2021 (1) TMI 5 - Tri - Companies Law

Restoration of the name of the 1st Respondent Company in the Register of Companies maintained by the Registrar of Companies, Telangana - section 252(3) of the Companies Act, 2013, read with rule 87A of the National Company Law Tribunal (Amendment) Rules, 2017 - HELD THAT - It is seen from the pleadings and documents that the Applicant not only filed the copies of income computation statements for the financial years 2016-17 and 2017-18, but also filed copy of the statement of Bank account i.e., Canara Bank A/c No. 2493201005710 for the period 01.11.2017 to 05.11.2019. Various entries in this account show day to day transactions with various parties located within and outside Hyderabad. Such transactions do support the contention of the Applicant that it is a functional, going concern - Further, the counsel for the Applicant has also submitted copies of Assets and Liabilities, Revenue figures, profit/loss figures for various years based on the Audited Financial Statements, from which it appears that the 1st Respondent Company has been doing business but failed to file Annual Returns and Income Tax Returns due to reason said in the Application. The provisions of Section 252(3) of the Companies Act, 2013 stipulate that this Tribunal may direct restoration of 1st Respondent name, if it is just and equitable to do so. In view of the averments made and evidence placed, refusal to restore will be an excessive penalty for the over-sight on the part of the 1st Respondent Company - The 2nd Respondent (ROC) is directed to restore the name of 1st Respondent Company in the Register of Companies. Application allowed.

Summary

Issues:
- Application under section 252(3) of the Companies Act, 2013 seeking restoration of company name in the Register of Companies.
- Compliance with statutory requirements and restoration of company operations.

Analysis:
1. The Company Application sought to set aside the order striking off the company's name from the register and restore it, ensuring all related persons are in the same position as before. The application also requested the delivery of orders to the Registrar of Companies (ROC) and subsequent publication in the Official Gazette. Additionally, it aimed at allowing the filing of pending financial statements and annual returns within a specified timeline.

2. The case detailed the incorporation and operations of the company, highlighting its capital structure, shareholders, and directors. It emphasized the company's compliance with meeting requirements under the Companies Act, 2013, and its financial performance over the years. The company faced strike-off due to defaults in filing financial statements and annual returns, despite efforts to sustain operations and comply with regulations.

3. The Registrar of Companies raised objections related to late filings, loan compliances, and incomplete tax returns, questioning the company's business continuity during the strike-off period. The applicant responded by submitting additional documents and ensuring future compliance, emphasizing the company's operational status and efforts to rectify the defaults.

4. After reviewing the pleadings and documents, the Tribunal acknowledged the company's financial transactions and operational status as evidenced by bank statements and financial figures. The Tribunal found the refusal to restore the company's name as an excessive penalty for the oversight in filing returns, considering the just and equitable grounds for restoration under Section 252(3) of the Companies Act, 2013.

5. The Tribunal ordered the restoration of the company's name in the Register of Companies, directing the filing of pending financial statements and annual returns, along with compliance with future regulatory requirements. The applicant was instructed to pay a specified cost to the ROC for related expenses. The order mandated the applicant to submit the restoration order to the ROC within 30 days, effectively allowing the company to resume operations and fulfill statutory obligations.

6. The judgment concluded by disposing of the Company Application, emphasizing the restoration of the company's name and the necessity for ongoing compliance with the Companies Act, 2013.