2020 (12) TMI 707 - Tri - Companies Law

Restoration of name of the Petitioner Company on the Register of Companies maintained by the Registrar of Companies - section 252 (3) of the Companies Act, 2013 R/w Rule 87A of the NCLT (Amendment) Rules, 2017 - HELD THAT - It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. It is true, while exercising jurisdiction of the Tribunal under the provisions of Companies Act, 2013, the Tribunal has to take into consideration the gravest economic condition prevailing in the Country due to pandemic conditions, while considering the issue especially in imposing costs. Therefore, the interest of justice would be met, if the name of Company is restored as prayed for, however, subject to conditions mentioned below. The name is restored - Application allowed.

Summary

Issues:
1. Restoration of the name of the Petitioner Company on the Register of Companies.
2. Compliance with statutory requirements and restoration of all consequential actions.
3. Payment of costs and fines for restoration.

Analysis:
1. The case involves a petition filed under Section 252 of the Companies Act, 2013 seeking to restore the name of a Company that was struck off the Register of Companies. The Company, engaged in investment and finance, faced challenges in compliance due to lack of professional support, leading to non-filing of financial statements for several years. The Directors, holding shares and disqualified under Section 164, were unaware of the compliance requirements, and the Company's operations were affected by health issues and financial losses.

2. The Registrar of Companies initiated action under Section 248(1) of the Companies Act, 2013, due to non-filing of financial statements by the Company. Notices were sent to the Company and its Directors regarding the proposed strike off, and despite no response, the name of the Company was struck off from the Register. The Registrar, while not opposing the restoration, emphasized the need for compliance with pending statutory returns and payment of costs.

3. The Tribunal, after considering the provisions of the Companies Act, 2013, acknowledged the Registrar's power to strike off non-compliant companies. However, in light of the Company's genuine intentions to continue business, the Tribunal opted for a lenient view, considering the economic challenges posed by the pandemic. The Tribunal ordered the restoration of the Company's name with specific directions, including filing statutory documents, payment of costs, and resumption of operations post-restoration.

4. The Tribunal's decision was based on the principle of ease of doing business and ensuring justice. By exercising powers under the Companies Act, 2013, the Tribunal directed the Registrar to restore the Company's name, subject to compliance with specified conditions. The judgment aimed to balance legal requirements with practical considerations, allowing the Company to rectify past non-compliances and resume operations effectively.