2009 (11) TMI 514 - HC - Companies Law

Strike name of the company off the registers - whether the company which was incorporated on 1-6-1984 had, in fact, never commenced its functioning and at any rate, it had become a defunct company from 1-2-1989? Held that - Though counter-affidavit has been filed on behalf of the respondent, he did not deny the receipt of Ext. P3 therein. Ext. P3 carries a specific request to strike off the name of the company from the registers by invoking the power under section 560(1) of the Companies Act, 1956, There is no explanation in the counter-affidavit as to why Exts. P3 and P4 carrying the aforesaid request were not considered. An authority clothed with a power is bound to exercise the same when it is called upon to exercise that. The disuse of that power is equally contemptuous as abuse or misuse of power. In the absence of a denial with regard to Ext. P3, I think the petitioner is perfectly justified in asking for a direction to the respondent to consider Ext. P3 and to take appropriate action thereon in terms of section 560(1) of the Companies Act, 1956. Therefore, there will be a direction to the respondent to pass appropriate orders on Ext. P3 by invoking the power under section 560(1) of the Companies Act, 1956

Issues:
1. Dispute over the incorporation date of the company.
2. Failure to obtain necessary licenses for manufacturing products.
3. Request to strike off the company from the register under section 560 of the Companies Act, 1956.
4. Allegations of non-compliance with filing annual accounts and documents.
5. Prosecution launched against the petitioner and the company.
6. Failure to consider the requests to strike off the company's name from the registers.

Analysis:
1. The petitioner, the Managing Director of a company, filed a Writ Petition seeking a writ of certiorari and mandamus. The main contention was the discrepancy in the incorporation date of the company, with the petitioner claiming it was on 1-6-1984 and the respondents stating it was on 2-2-1984. The company aimed to manufacture specific chemicals but faced issues obtaining necessary licenses from the Central and State Governments, hindering its operations.

2. Despite being incorporated, the company failed to commence operations due to licensing issues. The petitioner claimed the company became defunct from 1-2-1989 and made requests through various letters, including Ext. P3 and P4, to strike off the company's name from the registers under section 560(1) of the Companies Act, 1956. The respondent, however, did not take any action on these requests, leading to the Writ Petition.

3. The respondent, in a counter-affidavit, highlighted the company's non-compliance with filing annual accounts and documents, leading to the launch of a prosecution against the petitioner and the company. The respondent argued that the prosecution was in accordance with the law, citing the Company Law Settlement Scheme, 2000, which allowed defaulted companies to file pending documents.

4. The Court noted that the respondent did not deny receiving Ext. P3, which specifically requested the company's name to be struck off the registers under section 560(1) of the Companies Act, 1956. The Court emphasized that an authority with the power to strike off a company must exercise that power when requested. Hence, the Court directed the respondent to pass appropriate orders on Ext. P3 within three months, and communicated the same to the petitioner.

5. The Writ Petition was disposed of accordingly, with a stay on further proceedings until the respondent acted on Ext. P3. The judgment highlighted the importance of addressing requests made under the Companies Act promptly and in accordance with the law to ensure proper corporate governance and compliance.

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