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2021 (6) TMI 759 - AT - Companies LawSeeking restoration of name of the company in the ROC - absence of statutory filings for more than two years - Section 252 of Companies Act - HELD THAT - It is evident that the company is carrying on business and it is in operational. However, the admitted fact that the company is not filed the Annual Returns for two preceding years and the same has been admitted by the Appellant and the Company for their default showing that they are ignorant of the law. The main ground for the removal of the company from the Register of Companies is that if the company is not carrying any business or operation for a period of two immediately preceding years the ROC may issue notice to the Company calling explanation from the Company and thereafter take action in accordance with law. Non-filing of Annual Return is a default. The said default can be cured/rectified by imposing costs as per the provisions of the Companies Act, 2013. Whilst, the Company is carrying the business and if it is in operational however, non-filing the Annual Returns and the financial statement as required under law inadvertently may not be a ground for removing the name of the company - the company is in operational and as per Section 252 of the Companies Act the Learned NCLT ought to have restored the name of the Company to the Register of Companies. The SCN and any consequential order in respect of striking off the company are hereby set aside - ROC is hereby directed to restore the name of the Company i.e. Hiraj Hospitality Pvt. Ltd. on the Register of Companies - application allowed.
Issues Involved:
1. Non-filing of Annual Accounts and Annual Returns. 2. Striking off the company's name by the Registrar of Companies (ROC). 3. Appeal for restoration of the company's name to the Register of Companies. 4. Assessment of the company's operational status and financial health. 5. Compliance with statutory requirements and imposition of penalties. Issue-wise Detailed Analysis: 1. Non-filing of Annual Accounts and Annual Returns: The Appellant company failed to file Annual Accounts and Annual Returns for the Financial Years 2016-2017, 2017-2018, and 2018-2019. The company attributed this failure to a lack of professional guidance and inadvertent mistakes by the management. Despite being active and operational, the company did not comply with statutory filing requirements, leading to regulatory actions. 2. Striking off the company's name by the Registrar of Companies (ROC): The ROC, Gujarat, issued show cause notices in forms STK-1 and STK-5 due to the company's continuous non-filing of statutory returns for more than two years. The ROC struck off the company's name from the Register of Companies on 13.11.2019, citing non-compliance with Section 248(1)(c) of the Companies Act, 2013. The ROC's action was based on the company's failure to carry on business or operations for two immediate preceding financial years and not applying for dormant status under Section 455. 3. Appeal for restoration of the company's name to the Register of Companies: The Appellant sought restoration of the company's name, arguing that the company was operational and generating revenue during the disputed period. The company provided evidence of its business activities, tangible and intangible assets, and employment of 22 to 25 employees. The Appellant contended that the non-filing of statutory documents was not deliberate but due to inadvertent mistakes. 4. Assessment of the company's operational status and financial health: The NCLT dismissed the application for restoration, stating that the company did not generate income/revenue since the financial year ending 31.03.2017 and failed to provide future business plans or project reports. The NCLT noted accumulated losses and questioned the company's TDS deductions despite showing 'NIL' income. However, the Appellate Tribunal found that the company was operational, generating revenue, and had assets and employees, contradicting the ROC's claim of the company being defunct. 5. Compliance with statutory requirements and imposition of penalties: The Appellate Tribunal acknowledged the company's operational status but highlighted the admitted default in filing Annual Returns. The Tribunal emphasized that non-filing of returns is a rectifiable default, and the company should be restored to the Register of Companies upon compliance with statutory requirements. The Tribunal directed the ROC to restore the company's name and allowed the ROC to impose penalties and interest for the default in filings. Conclusion: The Appellate Tribunal set aside the NCLT's order dated 29.01.2020 and directed the ROC to restore the company's name. The company was instructed to file all outstanding financial statements, Annual Returns, and Balance Sheets. The ROC was granted liberty to impose penalties and interest for the default in filings, and the company was required to comply with all statutory requirements. The appeal was allowed with no order as to costs.
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