2020 (9) TMI 364 - Tri - Companies Law

Restoration of name of respondent in the Registrar of Companies - section 248 of the Companies Act, 2013 read with Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 - HELD THAT - The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013 which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the ROC to restore the name in its Register. The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would be neither just nor equitable - As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off to 'Active' (for e-filing), restoration of status of DIN etc. - Appeal disposed off.

Summary

Issues:
1. Restoration of name of a company struck off by Registrar of Companies.
2. Compliance with statutory requirements under Companies Act, 2013.
3. Just and equitable grounds for restoration.
4. Financial and operational status of the company.
5. Jurisdiction of National Company Law Tribunal.

Detailed Analysis:

Issue 1: Restoration of name of a company struck off by Registrar of Companies
The appeal was filed under Section 252(3) of the Companies Act, 2013 for restoration of the name of the company that was struck off by the Registrar of Companies, Uttar Pradesh. The company had been declared dormant due to default in statutory compliances regarding filing of Financial Statements and Annual Returns.

Issue 2: Compliance with statutory requirements under Companies Act, 2013
The Appellant Company contended that it had complied with all statutory filings up to the financial year ending 31.03.2014 and had also made Income Tax compliances for subsequent years. The company submitted evidence of financial accounts, audited balance sheets, and income tax returns to demonstrate its compliance with the statutory requirements.

Issue 3: Just and equitable grounds for restoration
The Tribunal found that the Appellant Company had valid reasons for its failure to adhere to statutory compliances, including adverse market conditions and financial issues. The documents presented by the company established that it was an active entity with substantial movable and immovable assets, justifying the restoration of its name in the Register of Companies.

Issue 4: Financial and operational status of the company
The Tribunal noted that the Appellant Company had assets, revenue from operations, and had been carrying on business activities since its incorporation. The Income Tax Authorities confirmed the company's compliance with tax returns, except for one year. The pending demands were deemed manageable once the company was restored.

Issue 5: Jurisdiction of National Company Law Tribunal
The Tribunal examined the relevant provisions of Section 252 of the Companies Act, 2013 and determined that it was in the interest of the Company, its Shareholders, and Creditors to restore the name of the Company. The Tribunal ordered the Registrar of Companies to restore the company's name and directed the Appellant to file all outstanding statutory documents within a specified timeframe.

In conclusion, the Tribunal granted the appeal, restored the company's name in the Register of Companies, and imposed certain conditions and costs for the restoration process, ensuring compliance with statutory requirements and justifying the restoration based on the company's financial and operational status.