2021 (1) TMI 516 - Tri - Companies Law

Seeking restoration of name of the 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. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioners seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue - It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to Tribunal to consider the case subject terms and conditions. The Registrar of Companies, Karnataka, the Respondent herein, is ordered to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register of Registrar of Company, by restoring all consequential action taken by Registrar of Companies, in pursuance to the impugned, which includes restoration of DINs of its Directors if any - petition allowed.

Summary

Issues:
Restoration of Company's name on the Register of Companies.

Analysis:
The case involved a Company Petition filed under Section 252(3) of the Companies Act, 2013, seeking to restore the name of a company on the Register of Companies maintained by the Registrar of Companies, Karnataka. The petitioner, a member and director of the company, stated that the company had failed to file financial statements and annual returns for multiple financial years, leading to the initiation of proceedings to strike off the company's name from the register. The petitioner argued that the non-filing was inadvertent and sought restoration to continue business activities. The Registrar of Companies did not oppose the petition but highlighted the non-compliance and the necessary actions taken to strike off the company's name.

The Tribunal considered the provisions of the Companies Act, 2013, specifically Section 248, which empowers the Registrar of Companies to strike off a company's name for non-compliance. However, it also noted that before striking off a company, the Registrar must ensure that provisions are made for the realization of amounts due and discharge of liabilities. The Tribunal acknowledged the lawful striking off of the company's name but emphasized the importance of considering the petitioner's genuine intentions and the principles of justice and ease of doing business. Notably, there were no pending investigations against the company, and the Registrar did not oppose the restoration, leaving the decision to the Tribunal.

In its decision, the Tribunal exercised its powers under Section 252(3) of the Companies Act, 2013, and directed the Registrar of Companies, Karnataka, to restore the company's name on the register. The restoration was subject to conditions, including the filing of statutory documents with prescribed fees within a specified period, payment of costs, and compliance with the Tribunal's directions. The Tribunal emphasized the need for the company to resume business operations promptly after the restoration and clarified that the order pertained to specific violations leading to the striking off, allowing the Registrar to take further actions for any other violations or offenses committed by the company.

In conclusion, the Tribunal granted the petition for restoration of the company's name on the Register of Companies, emphasizing compliance with statutory requirements, payment of costs, and prompt resumption of business activities post-restoration. The decision aimed to balance legal compliance with considerations of justice and ease of doing business, ensuring the company's continuity while upholding regulatory standards.