2020 (9) TMI 446 - Tri - Companies Law

Restoration of name of Rabia Textiles Private Limited struck off by the Registrar of Companies - Section 252(3) of the Companies Act, 2013 read with Rule 87A of the National Company Law Tribunal Rules, 2016 - HELD THAT - Appellant Company has not filed its Annual Return and Balance Sheet with RoC. Moreover, the dispute regarding Nil turnover of the company is also taken into consideration. But failure on the part of the Appellant and its Directors to adhere to the statutory compliances and also Nil turnover of the Company is attributed to a variety of reasons including adverse market conditions, financial issues etc. The documents relied upon by the Appellant unmistakably demonstrate that the Appellant Company is a living entity. The provisions pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act 2013, which includes that, if it is just and equitable to restore the name of the company in the Registrar of Companies, it may direct the ROC to restore the name in its Register - The Appellant has been able to satisfy this bench that it has certain assets which necessitate and justify the restoration of its name in the Register of Companies. A step as stringent as what has been taken at least requires an opportunity to the appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable. As per several decisions of various courts it should only be an exceptional circumstance that court should refuse restoration where the company has been struck off for its failure to file annual return as that would be excessive or inappropriate penalty for that oversight. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Appellant Company as if the name of the Company has not been struck off from the Registrar of Companies and take all consequential actions such as change of Company's status from 'Strike Off' to 'Active' (for e-filing), restoration of status of DIN etc. - Appellant Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by RoC within thirty days from the date on which its name is restored on the Register of Companies by the RoC.

Summary

Issues involved:
1. Restoration of name of a company struck off by Registrar of Companies.
2. Compliance with statutory requirements under the Companies Act, 2013.
3. Just and equitable grounds for restoration of the company's name.
4. Payment of costs and fees for revival of the company.

Issue 1: Restoration of name of a company struck off by Registrar of Companies:
The appeal was filed for restoration of the name of a company that was struck off by the Registrar of Companies, Uttar Pradesh, due to default in statutory compliances. The company had been active since its incorporation and maintained financial accounts but failed to file necessary documents with the Registrar within the prescribed time. The appellant argued that the company had assets and was carrying on business activities, justifying the restoration of its name in the records of the Registrar of Companies.

Issue 2: Compliance with statutory requirements under the Companies Act, 2013:
The Registrar of Companies stated that the company was dissolved after providing reasonable opportunity for compliance and no response was received to the show cause notice. The appellant acknowledged the failure to file annual returns and balance sheets but attributed it to various reasons such as adverse market conditions and financial issues. The Tribunal considered the documents presented by the appellant, which demonstrated the company's financial position and assets, indicating that it was a functioning entity.

Issue 3: Just and equitable grounds for restoration of the company's name:
The Tribunal examined the relevant provisions under Section 252 of the Companies Act, 2013, and found that restoration of the company's name would be in the interest of the company, its shareholders, and creditors. It was noted that the company had assets warranting restoration and that denying restoration solely based on failure to file annual returns would be excessive. The Tribunal emphasized the need for an opportunity to rectify oversights and deemed restoration appropriate in this case.

Issue 4: Payment of costs and fees for revival of the company:
The Tribunal ordered the restoration of the company's name, directing the appellant to file all statutory documents with prescribed fees within thirty days of restoration. A cost of ?50,000 was imposed for revival, to be paid online. The appellant was instructed to deliver a certified copy of the order to the Registrar of Companies and publish notices in newspapers and the Official Gazette regarding the restoration of the company, with expenses to be borne by the appellant.

In conclusion, the appeal was disposed of with the restoration of the company's name subject to compliance with the specified directions and payment of costs, emphasizing the just and equitable grounds for restoration based on the company's assets and circumstances.