2019 (6) TMI 1354 - AT - Companies Law

Restoration of name in the register of companies - restoration of name rejected on the ground that the company was not in operation and carrying on any business - HELD THAT - The undisputable legal preposition, as embodied in section 248 (1)(c) of the Companies Act, 2013 being that a company not carrying on any business or in operation for a period of two immediately preceding financial years is liable to be removed from the register of companies, the onus of proof that the appellant company was carrying on business and conducting operations during the aforesaid period lay on the appellant who failed to discharge the same by not even responding to the statutory notice. In absence of any material to dislodge the finding recorded by the NCLT, such finding cannot be termed erroneous much less perverse. We are convinced that the instant case is one where the appellant company, pursuant to its incorporation, failed to carry on business. There is no documentary evidence on record to establish even a semblance of commencement of operations by the Appellant Company from its very inception. Appeal lacks merit and is dismissed.

Summary

Issues:
1. Appeal against the dismissal of application to restore company's name in register of companies.
2. Company struck off under Section 248 of the Companies Act, 2013 due to non-compliance.
3. Appellant's failure to provide evidence of carrying on business operations.
4. Appellant's reliance on irrelevant document.
5. Finding of National Company Law Tribunal (NCLT) regarding lack of business operations by the company.

Analysis:
1. The appellant, claiming to be the Director of a company, sought reversal of the NCLT's order dismissing the application to restore the company's name in the register of companies. The NCLT found that the company was not in operation or carrying on any business, leading to its removal under Section 248 of the Companies Act, 2013. The appellant challenged this finding as erroneous.

2. The appellant company, incorporated in 2009, failed to file financial statements and annual returns for three consecutive financial years starting from 2014, resulting in statutory non-compliance. The Registrar of Companies issued notices to the company, which went unanswered. Consequently, the company's name was struck off the register. The appellant contested this action, claiming it was unjust.

3. The appellant's counsel attempted to rely on a document regarding action against directors of shell companies, which was deemed irrelevant to the current case. The legal provision under Section 248 (1)(c) of the Companies Act, 2013 states that a company not conducting business for two preceding financial years can be removed from the register. The appellant failed to provide evidence of business operations during this period, even when asked to do so during the appeal. The lack of documentation or proof of business activities led to the affirmation of NCLT's finding that the company did not engage in any operations.

4. The NCLT's decision was upheld as the appellant could not substantiate their claim of conducting business activities during the relevant period. The absence of any material or evidence to dispute the NCLT's findings rendered the appeal lacking in merit. The appellant's failure to demonstrate the commencement of operations or financial transactions, including the absence of a bank account, further supported the NCLT's conclusion.

5. The Appellate Tribunal found no legal flaw in the NCLT's order and dismissed the appeal, stating that no grounds for interference were established. Consequently, no costs were awarded in the case. The judgment reaffirmed the importance of complying with statutory requirements and providing evidence of business operations to maintain a company's registration status.