2021 (9) TMI 273 - Tri - Companies Law

Restoration of name of respondent company in the register of companies - section 252 of the Companies Act, 2013 - HELD THAT - It is evident from the plea of the Appellant that it admits the default and questions the due process undertaken by the RoC in striking off the name of the Appellant Company as envisaged under Section 248 of the Companies Act, 2013. However, the Appellant is seeking restoration of its name in the register as maintained by RoC, relying on the ground that the Appellant as of date is in active business and has been preparing all its financial statements and in the circumstances, it is just that the name of the Company should be restored on the register of RoC as maintained by the Respondent. A perusal of the documents referred, reflects that the appellant has business operations which necessitate restoration of its name in the Register of Companies. The assumption of RoC that the company was not in operation was merely on grounds of non-filing of the Statutory Returns by the appellant company. The Act itself provides for redressal of these defaults - 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 in exceptional circumstances that Courts 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 restoration of the Appellant Company's name in the Register will be subject to their filing all outstanding documents for the defaulting years as required by law and completion of all formalities, including payment of any late fee or other charges which are leviable by the Respondent for the late filing of statutory returns - the appeal is allowed subject to payment of costs of ₹ 20,000/- to the Registrar of Companies.

Summary

Issues:
- Appeal under Section 252 of the Companies Act, 2013 against the striking off of a company's name
- Compliance with statutory requirements by the company
- Grounds for seeking restoration of the company's name in the register
- Documents submitted by the Appellant to support the plea for restoration
- Consideration of the plea by the Tribunal
- Decision on the appeal and conditions imposed for restoration

Analysis:
1. The appeal was filed under Section 252 of the Companies Act, 2013 challenging the order of striking off the company's name by the Respondent. The Appellant contended that the company was actively engaged in business activities related to manufacturing and trading but failed to comply with certain statutory requirements due to the physical disability of a key director.

2. The Appellants, who were members and directors of the company, argued that despite the default in filing annual returns and financial statements, the omission was not deliberate. The main director of the company had become physically disabled, leading to non-compliance with the provisions of the Companies Act, 2013. The RoC, after receiving notice, expressed no objections to the restoration of the company subject to certain terms.

3. The Tribunal considered the plea of the Appellant and the representations of the RoC. The Appellant admitted the default but questioned the process followed by the RoC in striking off the company's name. The Appellant provided various documents, including financial statements, income tax returns, bank statements, and GST returns, to demonstrate the company's active business status and financial position.

4. After reviewing the documents and circumstances, the Tribunal found that the company had legitimate business operations that warranted the restoration of its name in the Register of Companies. The Tribunal criticized the RoC's assumption that the company was not operational solely based on non-filing of statutory returns, emphasizing the need for opportunities to rectify such defaults. The Tribunal cited previous court decisions to support the view that refusal of restoration should be in exceptional cases.

5. Consequently, the appeal was allowed with the condition of paying costs to the RoC and fulfilling all outstanding requirements for the defaulting years. The restoration would be subject to completing formalities and paying any applicable fees. The Tribunal directed the immediate release of the frozen bank accounts to enable the company to resume its business operations, with the RoC instructed to comply with the restoration order promptly.

6. The application was disposed of, and the parties were to be served with a copy of the order, marking the conclusion of the Tribunal's decision on the appeal.