2024 (3) TMI 292 - AT - Companies Law

Restoration of struck name of the company from its register - default in non-filing of the Financial Statements and Annual Returns - Section 248(5) of the Companies Act, 2013 - HELD THAT - Admittedly the impugned order was passed since the appellant had failed to produce documents to show it was still in possession of the asset and it had paid all water bills, electricity bills and rent receipt(s). It is submitted the financial statement could not be filed with the ROC inadvertently since father of the present directors was old and ill and it being a joint family set up with an incomplete professional/legal guidance and even their Chartered Accounts had unfortunately expired - the act of the Respondent in striking off the appellant from the rolls of ROC had caused a grave prejudice to the appellant herein, more specifically when the public notice issued by ROC was aimed at weeding out shell companies. Though the annual accounts of the years stated above though were duly prepared but could not be filed, for the reasons stated above, the non-compliance appear to be inadvertent, non-deliberate and unintentional. Admittedly the appellant is ready to comply with all the statutory provisions once the name of the company is restored by the ROC. Thus there are no reason why its name should not be restored as no prejudice would be caused to the ROC if its name is restored. It is not the case of the ROC that the appellant is a shell company or was at any time engaged in syphoning of funds. It is deemed just and equitable to restore the name of the appellant company to the record of ROC and thus the impugned order set aside to restore the name of the company to the Register of Companies subject to the compliances fulfilled - appeal alowed.

Summary

Issues Involved:
1. Legitimacy of striking off the Appellant Company by the ROC under Section 248(5) of the Companies Act, 2013.
2. Justification for restoration of the Appellant Company's name under Section 252(3) of the Companies Act, 2013.

Summary:

Issue 1: Legitimacy of striking off the Appellant Company by the ROC under Section 248(5) of the Companies Act, 2013.

The Appellant Company, incorporated in 1981, was struck off by the ROC, Delhi & Haryana, under Section 248(5) of the Companies Act, 2013, due to non-filing of Financial Statements and Annual Returns. The Tribunal dismissed the appeal, noting the absence of any material document demonstrating that the appellant was still in possession of its property or conducting business. The Tribunal relied on the decision in *Alliance Commodities Private Limited Vs. Office of Registrar of Companies, West Bengal*, which emphasized that restoration of a company's name should not be arbitrary and must be justified by the company's operational status or other equitable grounds.

Issue 2: Justification for restoration of the Appellant Company's name under Section 252(3) of the Companies Act, 2013.

The Appellant argued that the company holds substantial assets and the non-compliance was due to the ill health and subsequent death of the key managing director and the lack of legal guidance. The Appellant presented additional evidence, including financial statements, water bills, and electricity bills, to substantiate their claim of ongoing possession and intent to resume operations. The Tribunal acknowledged that the company is not a shell company and holds valuable assets, making it just and equitable to restore its name. The Tribunal referenced multiple cases, including *Durga Builders (P) Ltd Vs ROC* and *Dashmesh Impex Pvt. Ltd. & Ors. Vs ROC*, where companies with substantial assets were restored despite non-filing of returns due to exceptional circumstances.

Conclusion:

The Tribunal found that the non-compliance was inadvertent and unintentional, and the Appellant is ready to comply with statutory provisions. The Tribunal directed the ROC to restore the Appellant Company's name, subject to payment of costs and filing of all pending returns. The ROC retains the right to take punitive actions for non-filing/late filing of statutory returns/documents. The appeal was allowed to the extent of restoring the company's name.