2022 (8) TMI 424 - Tri - Companies Law

Restoration of the name of the Appellant Company in the register of the Registrar of Companies - Section 252 of the Companies Act, 2013 - HELD THAT - It is clearly established that the company was not undertaking business transaction before the striking off and that due to family differences the directors became negligent towards the annual filings. Moreover, the appellant has not provided sufficient documentary evidence to support its averments, that the business was in operation prior to after the striking off period. Therefore, it is concluded that the Appellant Company was neither in operation nor doing any significant business at the time when its name was struck off from the register of RoC. This Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under Section 248(5) of the Companies Act 2013 - Appeal dismissed.

Summary

Issues:
- Restoration of company name in the register of the Registrar of Companies
- Compliance with statutory requirements for filing financial statements & Annual Return
- Justification for restoration based on business operations and financial records
- Interpretation of Section 252(3) of the Companies Act, 2013 regarding restoration of struck-off companies

Analysis:
1. The appeal was filed by M/s. Llyod Logic Systems Pvt. Ltd. for restoration of its name in the register of the Registrar of Companies under Section 252 of the Companies Act, 2013. The company was struck off due to defaults in statutory compliances, specifically failure to file financial statements & Annual Return for several years.

2. The company claimed to be engaged in a wide range of business activities as per its Memorandum of Association but failed to provide concrete evidence of business operations immediately before being struck off. The directors had personal differences, leading to negligence in annual filings, and the company's financial records showed minimal revenue from operations, mainly from rental income and job work charges, resulting in losses.

3. The RoC's report indicated that the company had not filed documents for years, leading to the belief that it was not in operation. The Income Tax Department did not object to the restoration proposal, but the Tribunal emphasized the importance of demonstrating business operations or justifying restoration on other grounds as per Section 252(3) of the Companies Act, 2013.

4. The Tribunal referred to a judgment emphasizing that restoration should be based on the company being in operation or other justifiable reasons, not arbitrary decisions. In this case, due to lack of evidence of significant business operations before striking off and failure to meet statutory requirements, the Tribunal dismissed the appeal, upholding the RoC's decision to strike off the company.

5. The Tribunal concluded that the company was not carrying out substantial business activities before being struck off, and there was insufficient evidence to support claims of ongoing operations. Therefore, the appeal for restoration was dismissed, and the company's name remained struck off from the Register of Companies.