2020 (11) TMI 248 - Tri - Companies Law

Restoration of name of company struck off by the Registrar of Companies - section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT - It is not in controversy that the Appellant Company has not filed its Annual Return and Balance Sheet with RoC. Moreover. the dispute regarding Nil turnover of the company is also taken into consideration. But failure on the part of the Appellant and its Directors to adhere to the statutory compliances and also Nil turnover of the Company is attributed to a variety of reasons including adverse market conditions, financial issues etc. The documents relied upon by the Appellant unmistakably demonstrate that the Appellant Company is a living entity. 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:
1. Restoration of name of a company struck off by the Registrar of Companies.
2. Compliance with statutory requirements under the Companies Act, 2013.
3. Just and equitable grounds for restoration of the company's name.
4. Assets and financial status of the company supporting restoration.
5. Procedural requirements and costs for restoration.

Issue 1: Restoration of Name of Company:
The appeal was filed under Section 252(3) of the Companies Act, 2013 for restoration of a company's name struck off by the Registrar of Companies, Uttar Pradesh. The company, involved in business activities, had its name struck off due to default in statutory compliances, leading to it being classified as a Dormant Company under Section 455(1) of the Companies Act, 2013. The appellant company argued that it had been active since incorporation and maintained financial accounts but faced miscommunication issues with auditors, resulting in non-filing of necessary documents.

Issue 2: Compliance with Statutory Requirements:
The Registrar of Companies (RoC) stated that the company was struck off after complying with the provisions of Section 248 of the Companies Act, 2013. The company failed to respond to show cause notices and did not file annual returns and balance sheets. The income tax authorities confirmed the existence of the company at its registered address but noted discrepancies in income tax filings for certain assessment years.

Issue 3: Just and Equitable Grounds for Restoration:
The Tribunal considered the appellant's submissions, including audited balance sheets, assets, and income tax returns, to establish that the company possessed substantial assets and was operational. Despite the non-filing of annual returns, the Tribunal acknowledged various reasons for non-compliance, such as adverse market conditions and financial issues, and deemed the company a living entity, justifying restoration.

Issue 4: Assets and Financial Status Supporting Restoration:
The Tribunal analyzed Section 252 of the Companies Act, 2013, and found it in the interest of the company, its shareholders, and creditors to order restoration of the company's name. The appellant demonstrated the necessity and justification for restoration based on assets and financial standing, warranting the restoration of the company's name in the Register of Companies.

Issue 5: Procedural Requirements and Costs:
The Tribunal ordered the RoC to restore the company's status from 'Strike Off' to 'Active' and directed the appellant to file all outstanding statutory documents within thirty days of restoration. Additionally, a cost of ?50,000 was imposed for revival, to be paid online. Procedural steps, such as publication in the Official Gazette and leading newspapers, were outlined for the restoration process.

In conclusion, the Tribunal allowed the appeal, directing the restoration of the company's name with specified conditions and procedural requirements to be fulfilled by the appellant and the RoC.