2020 (11) TMI 160 - Tri - Companies Law

Restoration of name of company in the Register of Companies - section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal 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 neither be 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. - Application allowed.

Summary

Issues:
- Restoration of name of a company struck off by the Registrar of Companies.
- Compliance with statutory requirements under the Companies Act, 2013.
- Just and equitable grounds for restoration of the company's name.
- Assessment of company's assets and operations for restoration.
- Payment of costs and publication requirements post-restoration.

Analysis:
1. Restoration of Company's Name: The appeal was filed under Section 252(3) of the Companies Act, 2013 for the restoration of the Appellant company's name, which was struck off by the Registrar of Companies, Uttar Pradesh due to default in statutory compliances. The Appellant claimed that despite some internal disputes and inadvertent reasons, they had complied with regulatory requirements and were willing to rectify the non-compliance.

2. Compliance with Statutory Requirements: The Respondent, Registrar of Companies, contended that the company failed to file annual returns and balance sheets for multiple years, leading to the striking off of the company's name. The Income Tax Authorities also reported discrepancies in the company's existence and tax filings, raising concerns about the company's compliance with legal obligations.

3. Just and Equitable Grounds for Restoration: The Tribunal assessed the facts and circumstances of the case to determine the justifiability of restoring the company's name. It was noted that the Appellant company had assets and ongoing operations, indicating that it was a going concern. The Tribunal emphasized that refusal to restore the name solely based on non-filing of annual returns would be excessive and unjust, citing precedents where such penalties were deemed inappropriate.

4. Assessment of Assets and Operations: The Appellant provided audited balance sheets demonstrating assets and revenue, supporting the claim of being an ongoing concern. The Tribunal acknowledged the existence of substantial movable and immovable assets, crucial for the company's restoration in the interest of its stakeholders.

5. Payment of Costs and Publication Requirements: The Tribunal ordered the restoration of the company's name by the Registrar of Companies, directing the Appellant to file outstanding statutory documents within a specified timeframe. Additionally, a cost of Rs. 50,000 was imposed for revival, along with publication requirements in the Official Gazette and leading newspapers, ensuring transparency and compliance with legal procedures.

6. Conclusion: The appeal was disposed of with the restoration of the company's name, subject to fulfilling prescribed conditions and payment of costs. The detailed order outlined specific steps for compliance, publication, and verification to formalize the restoration process, safeguarding the interests of the company, shareholders, and creditors as per the provisions of the Companies Act, 2013.