2020 (12) TMI 1022 - Tri - Companies Law

Restoration of the name of the Company in the Register of Companies - section 252 of the Companies Act, 2013 Read with Rule 87A of the NCLT Rules, 2016 - HELD THAT - It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(3) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a Company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any Application within such period for obtaining the status of a dormant Company U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. The impugned order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law - The Registrar of Companies, Karnataka, the Respondent herein, is directed to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register, with restoration of all consequential action taken by Registrar of Companies, which includes restoration of DINs of its Directors. Application allowed.

Summary

Issues:
1. Restoration of the name of the Company under Companies Act, 2013.
2. Compliance with Companies Fresh Start Scheme, 2020.
3. Consideration of financial implications and business operations post-restoration.

Issue 1: Restoration of the name of the Company under Companies Act, 2013

The case involved C.P. No. 98/BB/2020 filed seeking restoration of the Company's name under the Companies Act, 2013. The Petitioner, a Promoter Director of the Company, highlighted that non-filing of Annual Returns and Financial Statements was unintentional due to lack of professional guidance. The ROC had initiated proceedings to strike off the Company's name for non-compliance. The Petitioner emphasized the importance of restoring the Company's name to continue business operations and generate revenue. The ROC did not oppose the restoration but highlighted the costs involved. The Tribunal considered the bona fide contentions of the Petitioner and the impact of striking off the Company's name on stakeholders. Despite the legality of the strike-off, the Tribunal decided to restore the Company's name, subject to specified conditions.

Issue 2: Compliance with Companies Fresh Start Scheme, 2020

The Petitioner intended to avail the Companies Fresh Start Scheme, 2020 (CFSS-2020) to rectify filing defaults. The scheme aimed to facilitate companies in rectifying non-compliances and making a fresh start. The Petitioner's inability to access the Company's frozen bank accounts hindered compliance with statutory requirements. The Tribunal acknowledged the Petitioner's intention to rectify defaults under the scheme post-restoration. The restoration order included directions for the Company to file all statutory documents with prescribed fees within 30 days of restoration, ensuring compliance with the CFSS-2020.

Issue 3: Consideration of financial implications and business operations post-restoration

The Tribunal considered the financial implications of the Company's strike-off, noting the profit before tax and potential hardships for stakeholders. The Petitioner assured post-restoration compliance with annual filings and normal business operations. The Tribunal emphasized the interest of justice, ease of doing business, and the need to restore the Company's name to mitigate losses and generate employment. The restoration order included conditions such as payment of costs, personal compliance monitoring, and prompt resumption of business operations post-restoration. The Tribunal's decision aimed to balance legal requirements with practical considerations for the Company's benefit and stakeholder welfare.

This detailed analysis of the judgment addresses the issues of restoration of the Company's name, compliance with the Companies Fresh Start Scheme, 2020, and the financial and operational considerations post-restoration.