2021 (1) TMI 865 - Tri - Companies Law

Seeking restoration of its name in the Register of Companies - Section 252 (3) of the Companies Act, 2013 - HELD THAT - The material available on record indicates that the failure of the Company to furnish the statutory returns with the RoC was not intentional. Apparently the Company has been carrying on its operations as the financial statements would indicate. Unless the Company's name is restored it will prejudicially affect its prospects and adversely influence the Directors in their future endeavours. The promoters of the Company as well as the Appellants are keen to carry on and perform the objects of the Company in right earnest. There have been substantial investments in the project. The Company is continuing its business. Unless the name of the Company is restored in the Register of Companies it would suffer financially and pay go out of business. The directors of the company would also face disqualification. The name of the Company should be restored in the Register of Companies - Application allowed.

Summary

Issues:
1. Restoration of company name in Register of Companies under Section 252 (3) of the Companies Act, 2013.

Detailed Analysis:
The appeal before the National Company Law Tribunal, Amaravati Bench, involved a shareholder seeking restoration of the company's name in the Register of Companies for the State of Andhra Pradesh. The company, engaged in real estate activities, failed to file its Annual Returns and Financial Statements for several financial years, leading to its name being struck off by the Registrar of Companies (RoC). The appellant, a major shareholder, contended that the lapses were unintentional due to oversight and that the company was actively operating. The RoC, in its report, acknowledged the non-compliance but raised no objection to the restoration application, emphasizing the need for the appellant to file pending documents and bear costs.

The Member (Judicial) of the Tribunal, after hearing arguments and reviewing the records, noted that the company's failure to submit statutory returns was not deliberate. Recognizing the company's ongoing operations and the significant investments made, the Member concluded that non-restoration of the company's name would have adverse financial implications and could lead to director disqualification. Consequently, the Tribunal ordered the restoration of the company's name in the Register of Companies, Andhra Pradesh.

In the final order, the Tribunal allowed the appeal, setting aside the previous order striking off the company's name. The restoration was subject to conditions, including the filing of pending Financial Statements and Annual Returns, payment of costs to the Prime Minister's Relief Fund, and publication of the order by the RoC. The status of the directors was to be restored, and non-compliance with the conditions would nullify the restoration order, without limiting the RoC's authority to address any other violations by the company.

In summary, the Tribunal granted the appeal for restoration of the company's name in the Register of Companies, emphasizing the inadvertent nature of the lapses and the company's active operations. The restoration was subject to specified conditions to ensure compliance and proper functioning going forward, with a warning that failure to meet the conditions would revoke the restoration order.