2022 (2) TMI 835 - Tri - Companies Law

Seeking restoration of the name of the company in the Register of Companies - Section 252(3) of the Companies Act 2013 - HELD THAT - It is seen from the documents available on record that the company was carrying on its business and was operative at the time of its name struck off from the register. The assumption of Registrar of Companies that the company was not in operation was erroneous. Besides that it is seen that the appeal has been filed within the stipulated period prescribed under Section 252 of the Act. Needless to say, that Income Tax Department and ROC have raised no specific objection against the restoration of the Company subject to filing of statutory returns with fees as prescribed. Moreover, nobody would be prejudiced by the restoration of the name of the Company. The restoration of the running company despite its default is clearly in the interest of the company, although, there is a delay in filing the annual returns as well as financial statement before the RoC, however, the same can be compensated by way of requisite late filing fees - non- filings of the annual return as well as balance sheet before the RoC were only inadvertent in nature and not willful - the impugned order passed by the RoC, whereby the name of the present appellant was struck-off from the Registrar of the Companies is hereby set aside - appeal allowed.

Issues:
1. Restoration of company name struck off by Registrar of Companies.
2. Failure to file annual returns and financial statements.
3. Jurisdiction of National Company Law Tribunal under Section 252 of the Companies Act, 2013.
4. Compliance with statutory requirements for restoration of company name.

Issue 1: Restoration of company name struck off by Registrar of Companies

The appeal was filed seeking restoration of the company's name, which was struck off by the Registrar of Companies due to non-filing of statutory returns and documents since the financial year 2015. The company argued that the failure to file annual returns and financial statements was inadvertent and not willful, attributing it to lack of professional guidance and market conditions. The appellant provided evidence of the company's operation during the relevant period, including financial statements and income tax returns, to support the claim for restoration.

Issue 2: Failure to file annual returns and financial statements

The Registrar of Companies highlighted that the company did not enclose financial statements or auditor reports with the petition. The Income Tax Department had not filed any reply. However, the appellant presented account statements and income tax return acknowledgments to demonstrate the company's operational status and compliance with tax obligations. The Registrar of Companies did not object to restoration, subject to payment of requisite late fees.

Issue 3: Jurisdiction of National Company Law Tribunal under Section 252 of the Companies Act, 2013

Section 252 of the Companies Act, 2013 allows for the restoration of a company's name if it was struck off unjustifiably. The Tribunal can order restoration if satisfied that the company was carrying on business, in operation, or restoration is just. The Tribunal analyzed the facts of the case and concluded that the company was active and running when its name was struck off, aligning with the criteria under Section 252.

Issue 4: Compliance with statutory requirements for restoration of company name

The Tribunal referred to precedents where restoration was ordered for companies facing similar circumstances of inadvertent non-compliance. Emphasizing the interest of justice, the Tribunal decided to restore the company's name, subject to the payment of a specified cost to the Prime Minister Care Fund. The decision aimed to balance the company's operational status with the need for statutory compliance, allowing for restoration while imposing penalties for the delays in filing annual returns and financial statements.

In conclusion, the National Company Law Tribunal ordered the restoration of the company's name, setting aside the Registrar's decision. The Tribunal found the non-filing of annual returns and financial statements to be inadvertent and not willful, allowing for restoration with specified conditions. The decision balanced the company's operational status with the need for compliance, ensuring the company's restoration while addressing the lapses in statutory filings.

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