2023 (4) TMI 14 - HC - Companies Law

Seeking restoration of name of the company in the Register of Companies (ROC) - Section 252 of Companies Act - HELD THAT - Under Section 10A of the Companies Act 2013, before commencement of business, and after incorporation, a Company has to file a declaration through one of its directors within 180 days that the share capital has been duly contributed as agreed by the subscribers to the memorandum - Under section 10A(3) of the said Act, the ROC can initiate action for the removal of the name of the company in terms of Chapter XVIII i.e. under Section 248. In the present case, the present writ petition has been premised on the ground that the notice itself was not issued, therefore, a writ petition would be liable to be entertained. It is stated that the striking off has taken place vide STK -7 issued on 13th December 2022 and published in the official gazette on 17th December 2022. For whatever reasons, the Petitioner has not approached the National Company Law Tribunal (NCLT) and has chosen to come before this Court - A perusal of Section 10A as also Section 252(3) of the said Act would show that the delay ultimately is condonable upon the payment of monetary penalty in terms of Section 10A. Even the standards that have been stipulated for restoration of the company by the NCLT is if the NCLT feels it is just that the name ought to be restored or if the company was carrying on business and was in operation. Considering the fact that the bonafides of the Petitioners are not in doubt as the companies are running companies, and the striking off has already been prejudicial to them, this Court deems it appropriate not to relegate the Petitioners to the alternative remedy under Section 252. The Petitioner shall deposit a sum of Rs.1 lakh each for each of the companies as a pro term deposit of penalty under Section 10A(2). The said deposit shall be made within one week, upon which the names of the companies shall be restored - Petition disposed off.

Summary

Issues Involved:
1. Legality of the striking off of companies' names by the Registrar of Companies (ROC).
2. Compliance with procedural requirements under the Companies Act, 2013 and associated rules.
3. Availability and appropriateness of alternative remedies.

Summary:

1. Legality of the Striking Off:
The petitions challenge the striking off of the names of three companies from the Register of Companies by the ROC under Section 248(5) of the Companies Act, 2013. The Petitioner, an ex-director of these companies, contends that the orders/notices of striking off were not properly served, violating the Act and Rules.

2. Compliance with Procedural Requirements:
The Petitioner argues that the ROC failed to serve the mandatory notice under Form STK-1 via email, despite having the directors' email addresses. The ROC asserts that all necessary provisions were complied with, including issuing notices under Section 248(1) in Form STK-1 by Speed Post, and publishing notices in the official gazette and newspapers as required by the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

3. Availability and Appropriateness of Alternative Remedies:
The ROC argues that the order of striking off is appealable under Section 252 of the Companies Act by the National Company Law Tribunal (NCLT), and many companies have sought relief through this route. The Court acknowledges this but decides not to relegate the Petitioner to the NCLT due to the prejudicial impact of the striking off on the companies' business operations.

Judgment:
The Court finds that the ROC followed the required procedures, including issuing notices by Speed Post, which is in compliance with Rule 3(2). However, considering the companies are operational and the striking off has caused significant prejudice, the Court issues the following directions:

1. The Petitioner shall deposit Rs.1 lakh for each company as a pro tem penalty under Section 10A(2) within one week, upon which the names of the companies shall be restored.
2. The companies shall make a representation under Section 248, to be considered by the ROC, who may impose penalties as per the Act and Rules.
3. Upon deposit, the ROC shall remove the freezing orders, allowing the companies to operate their bank accounts.
4. Any orders by the ROC shall be communicated to the Petitioner via email and Speed Post.
5. The Petitioners retain the right to approach the NCLT for further remedies.

The Court emphasizes that this order is specific to the unique facts of this case and should not be treated as a precedent. The petitions and all pending applications are disposed of accordingly.