2021 (11) TMI 558 - Tri - Companies Law

Seeking restoration of name of appellant company in the name of register of member - section 252 of the Companies Act, 2013 read with NCLT Rules, 2016 - HELD THAT - The Appellants are seeking restoration of the name of Company in the register as maintained by RoC relying on the ground that the Company as of date is in active business and has been preparing all its financial statements and in the circumstances, it is just that the name of the Company should be restored on the register of RoC as maintained by the Respondent No. 1. A perusal of the documents, reflects that the Company has business operations which necessitate restoration of its name in the Register of Companies. The assumption of RoC that the company was not in operation was merely on grounds of non-filing of the Statutory Returns by the appellant company. The Act itself provides for redressal of these defaults. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file financial statements would neither be just nor equitable. The appeal is allowed subject to payment of cost of ₹ 20,000/- (Rupees Twenty Thousands Only) to the ROC, with which the appellant is registered for incurring the expenses for the restoration of the Appellant. The restoration of the Appellant Company's name in the Register will be subject to their filing all outstanding documents for the defaulting years as required by law and completion of all formalities, including payment of any late fee or other charges which are leviable by the Respondent for the late filing of statutory returns - Appeal allowed.

Summary

Issues:
Appeal against striking off company name under Companies Act, 2013.

Analysis:
1. The appeal was filed against an order striking off the name of the company by the Registrar of Companies (RoC) due to non-filing of necessary e-forms. The Appellants argued that the failure to file was unintentional and that the company had been active and compliant with the Companies Act, 2013. They claimed they did not receive any show cause notice before the action was taken.

2. The RoC justified the striking off, stating it was due to the company not conducting business for two consecutive financial years. The RoC requested the Appellant Company to prove it was carrying out business operations during that period.

3. The RoC filed an affidavit supporting the striking off decision. The tribunal directed the appellants to provide an undertaking regarding any pending dues to the Income Tax Department. The Appellants complied by submitting the undertaking to settle all pending tax demands.

4. After reviewing the documents provided by the Appellants, including financial statements, bank statements, income tax returns, and other relevant documents, the tribunal found that the company had been conducting business operations. The tribunal criticized the RoC's decision based solely on non-filing of statutory returns and emphasized the need for opportunities to rectify such defaults.

5. The tribunal allowed the appeal, subject to the payment of costs for restoration. The Appellant Company was required to file all outstanding documents for the defaulting years, pay any late fees, and complete all formalities for restoration. The company's name would be restored in the RoC register as if it had not been struck off. The Income Tax Department retained the right to take action against the company as per the law.

6. The tribunal also directed the immediate release of frozen bank accounts to enable the company to resume its business operations. The RoC was instructed to comply with the restoration order within one week of the Appellant's compliance.

7. The application was disposed of, and the parties were to be served with a copy of the order for compliance and information.