STK-1 notice.

2. Compliance with Procedural Requirements:

The Tribunal examined Sections 248 and 252 of the Companies Act, 2013, and the Companies (Removal of Names from the Register of Companies) Rules, 2016. It noted that the RoC is required to follow specific procedures before striking off a company's name, including ensuring that all liabilities and obligations are settled. The Tribunal found that the RoC had issued notices as per the rules, but emphasized that the RoC must satisfy itself that sufficient provisions have been made for the realization of all amounts due and the discharge of liabilities before striking off a company’s name.

3. Justification for the Restoration of the Company's Name:

The applicants argued that the company was operational and had been filing income tax returns regularly. They attributed the failure to file annual returns to administrative reasons and expressed willingness to comply with all statutory requirements, including the payment of additional fees. The Tribunal considered the company's ongoing business activities, revenue generation, and the impact on employees and creditors. It noted that the company had provided sufficient reasons for the delay and was prepared to rectify the non-compliance.

4. Consequences of the Striking Off on the Company and its Stakeholders:

The Tribunal acknowledged that striking off the company's name had significant repercussions, such as freezing its bank accounts and affecting its financial transactions. It emphasized the need to facilitate the company's normal business activities and protect the interests of its employees and creditors. The Tribunal also referred to Article 19(g) of the Constitution of India, which guarantees the right to practice any profession or carry on any occupation, trade, or business.

Conclusion:

The Tribunal allowed the application for restoration of the company's name, subject to certain conditions. It directed the RoC to restore the company's status and take necessary actions to change its status from 'strike off' to 'active.' The company was instructed to file all pending statutory documents and pay the prescribed fees within 45 days. Additionally, the company was required to pay a cost of ?30,000 and ensure compliance with the order. The Tribunal also clarified that this order was confined to the specific violations that led to the striking off and did not preclude the RoC from taking action for any other violations.

Directions:

1. The RoC is ordered to restore the company's original status and take all consequential actions, including changing the company's status to 'active' and defreezing its bank accounts.
2. The company is directed to file all pending statutory documents and pay the prescribed fees within 45 days.
3. The company's representative must ensure compliance with the order.
4. The company must pay a cost of ?30,000 through online payment.
5. A certified copy of the order must be delivered to the RoC within 30 days.
6. The RoC is directed to publish the order in the official Gazette after compliance.
7. The order does not preclude the RoC from taking action for any other violations committed by the company.