NCLAT judgement on restoration of name of company

NCLAT: Restoration of the name of the company basis Continued operations and Commitment of completion of all outstanding Compliance

Urvashi Infrastructure Limited vs Registrar/ ROC Delhi under Section 252 of the Companies Act, 2013

Decision by: Hon'ble Justice M. Venugopal (Member (Judicial)) and Hon'ble Dr. Ashok Kumar Mishra (Member (Technical)

Facts of the case

Appellant Company (M/s Urvashi Infrastructure Limited) filed appeal before NCLT for restoration of the name of the Company under section 252 of the Companies Act, 2013 which was struck off by the order of Registrar through a Gazette Notification dated 29.10.2019, the 'Ministry of Corporate Affairs' (Registrar of Companies), published Form No. STK 7, whereby the 'List of Companies', whose names were 'Struck Off', were published and the Appellant's name appeared at Sl. No.7503 and subsequently passing the order under Section 248(5) of the Companies Act, 2013 dated 04.01.2021.

The Appellant in this appeal seeks permission from this 'Tribunal', to file the 'Income Tax Returns', for the 'Assessment Years' 2017-18, 2018-19, 2019-20 and 2020-21', since these documents were not filed before the 'Tribunal'.

This 'Tribunal', in furtherance of 'Substantial Cause of Justice', allows IA No. 339 of 2021 (filed by the 'Petitioner / Appellant' under Rule 11 of NCLAT Rules, 2016), to place on 'Record' the 'Additional Documents', since no prejudice will be caused to the Respondent (NCLT) on any score.

NCLT Observation in the Order rejecting request for restoration

The appellant company failed to bring anything on the record that company was either in operation or was doing any significant business at the time when its name was struck off from the Register of Companies by Registrar.

Arguments/Grounds of the present Appeal by the Appellant

• The Company was operational throughout the period till present day and they have changed their name in the year 2008 from Beriwal Chemicals Limited to Urvashi Infrastructure Limited and changed its object during the year 2017 for pursuing the business of infrastructure. They have stated that due to slow down in the real estate business a lot of money was stuck in the Debtors for which appellant has filed numerous legal proceedings and eight cases are pending before various courts and a sum of Rs. 18,12,500/- {'Debtors', (ranging from Rs.1,00,000/-, Rs.15,000/-, Rs.3,00,000/-, Rs.1,15,000/-, Rs.9,00,000/-, Rs.3,00,000/-, Rs.60,000/- and Rs.22,500/- respectively)} was to be recovered from the debtors. However, continued to carry on its incidental works and continued to generate 'Revenue'.
• The Company was fully Compliant Company until the demise of 2 sons of the Director –Smt. Kanta Kansal, in Feb 2018 and Jan 2020 respectively and demise of one other Director Sh. Raja Beriwal, which posed emotional challenge for the continuing Directors and inadvertence on the part of the Consultant that the Statutory Filings could not be properly followed, leading to non-filing of Financial Statements, for the period 2017-2018, 2018-2019, 2019-2020, 2020-2021 and the Annual Return for the Financial Year 2018-2019.
• The Appellant had filed Income tax returns before the Tribunal showing that incomes, salary were regularly paid:

• The Appellant further submitted that as per section 248(1) (e) of the Co. Act 2013 duty is casted upon the Respondent / Registrar of Companies, to carry out the physical verification as per 'Section 12 (9) of the Act', to ascertain whether the 'Company', is 'not carrying on any business or operations'. However, the Respondent passed an 'Order', as per Section 248 (5) of the Companies Act, without adverting to Section 248 (1) (e) of the Act.

Arguments by the Respondent

The company was not carrying on any business for a period of immediately preceding 2 years and not obtained status of Dormant Company as per section 455 of the Companies Act, 2013. It was also pointed out that demand raised by Income tax department for the AY 2008-2009 to 2017-2018 was of Rs 7740/- was also paid by the Company on 12th & 14th day of December 2020 which is after the date of striking off.

Citations cited in the pleadings

M.A. Panjwani v Registrar of Companies and Ors. (2015) 124 CLA 109 (Delhi)

Division Bench decision of Madras High Court in M.A. Rahim & Anr. v. Sayri Bai, reported in MANU/TN/O218/1973

Kesinga Paper Mills Pvt. Ltd. v Ministry of Corporate Affairs, 2010 (101) SCL 321 (Del.), the Hon'ble High Court of Delhi

Sidhant Garg and Anr. v 'Registrar of Companies and Ors.', in (2012) 171 Comp. Cas. 326

Lakshmi Rattan Cotton Mills Company Ltd. through its Director Sashank Gupta, Kanpur, Uttarpradesh v Union of India, through Secretary, Ministry of Corporate Affairs, (vide Comp. App. (AT) 239 of 2018)

M/s. Leena D. Bagwe v. The Registrar of Companies, Mumbai, CP No.1461/252/MB/2019

