Provision - Strike off company by ROC

Short Summary:

In this flash tabloid, the writer initiates by speak of the provisions of Section 248 & 242 of Companies Act, 2013 pursuant to power of ROC to struck off name of Companies from its records. The main drive of the broadsheet, on the other hand, is upon the 'Grounds available with ROC for such action, Compliance requirement by ROC etc.'

In this flash tabloid writer deliberate the verdicts of Hon'ble National Company Law Tribunal (NCLT), in some cares. This article contains the Grounds, Statutory compliance of strike off of Company by ROC suo-moto.

Introduction:

As ROC has struck off the 100,000 (One Lakh) Companies from its record. List of Companies struck off from record of ROC available at [below given link [1]]. After such strike off many professionals, Corporates has questioned the supremacy of ROC pursuant to which, ROC has remove the name of Company from its records. Several persons have filed the application in NCLT for revival of Company on the grounds that ROC has not complied with the provisions of the Act for strike off of Companies. Lots of further questions have risen in relation to such strike off of Companies. Let's study the pointes one by one;

A. Grounds of Removal of Name of Company:

Statutory Provision

Pursuant to provisions of Section 248(1) of Companies Act, 2013 ROC has power to removal of the name of Company on the below mentioned two grounds:

Where the Registrar has reasonable cause to believe that-

1. a company has failed to commence its business within one year of its incorporation; [or]
2. a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455,

Crux: One can opine that ROC can remove the name of the Company from its record on the above mentioned 2 (two) ground.

Here the Question Arise: Whether ROC can remove the name of Company from its record on the ground other then above mentioned two grounds?

B. Statutory Compliance by ROC:

Statutory Provision

Pursuant to provisions of Section 248 ROC has to comply with the following below mentioned Statutory Compliances;

1. ROC shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies; and
2. ROC requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.
3. ROC shall publish the notice in following manner:

1. Placed on the official website of the Ministry of Corporate Affairs on a separate link established on such website in this regard;
2. published in the Official Gazette;
3. published in English language in a leading English newspaper and at least once in vernacular language in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated

After Expiry of above mentioned 30 days:

1. Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette.
2. ROC before passing above order of strike off, shall satisfy himself that sufficient provision has been made for the realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time

Crux: One can opine that, If ROC suo-motto remove name of any Company from its records then it has to Comply with above mentioned statutory requirements. Here the Question Arise:

If ROC struck off the name of Company without complying with above mentioned requirements e.g. “non-publication of notice in news paper” whether Company can challenge the order of ROC in NCLT?

YES, the same has been challenged in case of International Security Printers Private Limited v/s ROC Delhi.

Case Law Detail:

Factual Background:

1. Petition filed by the International Security Printers Pvt. Ltd and challenges the order of ROC for strike off the name of the Company. ROC exercises his power for strike off of Companies.
2. Petitioner: ROC has struck off 6000 Companies.

• No notice was issued to them and neither did the roc adhere to any legal procedure which required a letter to be sent to the Company.
• The gazette notification was required to be published and the copy of the notification was required to be sent to the registered office of the Company.
• It is averred that without adhering to the aforesaid procedure, the impugned action is vitiated and is in gross violation of the principles of natural justice as no opportunity for hearing was given before taking the impugned step

Decision of the HON'BLE BENCH:

Principle of Natural Justice: ROC however have failed to prove the allegation that no step were taken in compliance of the mandatory provisions of Section 252 (4),(5),(6) which are a pre requisite for striking off the name of Company from the Registrar. In the absence of impugned action of the Respondent would be arbitrary, illegal and against the principles of natural justice.

This Petition Accepted with costs of Rs. 25,000/- to be paid to the prime minister Relief fund.

C. Power to file application with NCLT:

As per provision Section 252(1) of Companies Act, 2013 (as mentioned above) “Any Person” can file application for revival of name of Company with in limitation period of 3 (Three) years, like:

(i) Company
(ii) Member
(iii) Creditor
(iv) Employee
(v) Workmen (vi) ROC
(vii) Any other aggrieved Person

As per Proviso, if the Registrar is satisfied 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 by the company or its directors, he may within a period of three years from the date of passing of the order dissolving the company.

As per provisions of Section 252(3) If a Company is struck off from the record of the registrar, then company, or any member or creditor or workman aggrieved by the company having its name struck off may file application before NCLT for restoration of the Company with in limitation period of 20 (Twenty) years.

Ground on which roc can file application for revival of company:

Registrar of Companies can itself file the application with National Company Law Tribunal (NCLT) for restoration of name of company with in limitation period of 3 (Three) years in case of company is strike off by the ROC;

• Pursuant to inadvertent or
• On the basis of incorrect information.

Noted:

One can opine that Companies Act, 2013 provides the authority to the Registrar of Company to apply for the restoration of Name of Company with NCLT. Earlier ROC doesn't have the power pursuant to same under Companies Act, 1956.

Power of ROC in relation to filing of application for revival of Company has been discussed in:

Conclusion:

Powers are given under the Act to ROC for removal of name of Company if ROC feels that Company is not in operations. However, to use the powers ROC has to comply with the legal provisions mentioned under the Act. If ROC fails to comply with any of the statutory requirement then the Company or stake holders can challenge the decision of ROC before NCLT under Section 252 of the Act.

[1] http://www.mca.gov.in/MinistryV2/stk7publicnotices5.html