2012 (10) TMI 590 - HC - Companies Law

Struck off the name from ROC Register - application for restoration of the name opposed by ROC - whether the Company Court has power to examine the administrative action of the Registrar so envisaged under Section 560 - Held that - Authority of the Registrar to strike out a name after offering opportunity to the persons being in control of the company to justify existence and being satisfied that the company was defunct. Similarly, the aggrieved party was given right to challenge such action before the learned company Judge. The learned company Judge was competent to issue such direction and/or make such provision as seen just and proper. The invocation of the power of the learned Company Judge is stipulated under Sub-Section 6 that would enable a company or any member or a creditor feeling aggrieved by the company s name being struck off, to approach the learned Judge. Hence, the learned Judge would have to be satisfied that pre-requisites were fulfilled meaning thereby the applicant must be either of a company or a shareholder or creditor, any person not falling under any of the three categories would not be entitled to invoke this provision. Hence, the learned Company Judge, to receive an application under Sub-Section 6, must satisfy himself that the petitioner had locus to approach. As in the present case on the date of the striking off not a single document would show the nexus of the respondent no.1 with the company. He came in picture in October 2008 through filing of DIN. Documents filed after 2008 would also show, he was Director since 1998 as claimed by him. Such dispute would have to be resolved in an appropriate forum. Section 560 would not give power to the Court to adjudicate as to such dispute. The court would be relying upon the admitted records that would clearly show, respondent no.1 did not feature in the records. His belated plea would also keep him at bay. His prayer for restoration would wait for a decision in his favour on his status by a competent civil court or any other appropriate forum. The learned Judge should not have restored the name of the company at the instance of someone whose identity is yet to be established. So long he cannot establish his status he would not be entitled to invoke the provision of Section 560. The appeal succeeds and is allowed.

Issues Involved:
1. Maintainability of the appeal.
2. Procedural compliance under Section 560 of the Companies Act, 1956.
3. Locus standi of the respondent.
4. Administrative vs. judicial scrutiny of the Registrar's decision.

Detailed Analysis:

Maintainability of the Appeal:
At the commencement of the final hearing, the respondent's counsel contested the maintainability of the appeal, arguing that Section 560(6) of the Companies Act, 1956, grants superintending or appellate power to the Company Judge over the Registrar's quasi-judicial decision, which should not be subject to intra-court appeal. The appellant's counsel countered that the Registrar's decision to strike off a company's name is an administrative act and thus amenable to scrutiny by the Division Bench under Section 483 of the Companies Act, 1956, or under Clause 15 of the Letters Patent.

The court found that any order passed by a Single Judge, unless statutorily barred, is appealable based on the nature of the order. If the order affects any party's rights or controversy, it is available for scrutiny by the Division Bench. The court concluded that the appeal is maintainable as it involves the finality of the respondent's locus standi, making it a "judgment" within the meaning of Clause 15 of the Letters Patent.

Procedural Compliance under Section 560:
The court examined whether the Registrar followed the procedural requirements under Section 560 of the Companies Act, 1956, before striking off the company's name. The provision mandates the Registrar to send notices and wait for statutory periods to receive a reply. If the company does not respond or admits it is not carrying on business, the Registrar may strike off the name. The learned Single Judge initially restored the company's name due to procedural irregularities, but another Judge later recalled this order, citing inordinate delay and lack of interference grounds.

The court emphasized that the Registrar must follow the procedure laid down in Section 560, including sending notices and waiting for responses. The Registrar admitted procedural lapses, and the court noted it is the Registrar's responsibility to correct these mistakes.

Locus Standi of the Respondent:
The respondent's locus standi was a significant issue, with the appellant's counsel arguing that the respondent's identity and connection to the company were not established in the Registrar's records. The respondent only appeared in the records in October 2008, two years after the company's name was struck off. The court highlighted that the learned Company Judge must be satisfied that the applicant has the locus to approach under Section 560(6), meaning the applicant must be a company, shareholder, or creditor.

The court found that the respondent's status was in dispute and should be resolved in an appropriate forum. The learned Judge should not have restored the company's name at the instance of someone whose identity is yet to be established.

Administrative vs. Judicial Scrutiny:
The court discussed the scope of the Company Judge's power under Section 560, noting that the Judge's role is to examine the administrative action of the Registrar within the four corners of the provision. The Company Judge cannot have broader powers than the Registrar and should not adjudicate disputes regarding the veracity of the company's assertion of carrying on business.

The court concluded that the learned Judge's order restoring the company's name was appealable as it reached finality concerning the respondent's locus standi. The court set aside the learned Single Judge's order and allowed the appeal, emphasizing that the respondent must establish his status in an appropriate forum before invoking Section 560.

Conclusion:
The appeal was allowed, and the judgment and order of the learned Single Judge were set aside. The court held that the respondent must establish his locus standi before the Civil Court and then ventilate his grievance under Section 560 or any other appropriate provision. The Registrar must correct procedural lapses, but the court cannot issue directions at the instance of someone whose locus is yet to be established.

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