Foreign Decisions

Conti v Uebersee Bank AG, (2000) BCC 172 (Scotland)

Re Priceland Ltd. Waltham Foresh London Borough Council v Registrar of Companies and Ors. (1997) 1 BCLC 467, 476, 477 (Ch. D) (Companies Court)

Bayswater Trading Company Ltd. in Re (1970) 40 Comp Cas 1196 (Ch. D)

Judgment/Order passed

In para no. 48 to 50 the Hon'ble Court passed the following Judgement

"48. Be that as it may, on a careful consideration of the contentions advanced on side of the 'Appellant' / 'Company', this 'Tribunal', taking out of the fact that the 'Appellant' / 'Company' has initiated various proceedings before the Criminal Courts (8 in number) against its 'Debtors', and is to recover approximately Rs.18,12,500/- from its 'Debtors' and bearing in mind of the prime fact, 'Right' to seek the 'name' of the Company' (to be entered, in the 'Register of Companies'), is not 'Lost' or 'Extinguished', as long as 20 years had not expired and apart from these, the 'Appellant' / 'Company', in the instant 'Appeal', had unequivocally averred that in the event of 'Revival' of the 'Company' and 'Restoration' of the 'Company's name' in the 'Register', maintained by the 'Respondent', it shall file all 'Statutory Documents' Viz. 'Financial Statements' from 2016-17, 2017-18 and Financial Statement' and 'Annual Return' for 2018-19 along with Filing Fees and the Additional Fees, etc., in all 'Justness', 'Fairness', 'Equitableness' and 'Reasonableness', by exercise of 'sound discretion', deems it 'Prudent, Just and Proper', to 'Restore' the 'name' of the 'Appellant' / 'Company', and that 'Laches' / 'Omissions' / 'Lapses' ('Failures'), on the part of the 'Appellant / Company's management, in not submitting the 'filing of 'Annual Returns' and 'Financial Statements', in time, can be saddled with a 'Levy' of 'Costs', to prevent an 'Aberration of Justice', and to promote 'Substantial Cause of Justice', otherwise, it will cause 'Irreparable Harm / Hardship', 'Inconvenience' and serious 'Prejudice' to the 'Appellant' /'Company', as opined by this 'Tribunal'. However, the contrary view, arrived at by the 'National Company Law Tribunal', New Delhi Bench (Court II) in the 'impugned order' dated 04.01.2021 in Appeal No. 215 /252 (ND) / 2020, is an 'incorrect' and 'unsustainable' one in 'Law'.

Viewed from that angle, the instant 'Appeal' succeeds.

Result

49. In fine, the instant Company Appeal (AT) No. 28 of 2021 is allowed. No costs. The impugned order dated 04.01.2021 in Appeal No. 215 / 252 (ND) / 2020 (filed under Section 252 of the Companies Act, 2013), passed by the 'National Company Law Tribunal', New Delhi Bench (Court II), is set aside by this 'Appellate Tribunal', for the reasons assigned in this 'Appeal'. The 'Notice of 'Striking Off' and 'Dissolution' in Form No. STK-7 dated 29.10.2019, where the 'name' of the 'Appellant' / Company', appearing at Serial No. 7503, is set aside.

50. Before parting with the case, this 'Tribunal', pertinently points out that the 'Restoration' of the 'name' of the 'Appellant' / 'Company', is subject to its filing of all outstanding documents required by Law and completion of all 'Statutory' formalities including payment of any late fee (for the outstanding period) or any other 'charges' / 'prescribed fee', which are leviable by the 'Respondent' for late filing of 'Statutory Returns' and also on payment of cost of Rs.60,000/- (Rupees Sixty Thousand only), to be paid to the 'Prime Minister Relief Fund', within two weeks' from today, and to produce the receipt for verification, before the 'Respondent'. The 'name' of the 'Appellant Company', shall then, as a resultant effect, shall stand restored to the 'Register of the Registrar of Companies', as if the 'name' of the Company' was not 'Struck Off', in accordance with Section 248 (5) of the Companies Act, 2013.

Before parting with the case, this 'Tribunal' makes it lucidly quite clear, that in future, the 'Appellant' / 'Company', is to act with great 'Care', 'Caution' and with 'Utmost Circumspection', in regard to the 'Statutory Compliances', as per 'Law', 'Rules' and 'Regulations'.

Synopsis of the Judgment

The Hon'ble Court considering that various proceedings are pending for recovery of approximately Rs.18,12,500/- before the Criminal Courts (8 in number), and that the right to seek restoration does not lapse for 20 years from the date of strike off and that the Appellant has averred that they shall complete all outstanding compliances, passed the judgment that all pending compliances can be saddled by levy of cost (Rs.60,000 to be donated to PM Relief Fund), order of NCLT and Notice of Strike off both set-aside and company's name allowed to be restored with a statement of caution that the Company shall act with great care, caution and utmost circumspection in regard to statutory compliance as per law, rules and regulations.

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