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2018 (6) TMI 949 - AT - Companies LawName struck off from the Register of Companies - failure to file Financial Statements and Annual Returns - appellant wanted the company to be restored so that it could comply with the winding up procedure and the company could have an honourable exit - Held that - If restoration of the name of the Company was to be allowed only for the purpose of winding up, it would defeat the very purpose of striking off the company. It also found that the appellant/petitioner had no assets other than nominal cash balance in the current liabilities and there was no justification for restoring the name of the company. It is not a case that the Company was carrying on business or was conducting its operations and default in filing took place. The object of Section 252 appears to be to safeguard companies which were carrying on business or were in operation so that they should get opportunity to be restored. We do not find that there would be justification to restore the name of the company only for the company to go through the process of winding up, or closure. As the appellant tried to submit that because of the striking off of the present company the directors have been affected due to DIN getting blocked and they are aggrieved because they are connected with other companies also. Learned counsel was unable to show that any such ground was taken before NCLT or in the Company Petition. As such we have not allowed the learned counsel to raise this new ground for the first time in the appeal. Again, it would also be no just cause under Section 252(3) of the new Act. Appeal dismissed.
Issues:
1. Restoration of a Private Limited Company struck off from the Register of Companies for failure to file Financial Statements and Annual Returns. 2. Interpretation of Section 252 of the Companies Act, 2013 regarding the restoration of a company's name to the register. 3. Justification for restoring the name of the company only for the purpose of winding up. Issue 1: Restoration of a Private Limited Company The Appellant Company, a Private Limited Company, was struck off from the Register of Companies for failing to file Financial Statements and Annual Returns. The Appellant claimed that they were misled by an online portal, leading to the default. The Appellant filed an application under Section 252 of the Companies Act, 2013 to restore the company, stating that they were in the process of winding up and would comply with statutory requirements. However, the NCLT dismissed the petition, prompting the appeal. Issue 2: Interpretation of Section 252 The Counsel for the Appellant argued that even if the company was not carrying on business, restoration could be justified if it was just to do so. The NCLT considered the Registrar of Companies' counter affidavit, which detailed the company's non-compliance and the steps taken before striking off the name. The NCLT analyzed Section 252(3) and concluded that restoration should not be allowed solely for winding up purposes, especially when the company had no assets other than a nominal cash balance. Issue 3: Justification for Restoration for Winding Up The Appellant contended that they were misled about the necessity of filing returns, but the NCLT found this to be an insufficient reason for non-compliance. The NCLT emphasized that restoration should not be granted solely for the company to undergo winding up, as it would defeat the purpose of striking off. The NCLT highlighted that the company had no assets besides a small cash balance, providing no justification for restoration. The Appellant's argument regarding the directors' DIN being affected due to the striking off was not considered as a valid ground for restoration under Section 252(3). In conclusion, the appeal was dismissed by the NCLT, finding no substance in the arguments presented. No costs were awarded in the matter.
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