Android Ventures Private Limited vs Registrar Of Companies, Mumbai

Per: Justice Rakesh Kumar Jain:

20.04.2023: This appeal is directed against the order dated 11.02.2020, passed by the National Company Law Tribunal, Mumbai Bench – IV (in short ‘the Tribunal’) by which an appeal under Section 252 of the Companies Act, 2013 (in short ‘the Act’) for restoration of its name to the register of the Companies maintained by the Registrar of Companies has been dismissed.

2.. Brief facts of this case are that the Appellant ‘Android Ventures Pvt. Ltd.’ was incorporated under the Companies Act, 1956 on 14.06.2012 as a private company limited by shares having Corporate Identity No. U45400MH2012PTC232142 with authorized share capital of the Company of Rs. 2,00,00,000/- divided into 20,00,000 number of equity shares of Rs. 10/- each and the issued, subscribed & paid up capital of the Company as Rs. 53,00,000/- divided into 5,30,000 number of equity shares of Rs. 10/-each, having its registered office at Kalyan, Thane, Maharashtra. The Company was incorporated for the following objects:

The name of the Company was struck off in terms of Section 248 of the Act by the Registrar of Companies, Mumbai (in short ‘Registrar’) on the ground that it had failed to file its financial statements and annual returns for the financial years 2014-15 to 2017-18, it has not been found carrying on any business and had not applied to declare itself a dormant Company under Section 455 of the Act.

It has been argued before the Tribunal that the Company is in operation from its incorporation, submitted the audited accounts for the financial year ending on 31.03.2017, 31.03.2018 and 31.03.2019 and filed an affidavit on 04.11.2019 clarifying certain points. The Tribunal sought a clarification by way of a report from the Registrar but the same was not submitted whereas it has been recorded in the order that the Company generated revenue to the tune of Rs. 98,425/- and has current assets of Rs. 1,02,59,131/- and spent an amount of Rs. 1,01,250/- towards total expenses for the financial year 2017-18. The Company also generated revenue to the tune of Rs. 2,56,243/- had current assets of Rs. 1,02,17,594/- and spent an amount of Rs. 2,60,280/- towards total expenses for the financial year 2018-19 but the Tribunal was of the opinion that the Company had generated meagre income from commission from Real estate Activity, do not have any employees, the entire amount of share capital and long-term borrowings have been invested only in shares of the other Company, namely, Artemis Properties Pvt. Ltd.. The Company also do not have any bank account and above financial position it was considered that it does not deserve to be restored in the register of the Companies and the appeal was dismissed. Aggrieved against the said order, the present appeal has been filed.

5 Counsel for the Appellant has submitted that the name of the Company can be resorted if it is found that it is in business or operation or otherwise it is just. It is argued that the Tribunal itself has found that the Company is in operation because it has generated revenue and spent amount towards expenses and also got the assets, therefore, it cannot be said that the Company is neither doing any business nor it is in operation.

On the other hand, Counsel for Respondent/Registrar has submitted that the name of the Company has rightly been struck off and the appeal has been dismissed because of the reasons that the Company is only generating meagre income, do not have any employees and is investing amount in the share capital and long term borrowings in another Company.

We have heard Counsel for the parties and perused the record.

8 As per Section 2(20) of the Act, company means a company incorporated under this Act or under any previous company law. The Registrar of the Companies gives a certificate of the incorporation to the Company in terms of Section 7(2) and as per Section 9 of the Act, from the date of incorporation mentioned in the certificate of incorporation, such subscribers to the memorandum and all other persons, as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable of exercising all the functions of an incorporated company under this Act and having perpetual succession with power to acquire, hold and dispose of property, both movable and immovable, tangible and intangible, to contract and to sue and be sued, by the said name. Section 250 of the Act deals with effect of company notified as dissolved. It says that where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that Section cease to operate as a company and the certificate of incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligation of the company. The name of the Company from the register of the Registrar of Company can be removed by the Registrar in terms of Section 248(1)(a)(c)(d)&(e). The said decision of the Registrar passed in Section 248 of the Act is amendable to appeal under Section 252 of the Act. In the present case, the order passed under Section 248 of the Act was challenged in appeal by the Appellant before the Tribunal. It is provided in Section 253 of the Act that name of the Company can be restored if it is satisfied that it was carrying on business or in operation or otherwise it is just. In the present case, the Tribunal itself noticed in para 6 of the impugned order that “it is observed that the Petitioner Company has generated revenue to the tune of Rs. 98,425/-, has current assets of Rs. 1,02,59,131/- and has spent an amount of Rs. 1,01,250/- towards total expenses for the F.Y. 2017-18. The Petitioner Company has also generated revenue to the tune of Rs. 2,56,243/, had current assets of Rs. 1,02,17,594/- and has spent an amount of Rs. 2,60,280/- towards total expenses for the F.Y. 201-19”. Since, it has been found that not only the Company is generating the revenue and spending the same and has the assets, it cannot be said that the Company is neither doing any business nor it is in operation, therefore, the shortcomings which has been noticed in Para 7 about not having employee or not having the bank account etc. can be rectified by the Company. It can also be asked to file annual returns and balance sheets alongwith requisite charges/fee as well as late fee/charges as applicable.

Therefore, in view of the aforesaid facts and circumstances, we are satisfied that the order passed by the Registrar striking off the name of the Company from the Register of the Companies is not justified as is the order of the Tribunal dismissing the appeal preferred by the Appellant. Therefore, the present appeal is hereby allowed and the impugned order is set aside, however, subject to the payment of Rs. 1 Lakh as cost which shall be deposited by the Appellant with the Registrar of the Companies, Mumbai within a period of 30 days from the date of receipt of the certified copy of this order. The Registrar shall restore the name of the Company to its register. The Appellant shall also comply with the statutory obligations of submitting the annual returns and balance sheets.