2024 (9) TMI 710 - HC - Companies Law

Petition dismissed on the ground that the delay cannot be condoned - seeking extension of Companies Fresh Start Scheme, 2020 (CFSS 2020) by letter/notification dated 15th January, 2021 - whether the benefits of a particular scheme brought into force by the respondents as an exemption notification could be applicable to the appellant in the fact situation obtaining in the present case, it would be appropriate to consider the law in this regard? HELD THAT - It is trite that a notification granting benefit of exemptions from a regime, whether taxation or otherwise, is to be strictly construed. This of course, is dependent also on the facts of each case. The question whether party falls in the notification or in the exemption clause, has to be strictly construed and when once the ambiguity or doubt is resolved by interpreting the applicability of exemption clause strictly, the Court may construe the notification by giving full play bestowing wider and liberal construction. The Courts are to examine as to whether the party seeking such benefit under such exemption notification is found to be entitled to such benefits or not. In case, a party is found to be eligible within the conditions prescribed, the notification is to be construed liberally. In contradistinction thereto, if a party is found to be ineligible as per the conditions prescribed, the notification is to be construed strictly. All that is to be seen is the legislative intent or the economic justification behind such notification. A perusal of the CFSS 2020 dated 30th March, 2020 reveals that the benefit of exemption from charging additional fees and grant of immunity from launching prosecution on account of delay associated with certain filings was notified in respect of only those companies which were not in the excepted category as per sub clause (ix) (a) of clause 6 thereof. It is also apparent that the said benefit was to come into force with effect from 1st April, 2020 to 30th September, 2020. The scheme envisages entitlement to companies, whose restoration orders were passed between 1st December, 2020 and 31st December, 2020. It is an undoubted fact that the restoration of the name of the appellant was directed. Thus, in view of the fact that the order restoring the name of the appellant was not passed between 1st December, 2020 and 31st December, 2020, even if it is to assume replacement of NCLT with Delhi High Court , the exemption notification of extended CFSS 2020 cannot be made applicable to the appellant - the appellant was clearly not entitled to the benefit of extended CFSS 2020 and thus, this cannot be a second bite at the cherry. There are no reason to interfere with the impugned judgment and resultantly, the appeal along with pending applications, if any, is dismissed.

Summary

Issues Involved:
1. Applicability of CFSS 2020 and extended CFSS 2020 to the appellant.
2. Interpretation of the term "requisite fees in accordance with law".
3. Entitlement of benefits under Section 460 of the Companies Act, 2013.

Detailed Analysis:

1. Applicability of CFSS 2020 and Extended CFSS 2020 to the Appellant:
The appellant challenged the applicability of the "Companies Fresh Start Scheme, 2020" (CFSS 2020) and the "extended CFSS 2020" to its case. The CFSS 2020, notified on 30th March 2020, allowed companies to file belated documents without additional fees from 1st April 2020 to 30th September 2020. However, sub clause (ix)(a) of clause 6 of CFSS 2020 excluded companies against which action under section 248 of the Companies Act had already been initiated. Since the appellant's name was struck off on 29th October 2019, it fell within this excluded category and was ineligible for CFSS 2020 benefits.

The extended CFSS 2020, notified on 15th January 2021, applied to companies whose names were restored by NCLT between 1st December 2020 and 31st December 2020. The appellant argued for the substitution of "NCLT" with "Delhi High Court" to claim eligibility. However, the court held that even with this substitution, the appellant did not qualify as its restoration order was dated 11th February 2021, outside the stipulated period.

2. Interpretation of the Term "Requisite Fees in Accordance with Law":
The appellant contended that the term "requisite fees in accordance with law" in the order dated 11th February 2021 implied only the actual prescribed fees and not additional fees as a penalty. The court disagreed, stating that the learned Single Judge's order clearly required payment of requisite fees, which included additional fees as penalties, and there was no specific direction exempting the appellant from such penalties.

3. Entitlement of Benefits under Section 460 of the Companies Act, 2013:
The appellant claimed entitlement to benefits under Section 460 of the Act, which allows for condonation of delays in certain filings. The court found this argument untenable, as the CFSS 2020 and extended CFSS 2020 were themselves notifications issued under Section 460. Since the appellant was already found ineligible under these schemes, it could not seek the same benefits directly under Section 460. The court emphasized that once a party is found ineligible under a specific exemption notification, it cannot claim those benefits through another route.

Conclusion:
The court concluded that the appellant was not entitled to the benefits of CFSS 2020 or extended CFSS 2020 due to its exclusion under the specific provisions of these schemes. The interpretation of "requisite fees in accordance with law" included penalties, and the appellant's claim under Section 460 was invalid as the benefits were already addressed under the specific schemes. Consequently, the appeal was dismissed without any order as to costs.