2021 (1) TMI 898 - Tri - Companies Law

Restoration of name of Company in the Register of Companies, maintained by the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT - Having gone through the report received on 18.12.2020 from the Registrar of Companies in the instant appeal as also all the annexures appended to the Appeal including the latest Balance Sheets and Financial Statements of the Company for the year ending 31st March 2019 and the Income Tax Return Acknowledgment for the Assessment Year 2019-2020 - Appellant sought leniency while ordering costs, for the reason that the Company is facing financial problems due to COVID-19 pandemic. This Tribunal is of the opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies - The Registrar of Companies, the respondent herein, is ordered to restore the original status of the Appellant Company, as if the name of the Company has not been struck off from the Register of Companies and take all consequential actions like change of company s status from Strike off to Active (for e-filing) and to intimate the bankers about the restoration of the name of the company so as to defreeze its accounts - Application allowed.

Issues:
1. Restoration of Company's name in Register of Companies.
2. Re-activation of Directors' DIN and defreezing of Company's accounts.
3. Compliance with statutory requirements under the Companies Act, 2013.
4. Negligence of Directors leading to strike off of Company's name.
5. Tribunal's authority to order restoration of Company's name.

Issue 1: Restoration of Company's name in Register of Companies:
The appeal sought restoration of the Company's name in the Register of Companies due to non-filing of Financial Statements and Annual Returns for the Financial Years 2017-2018 and 2018-2019. The Appellant argued that despite holding Annual General Meetings for the respective financial years, the strike off by the Registrar of Companies was due to an in-house accountant's negligence in filing the returns, not willful negligence. The Tribunal, after considering the submissions, ordered the Registrar of Companies to restore the Company's name and change its status from 'Strike off' to 'Active'.

Issue 2: Re-activation of Directors' DIN and defreezing of Company's accounts:
The Appellant requested re-activation of the Directors' DIN and defreezing of the Company's accounts upon restoration of its name in the Register of Companies. The Tribunal directed the Registrar of Companies to re-activate the DIN of the Directors and inform the bankers about the restoration to defreeze the accounts, ensuring the Company can resume its operations smoothly.

Issue 3: Compliance with statutory requirements under the Companies Act, 2013:
The Registrar of Companies highlighted that the Company failed to file Balance Sheets and Annual Returns since 2016, violating Sections 92/137 of the Companies Act, 2013. The Tribunal acknowledged the non-compliance but considered the Company's plea, ordering it to file all outstanding statutory documents within 30 days of name restoration, along with prescribed fees and fines.

Issue 4: Negligence of Directors leading to strike off of Company's name:
The ROC attributed the strike off to the Directors' negligence in not filing statutory returns within due dates and ignoring periodical notices. The Tribunal concurred with the ROC's assessment, emphasizing the Directors' failure to discharge statutory duties. Despite this, the Tribunal decided to restore the Company's name, subject to compliance with specified conditions.

Issue 5: Tribunal's authority to order restoration of Company's name:
The Tribunal invoked Section 252(3) of the Companies Act, 2013, which allows restoration of a company's name if it was carrying on business at the time of strike off or if restoration is deemed just. Relying on this provision and the facts presented, the Tribunal deemed it just and equitable to order the restoration of the Company's name, ensuring fairness and adherence to legal provisions.

In conclusion, the Tribunal's judgment in Company Appeal No. CA/121/KOB/2020 directed the restoration of the Company's name in the Register of Companies, re-activation of Directors' DIN, and compliance with statutory requirements within specified timelines. Despite acknowledging the Directors' negligence, the Tribunal balanced the interests of all parties involved, emphasizing the importance of adherence to statutory obligations while providing a pathway for the Company's revival.

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