2019 (5) TMI 826 - AT - Companies Law

Striking off of name of Company - Section 560 of the Companies Act, 1956 - HELD THAT - The appellant has not filed the statutory returns and financial statement as required under Companies Act, 1956. We noted that the consent of the shareholders and the creditors have been filed by the appellant. We noted that the shareholders and creditors are all family members. As regards the plea taken by the appellant that the appellant has deposited lease rentals with the HSIDC, we further observe that the lease rentals have been deposited only after when the NCLT asked for proof in its order dated 19.5.2017. Subsequent event to deposit the lease rental after the proof has been asked for cannot be taken a good ground to assert that the company has already been in business or in operation. Appeal dismissed.

Issues:
1. Appeal against the order of National Company Law Tribunal dismissing the company petition.
2. Striking off the name of the company by the Registrar of Companies (ROC) due to non-filing of statutory documents.
3. Allegations of the company being inactive and not carrying out any business operations.
4. Arguments regarding the company's continuous business operations, reasons for non-filing of documents, and efforts for restoration.

Analysis:
1. The appellant filed an appeal against the National Company Law Tribunal's order dismissing the company petition under Section 421 of the Companies Act, 2013. The appeal challenged the final order dated 15.03.2018 passed by the NCLT Principal Bench, New Delhi, which led to the dismissal of the company petition.

2. The ROC struck off the name of the appellant company from the register under Section 560 of the Companies Act, 1956, citing non-filing of Balance Sheet and Annual Returns since incorporation. The appellant claimed to be active, preparing financial statements, holding meetings, and conducting business operations. However, the ROC's reply highlighted the lack of statutory filings, leading to the belief that the company was not operational.

3. The impugned order emphasized the ROC's objections regarding the appellant's business operations, including income tax returns, board composition, and creditor consents. Despite the appellant's submission of financial statements for a specific year, adverse inferences were drawn against the company, indicating a lack of business transactions or operations since inception.

4. The appellant argued that it continued its cycle manufacturing business since incorporation, facing challenges like director illness, financial constraints, and market downturns. Reasons provided for non-filing of documents included inadvertence, lack of opportunity, and operational difficulties. Efforts were made to demonstrate business continuity, shareholder and creditor consents, and lease rental payments during the restoration process.

5. Both parties presented their arguments regarding the company's operational status, statutory compliance, and restoration efforts. The appellant's claims of business continuity were weighed against the ROC's concerns over non-compliance with filing requirements. The court noted discrepancies in document submissions, shareholder relationships, and delayed responses to show cause notices, leading to the dismissal of the appeal.

6. Ultimately, the appellate tribunal found no merit in the appeal, considering the appellant's failure to meet statutory obligations, delayed actions in response to regulatory requirements, and insufficient evidence of continuous business operations. The appeal was dismissed, with no costs awarded.

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