2019 (7) TMI 524 - AT - Companies Law

Restoration of name of company on the Register of Companies - failure to file the returns with the ROC from financial year 2009 onwards - jurisdiction of Registrar of Companies under Section 248 of the Companies Act, 2013 - failure to notice that the parameters set out in Section 252(3) of the Act - HELD THAT - Matrix Power has been struck off the Register of Companies on the ground of non-filing of financial statements and annual returns for the financial years 2009-10 to 2017-18, though it is not disputed that the company has filed Income Tax Returns and Bank Statements for Assessment Years 2008-09 to 2017-18, which demonstrated significant accounting transactions during the aforesaid period. The only conclusion deducible from this documentary evidence and unhesitatingly accepted by the Respondent ROC is that Matrix Power had been carrying on business and was in operation during the relevant period. It being admitted by ROC that the accounting transactions undertaken by the company qua its avowed objective were significant, the business being carried on by the company cannot be termed cosmetic or inconsequential. What stares in the face of impugned order is the fact that the Tribunal has overlooked the factum of the significant accounting transactions admittedly undertaken by the company during the relevant period justifying no conclusion other than the one that the company was in operation and carrying on business. Ironically the ROC, while admitting this factual proposition, sought to strike off the name of the company from its register ignoring and shutting out the vital evidence though in its report before the Tribunal as also before this Appellate Tribunal such proposition of fact is pleaded and reiterated. It is therefore safe to conclude that removal of name of the company from the Register of Companies was not justified as the ground projected i.e. the company was not in operation and not carrying out business during the relevant period did not exist. Respondent is directed to restore the name of M/s Matrix Power Controls India Pvt. Ltd. to the Register of Companies subject to statutory compliances being filed together with the prescribed fees and penalties leviable thereon as mandated by law - Appeal allowed.

Summary

Issues:
1. Challenge to the order declining restoration of company's name on the Register of Companies.
2. Non-filing of financial statements and annual returns by the company.
3. Dismissal of the petition for restoration due to default in filing statutory returns.
4. Justification for declining restoration based on non-compliance.
5. Evidence of company's business operations during the relevant period.
6. Consideration of significant accounting transactions and business operations.
7. Conclusion on restoration of the company's name in the Register of Companies.

Issue 1: Challenge to the order declining restoration
The Appellant, a Shareholder and Director of the company, challenged the order declining to restore the company's name on the Register of Companies. The challenge was based on improper exercise of jurisdiction by the Registrar of Companies (ROC) under Section 248 of the Companies Act, 2013, and the failure of the Tribunal to consider the parameters set out in Section 252(3) of the Act.

Issue 2: Non-filing of financial statements and annual returns
The company, 'Matrix Power Controls India Pvt. Ltd.', failed to file financial statements and annual returns for the financial years 2009-10 to 2017-18. This led to the initiation of action under Section 248(1) of the Act by the ROC, resulting in the company's name being struck off from the Register of Companies.

Issue 3: Dismissal of the petition for restoration
The Tribunal dismissed the company's petition for restoration due to its failure to file statutory returns since the financial year 2009-10 and the lack of cogent reasons for such default.

Issue 4: Justification for declining restoration
The justification for declining restoration was based on the company's non-filing of financial statements and annual returns, as well as the absence of adequate reasons provided for the default.

Issue 5: Evidence of company's business operations
The company submitted Income Tax Acknowledgments and bank statements demonstrating significant accounting transactions during the relevant period, indicating that it was in operation and carrying on business.

Issue 6: Consideration of significant accounting transactions
The Appellate Tribunal found that the company had been carrying on business and was in operation during the relevant period, supported by documentary evidence of significant accounting transactions, contrary to the Tribunal's finding that the company was not in operation.

Issue 7: Conclusion on restoration
Considering the evidence of the company's business operations, the Appellate Tribunal concluded that there was a just ground for restoration of the company's name in the Register of Companies. The appeal was allowed, and the impugned order was set aside, directing the ROC to restore the company's name subject to statutory compliances being filed within a specified period.

This detailed analysis of the legal judgment highlights the key issues involved, the arguments presented, and the ultimate decision of the Appellate Tribunal regarding the restoration of the company's name on the Register of Companies.