2021 (5) TMI 681 - Tri - Companies Law

Seeking restoration of the name of Respondent in the Register of the Companies maintained by the ROC - Section 252(3) of the Companies Act, 2013 - HELD THAT - Order IX Rule 13 is also not attracted in any manner, in as much as no sufficient cause for non-appearance was shown. That apart, even if there is 'sufficient cause', in that event there cannot be a fresh memo of appeal, so filed by the Appellant. The very arguments so advance by the learned lawyer of the Appellant is not maintainable in any manner under facts and law. That apart, it is a matter of record that one Gopal Polymer and Impex Limited along with 2 ors. have filed a case before the Hon'ble VIII Additional District Judge Indore 67A of 2015, which corroborate the objection so made by the objector - on perusal of the sale deed so relied by the Appellant executed on 17.02.1976 in favour of M/s. Bhandari Crosfields Limited, Manglia Gram, Indore, a Company incorporated under the Indian Companies Act, having its registered office at Manglia Gram, Indore. It prima facie reflects that the sale deed was executed in favour of the company out of the proceeds receipt by the Company from its shareholders or other stakeholders, and not in favour of any individual/director/shareholder. The instant appeal is bad in the eye of law and is hereby rejected with a cost of ₹ 10,000 for suppression of material facts to be deposited in the Army Welfare Fund.

Issues Involved:
1. Restoration of the company's name in the Register of Companies.
2. Validity of the application under Section 252(3) of the Companies Act, 2013.
3. Legitimacy of the company's dissolution and subsequent revival.
4. Allegations of mismanagement and fraudulent activities by the directors.
5. Maintainability of the fresh appeal after dismissal of the previous one for non-prosecution.

Issue-Wise Detailed Analysis:

1. Restoration of the Company's Name in the Register of Companies:
The appellant, a shareholder of the company, sought the restoration of the company's name, Bhandari Crosfields Limited, in the Register of Companies maintained by the ROC, MP, and requested to change the status of the company to "Active" to enable the filing of pending financial statutory returns. The company was struck off on 27.07.2006 on an application made by the directors under Section 248(2) of the Companies Act, 2013.

2. Validity of the Application under Section 252(3) of the Companies Act, 2013:
The application was filed under Section 252(3) of the Companies Act, 2013. However, the tribunal noted that the company was struck off in 2006, when only the Companies Act, 1956 was applicable. The tribunal questioned the credibility of the claim that the company was struck off under Section 248(2) of the new Act in 2006.

3. Legitimacy of the Company's Dissolution and Subsequent Revival:
The appellant argued for the revival of the company due to the discovery of an asset (land) that had not been liquidated. The appellant did not provide a reason for the delay in filing the appeal, except that the issue came to their notice recently. The tribunal observed that the company had ceased business activities since 1995 and had not held any annual general meetings or prepared balance sheets since then, indicating that the substratum of the company had disappeared.

4. Allegations of Mismanagement and Fraudulent Activities by the Directors:
The objector, representing a group of shareholders, opposed the restoration of the company, alleging that the directors had mismanaged the company and sold all its assets, except for an 8000 square feet land, without accounting for the sale proceeds. The objector claimed that the land was fraudulently mortgaged by the directors for securing personal loans, and the proceeds were not used for the company's benefit. The objector provided evidence, including a public notice by Dena Bank and a suit filed for declaration and permanent injunction, to support their allegations.

5. Maintainability of the Fresh Appeal after Dismissal of the Previous One for Non-Prosecution:
The tribunal noted that a previous appeal (Co. Appeal No. 172/2019) filed under Section 252(3) was dismissed for non-prosecution on 16.08.2019. The appellant argued that the fresh appeal was maintainable under Order VII Rule 13 and Order IX Rule 13 of the CPC. However, the tribunal found that these provisions were not applicable, as there was no sufficient cause for non-appearance in the previous appeal, and the fresh appeal was filed after a lapse of one and a half years without any provision allowing for it.

Conclusion:
The tribunal concluded that the fresh appeal was not maintainable under the facts and law, noting that the appellant had suppressed material facts, including the dismissal of the previous appeal. The tribunal also highlighted that the land in question belonged to the company and was mortgaged to Dena Bank, making the appeal untenable. Consequently, the appeal was rejected with a cost of ?10,000 for suppression of material facts, to be deposited in the Army Welfare Fund.

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