2020 (12) TMI 958 - Tri - Companies Law

Restoration of the name of the Company to the Register of Companies maintained by the Registrar of Companies - the name of the company was struck off due to failure on the part of the company to file the statutory documents for Financial Year 2014-15 and 2016-17, and also for not carrying on the business - section 252 of the Companies Act, 2013 - HELD THAT - Upon perusal of the Financial Statements of the Company, it is observed that the Petitioner Company has not generated any revenue for the financial year 2014-15 and 2015-2016. The Petitioner Company has incurred Total Expenses of ₹ 19,788.00 and has Current Assets of ₹ 97,131.00 for F.Y. 2014-15. Further, Petitioner Company has incurred Total Expenses of ₹ 17,950.00 and has Current Assets of ₹ 79,181.00 for F.Y. 2015-16. The Petitioner Company has other current liabilities of ₹ 26,149.00 for F.Y. 2014-15 and 2015-16. The Bench observes that the Petitioner Company has not generated revenues. However, the Petitioner Company has Current Assets other current liabilities in its Books of Accounts. Therefore, it would be just, equitable and in the interest of justice to provide an opportunity to the company to rectify its defaults and continue the business. The Respondent Registrar of Companies, Maharashtra, Mumbai, is directed to restore the name of the Petitioner Company - Application allowed.

Issues:
1. Restoration of company's name in the Register of Companies.
2. Default in statutory compliances leading to striking off the company's name.
3. Deactivation of Director Identification Numbers (DIN) of the directors.
4. Consideration of leniency due to circumstances.
5. Financial status and performance of the company.
6. Decision on restoration and conditions imposed.

Analysis:
1. Restoration of company's name in the Register of Companies:
The Petitioner, a real estate company, filed a Company Petition seeking restoration of its name in the Register of Companies maintained by the Registrar of Companies, Maharashtra, Mumbai. The Respondent had struck off the company's name due to defaults in statutory compliances and non-operation for a specific period. The Tribunal considered the circumstances and decided to allow the restoration, subject to certain conditions.

2. Default in statutory compliances leading to striking off the company's name:
The Respondent Registrar of Companies initiated the process to strike off the company's name due to non-filing of Financial Statements and Annual Returns for multiple years, as required by the Companies Act, 2013. This led to the dissolution of the company, causing deactivation of the Director Identification Numbers (DIN) of the directors.

3. Deactivation of Director Identification Numbers (DIN) of the directors:
The deactivation of DINs of the directors occurred as a consequence of the company's name being struck off the Register of Companies. This action highlighted the serious implications of non-compliance with statutory requirements under the Companies Act.

4. Consideration of leniency due to circumstances:
The Bench considered the circumstances of the case, where the company was founded by a young individual who faced challenges in managing the business due to pursuing higher studies abroad. The Bench decided to take a lenient view and allowed restoration without requiring immediate winding up, emphasizing the importance of supporting young entrepreneurs in their business endeavors.

5. Financial status and performance of the company:
Upon reviewing the financial statements of the company, it was noted that the company had not generated revenue for certain financial years. However, the company had current assets and liabilities, indicating the potential for rectifying the defaults and continuing its business operations.

6. Decision on restoration and conditions imposed:
After considering all submissions and documents, the Tribunal found that the Petitioner company deserved restoration. The restoration order was granted with specific conditions, including the payment of a prescribed sum as cost, filing of pending financial statements and Annual Returns, and a timeline for compliance. Failure to meet these conditions would result in the automatic vacation of the restoration order.

In conclusion, the Tribunal allowed the restoration of the company's name in the Register of Companies, emphasizing the importance of rectifying defaults and providing opportunities for businesses to continue operations while upholding statutory compliance.

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