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TMI Blog2012 (10) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... can only be defunct, if it does not reply to the notice or says in reply that it does not carry on any business or is not in operation. If it asserts to the contrary, it cannot be struck off at all. Hence striking off is on the admission by the Company that it is defunct. It necessarily follows that if there is any dispute regarding the paid up capital or whether the Company does business, it cannot be declared defunct. Moreover, the petitioner, claiming to be a shareholder and director had sufficient locus to file this application - thus the order of the ROC is set aside & Company be put back in the Register of Companies immediately, by the Registrar of Companies, West Bengal. - C.P. No. 432 of 2010 - - - Dated:- 8-8-2012 - I.P. MUKERJI, J. For the Petitioner : Mr. Ratnanko Banerjee, Advocate For the Respondent : Mr. D. Basak, Advocate with Mr. Aniruddha Roy, Mr. Deepak Kr. Jain, Advocates For Registrar of Companies : Mr. Partho Sarathi Basu, Senior Advocate Ms. Shyamoli Banerjee, Advocate I.P. MUKERJI, J. Section 560 of the Companies Act, 1956 is involved in this case. It provides that if the Registrar of Companies has reasonable cause to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Registrar of Companies, West Bengal. They, it seems, made this application under section 560 of the Companies Act, describing themselves as directors of the said company. In the body of the application it was said that it was being made under the simplified exit scheme of the Central Government. What exactly was this simplified exit was neither explained to me by the learned counsel for the parties nor by the Central Government. In that application it was said that for five years the company was not doing any business. It was also said in paragraph 8 thereof that the paid up capital of the company was Rs.7,000/-. Hence, it was alleged that the company may be deemed to be defunct under Section 3(5) of the Companies Act, 1956 read with Section 560 thereof. On the foundation of this application caused to be made by an affidavit, the name of the company was struck off on 27th January, 2006. Undisputedly, the procedure mentioned in Section 560 of the said Act was not followed. The decision was made on Section 3(5) of the Act. Sections 3 (3), (4) and (5) of the said Act are very important. They are in the following terms: 3. (3) Every private company, existing on the commencemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N-3 was accepted by the Registrar of Companies, West Bengal. If this Form DIN-3 was accepted by the Registrar it goes to atleast show that such form was accepted after striking off the name of the company by the Registrar of Companies, West Bengal on 27th January, 2006. This form further shows that Nirendra Nath Kar declared himself or the company declared him to be the Director which was accepted by the Registrar after 27th January, 2006. Now, I come to the application and affidavit-in-reply of Nirendra Nath Kar affirmed on 20th September, 2011. The company was incorporated on 12th August, 1998. It was declared in the Memorandum of Association that Mr. Dave, Mr. Nikhil Merchant and Mr. Paresh Merchant would take 10 shares each in the company. The Memorandum of Association is annexed to the application. On 23rd September, 1998 there was a meeting of the Board of Directors of the company. These 30 shares were to be allotted to the above persons but would be transferred to Nirendra Nath Kar. Further to this resolution, 30 shares were duly transferred to Nirendra Nath Kar in 1998. Share transfer forms are annexed to the Affidavit-in-Reply. The date in the share transfer form was 4t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l send to the company by post a letter inquiring whether the company is carrying on business or in operation. (2) If the Registrar does not within one month of sending the letter receive any answer thereto, he shall, within fourteen days after the expiry of the month, send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been received and that, if answer is not received to the second letter within one month from the date thereof, a notice will be published in the Official Gazette with a view to striking the name of the company off the register. (3) If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or does not within one month after sending the second letter receive any answer, he may publish in the Official Gazette, and send to the company by registered post, a notice that, at the expiration of three months from the date of that notice, the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved. (4) If, in any case where a company is being would up, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor, manager or officer of the company whose name and address are known to the Registrar, may be sent to each of the persons who subscribed the memorandum, addressed to him at the address mentioned in the memorandum. (9) A notice to be sent under this section to a liquidator may be addressed to the liquidator at his last known place of business. For the application of this provision, the satisfaction of the Registrar of Companies is necessary. The satisfaction is to the effect that a particular company is not doing any business or is not in operation. Thereafter he issues two notices to the company to controvert this satisfaction. The Company may reply by saying that it is not doing business or may not reply at all. In either of these two cases, the Registrar may strike off the name of the Company, after publishing the proposal in the Official Gazette. A company or any member or creditor can challenge this decision by filing an application in the High Court (Section 560 (6) of the Act). According to the records the Registrar of Companies, West Bengal did not take recourse to sub sections (1), (2), (3) and (5) of Section 560, at all. The foundation of his decision were sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, it does seem to me that a company can only be defunct, if it does not reply to the notice or says in reply that it does not carry on any business or is not in operation. If it asserts to the contrary, it cannot be struck off at all. Hence striking off is on the admission by the Company that it is defunct. The same principle applies in the application of Section 3 (3), (4) and (5) of the Act. It necessarily follows that if there is any dispute regarding the paid up capital or whether the Company does business, it cannot be declared defunct. Moreover, the petitioner, claiming to be a shareholder and director had sufficient locus to file this application. The order of the Registrar of Companies dated 27th January, 2006 is set aside. The Company be put back in the Register of Companies immediately, by the Registrar of Companies, West Bengal. This application is allowed. Mr. Dave, Mr. Nikhil Merchant and Mr. Paresh Merchant are at liberty to approach any appropriate forum for adjudication of the rights that they claim with regard to the company. Urgent certified photocopy of this judgment/ order, if applied for, be supplied to the parties subject to compliance with all requisite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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