2025 (3) TMI 1356 - HC - Companies Law

Validity of revival of struck off company - Interpretation of statute - second proviso of Section 252 of Companies Act 2013 - Striking off the name of a company from the register of companies - HELD THAT - The plain reading of second proviso to Section 252 shows that where the Registrar of Companies feels that the name of the company has been struck off from the Register of Companies either inadvertently or on the basis of incorrect information furnished (as has been stated to be the case by the Respondents in the present Petition) the Registrar of Companies may within a period of three years from the date of passing of the order dissolving such company under Section 248 of the 2013 Act file an application under Section 252 of the 2013 Act seeking restoration of the name of such company before the Tribunal. The procedure as set out in second proviso to Section 252 of the 2013 Act is that the Registrar must within a period of three years from the date of order of dissolving the company file an application before the National Company Law Tribunal seeking restoration of such company. Concededly the Respondent No. 2 has taken no such steps as are required under the provisions of the 2013 Act yet the Company was revived. In addition since the order dissolving the Company was dated 11.01.2016 such steps were required to be taken by the Respondent No. 2 within three years from such date which has also not been done. Thus the action of the Respondent No. 2 cannot be sustained. Conclusion - The Respondent No. 2 is directed to strike off the name of the company from the Register of Companies and to take all necessary steps in accordance with the law. Petition allowed.

ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment was whether the revival of the company, Ambe Organic Food Products Pvt. Ltd., after being struck off, was done in accordance with the legal provisions under the Companies Act, 1956, and the Companies Act, 2013. Specifically, the issue revolved around the application of the second proviso to Section 252 of the Companies Act, 2013, which governs the restoration of a company's name to the Register of Companies.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents

The legal framework relevant to this case includes Section 560(5) of the Companies Act, 1956, and Section 248 and Section 252 of the Companies Act, 2013. The second proviso to Section 252 of the 2013 Act is particularly pertinent as it outlines the conditions under which a company can be restored to the Register of Companies.

Court's interpretation and reasoning

The Court interpreted the second proviso to Section 252 of the 2013 Act to mean that if the Registrar of Companies believes a company was struck off either inadvertently or based on incorrect information, the Registrar must file an application for restoration with the National Company Law Tribunal (NCLT) within three years of the dissolution order. The Court emphasized that this procedural requirement was not followed by Respondent No. 2.

Key evidence and findings

The key evidence presented included the timeline of events: the company was struck off on 11.01.2016, and no application for restoration was filed by the Registrar with the NCLT within the stipulated three-year period. Additionally, the Court noted that the Petitioner No. 1 was not disqualified at the time of filing the Fast Track Exit (FTE) form, countering the Respondents' argument that the revival was justified due to the Petitioner's disqualification.

Application of law to facts

The Court applied the legal provisions of the Companies Act to the facts of the case, concluding that the revival of the company was not in compliance with the statutory requirements. The failure of Respondent No. 2 to file the necessary application with the NCLT within the prescribed timeframe rendered the revival of the company unsustainable.

Treatment of competing arguments

The Respondents argued that the revival was justified due to an error regarding the Petitioner's disqualification. However, the Court found this argument unconvincing, as the Petitioner was not disqualified at the relevant time. The Court also noted the absence of procedural compliance by the Respondents, which was a critical factor in its decision.

Conclusions

The Court concluded that the revival of the company was arbitrary and contrary to the provisions of the Companies Act. The necessary procedural steps were not taken by Respondent No. 2, and thus, the action of reviving the company could not be sustained.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning

The Court highlighted: "Concededly, the Respondent No. 2 has taken no such steps as are required under the provisions of the 2013 Act, yet the Company was revived. In addition, since the order dissolving the Company was dated 11.01.2016, such steps were required to be taken by the Respondent No. 2 within three years from such date - which has also not been done. Thus, the action of the Respondent No. 2 cannot be sustained."

Core principles established

The judgment reaffirmed the principle that procedural compliance with statutory requirements is essential for the restoration of a company's name to the Register of Companies. The Registrar must follow the procedure outlined in the Companies Act, including filing an application with the NCLT within the specified timeframe.

Final determinations on each issue

The Court allowed the petition, directing Respondent No. 2 to strike off the name of the company from the Register of Companies and to take all necessary steps in accordance with the law. The pending application was disposed of, and parties were instructed to act based on the digitally signed copy of the order.

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