2019 (8) TMI 1002 - Tri - Companies Law

Restoration of name of Company in the Register of Companies maintained by ROC - no returns were filed for the period beginning from 2014-2015 till 2017-2018 - section 252(1) of the Companies Act, 2013 - HELD THAT - It is conclusively established that the company cannot be considered to be in operation. Further, merely some unsecured loans/investment in private companies have been made in earlier years and which have remained static, the continuity of the company as a going concern as per established business norms and accounting framework cannot be said to be in existence. Further, in view of the specific provisions of section 248(6), the liability to pay unsecured loans remain on the part of directors / other persons in the charge of the management of the company and the assets of the company are also available for the discharge of all its liabilities and obligation - Hence, the removal of the company's name from the Register of Companies cannot be a constraint / impediment for removal of the name of the company and therefore, the same cannot become a ground for restoration of the company. In the present case, it is not in dispute that company has failed to file the returns and annual financial statements and has also not obtained the status of a dormant company prior to striking off the name of the company from the register of companies. The company and/or its directors have also not responded to the notice issued by Registrar of Companies under section 248(1) of the Companies Act, 2013 - There is also no valid ground for restoration of the name of the company for the reason that it caused great hardship to the directors of other companies as they have come to this situation because of their own inaction and non-compliance. Appeal dismissed.

Issues Involved:
1. Restoration of the company's name in the Register of Companies.
2. Non-filing of annual returns and financial statements.
3. Disqualification of directors.
4. Alleged violation of fundamental rights under Article 19(1)(g) of the Constitution of India.
5. Compliance with statutory obligations under the Companies Act, 2013.

Detailed Analysis:

1. Restoration of the Company's Name in the Register of Companies:
The appeal was filed under Section 252(1) of the Companies Act, 2013, seeking restoration of Moontree Real Estates Limited in the Register of Companies maintained by the Registrar of Companies (ROC), West Bengal. The company was struck off due to non-filing of annual returns from the financial year 2014-2015 to 2017-2018.

2. Non-filing of Annual Returns and Financial Statements:
The company filed annual returns only up to the financial year 2013-2014. The ROC issued a notice under Section 248(1) of the Companies Act on 07.06.2018, and subsequently struck off the company’s name with effect from 29.06.2018. The company argued that it was unaware of the striking off until it attempted to file statutory documents. The ROC maintained that the company had not filed its balance sheets and annual returns since the financial year 2014-2015, leading to the conclusion that the company was not carrying on business or in operation.

3. Disqualification of Directors:
The company’s directors were disqualified under Section 164(2) of the Companies Act, 2013, due to non-filing of statutory returns. This disqualification also affected their ability to serve as directors in other companies. The ROC argued that the activation of the company does not automatically entitle the activation of the Directors Identification Number (DIN) of the disqualified directors.

4. Alleged Violation of Fundamental Rights under Article 19(1)(g) of the Constitution of India:
The company contended that the ROC’s action violated their fundamental right to carry on business as guaranteed by Article 19(1)(g) of the Constitution. However, the Tribunal clarified that it is not competent to deal with the constitutionality of the provisions of Section 248 on the ground of violation of fundamental rights. The Tribunal emphasized that fundamental rights are subject to reasonable restrictions prescribed by statute.

5. Compliance with Statutory Obligations under the Companies Act, 2013:
The Tribunal noted that the company had minimal financial activity and had not carried out any substantial business operations. The financial statements showed no revenue from operations and only minor other income. The Tribunal concluded that the company was not in operation, and the non-compliance with statutory obligations justified the ROC’s decision to strike off the company’s name. The Tribunal also discussed the provisions of Sections 248 and 455 of the Companies Act, 2013, highlighting the importance of compliance with statutory obligations and the criteria for striking off a company’s name from the register.

Conclusion:
The Tribunal dismissed the appeal for restoration of the company’s name, stating that the company had not been carrying on business or operations and had failed to comply with statutory obligations. The Tribunal also rejected the plea regarding the violation of fundamental rights, emphasizing the necessity of compliance with statutory requirements. The decision underscores the importance of adhering to the provisions of the Companies Act, 2013, and the consequences of non-compliance.

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