East Asia Developers Private Limited vs Registrar Of Companies

Santanu Kumar Mohapatra, Member (T)

The director of M/s. East Asia Developers Private Limited (for brevity "Company") has filed the present appeal under sub-section (3) of Section 252 of the Companies Act, 2013 seeking restoration of the name of the Company which has been struck off by the Registrar of Companies, NCT of Delhi and Haryana.

M/s. East Asia Developers Private Limited was incorporated on 18.12.2003 as a private limited company under the provisions of Companies Act, 1956. The registered office of the company was situated at 2/15 West Patel Nagar, New Delhi-1100008, within the territorial jurisdiction of this Tribunal.

It is the case of appellant that the name of the Company was struck off from the register of companies under Section 248 of the Companies Act, 2013, by a suo moto action of the Respondent, after issuing the notification under Section 248(5) in the Official Gazette dated 30.06.2017. The aforesaid action was taken on account of failure of the Company to file its statutory returns and other documents since the financial year ending 31.03.2014, giving rise to a reasonable belief that the company was not operational.

The appellant has submitted that inadvertently and without any mala fide motive the Company had failed to file the Annual Returns and financial statements for the financial year ending on 31st March, 2014, 31st March, 2015, 31st March, 2016 and 31.03.2017 with the office of the concerned Registrar of Companies in compliance of the provisions of sub-section 4 of Section 92 and sub-section 1 of Section 137 of the Companies Act, 2013.

It is further submitted that the due to default in services by the company secretary of the appellant relevant Balance Sheets could not be filed with the Respondent RoC. However, it is submitted that the company has duly prepared and audited its financial statements for the financial years 2013-14, 2014-15, 2015-16 and 2016-17 respectively. Copies of the audited Balance Sheets for the financial years ending on 31st March, 2014, 31st March, 2015, 31st March, 2016 and 31st March, 2017 have been placed on record.

It is also the case of the appellant that the Company has been filing the necessary Income Tax Returns, before Income Tax Department. Copies of acknowledgement receipts of Income Tax Returns for the Assessment year, 2013-2014, 2015-2016 and 2016-17, have been placed on record.

It is accordingly seen from the documents placed on record including the Income Tax Returns and also from a perusal of the financial statements of the company, it is manifestly established that the company has been in operation and therefore it could be said that the petitioner company is not a defunct or non-operational or dormant company within the meaning of the Companies Act, 2013.

The Registrar of Companies has filed its response and submitted that the name of the company was stuck off in terms of Section 248 (1) of the Companies Act, 2013 read with Rule 7 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016. It is further stated in the report that the action was initiated as the Company did not file the Balance Sheet and Annual Returns since 31.03.2014, which gave rise to the reasonable presumption that the Company was not in operation.

The respondent Registrar of Companies in its report stated that the company should be directed to file its pending Annual Returns and Balance Sheets till date along with the requisite late filing fee as prescribed under the law.

The Income Tax Department has also filed its report and submitted that there are some outstanding demand pending for the assessment year 2009-2010, 2010-2011 and 2011-2012 in respect of the company. In that view of the matter also the revenue interest will be safeguarded and the outstanding public dues can be recovered; once the name of the Company is restored.

The provision pertaining to restoration of the name of the company has been provided in Section 252 of the Companies Act, 2013, which envisages that: -

"Appeal to Tribunal 252. (1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies:

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(3) If a company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that the company was, at the time of its name being struck off carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies." (emphasis given)

A perusal of the aforesaid provisions shows that any person aggrieved by the order of the Registrar, notifying a company as dissolved under Section 248 is competent to move the National Company Law Tribunal. If a company or any member or creditor feels aggrieved, they would also be competent to file an appeal against the order of the ROC before the expiry of twenty years from the date of publication of order in the Official Gazette. Sub section 3 of Section 252 contemplates that one of the three conditions are required to be satisfied before exercising jurisdiction to restore company to its original name on the register of the ROC namely:

A) That the company at the time of its name was struck off was carrying on business.

B) or it was in operation

C) or it is otherwise just that the name of the company be restored on the register.

When we apply the aforesaid principles to the facts of the present case, it can be seen from the income tax returns and financial statements of the Company that the Company was carrying on business at the time when its name was struck off from the register of companies.

It is pertinent to refer here the case of Vats Association Pvt. Ltd. Vs. ROC reported in (2010) 102SCL 397 (Del), where at the time of striking off the company was flourishing but accounts could not be filed due to secretary's negligence, restoration was ordered. In the present case there are sufficient evidence to show that the company was active and running since its incorporation.

The facts of the case are also similar to the law laid down in the matter of Purushottamdass V. Registrar of Companies, Maharashtra, (1986) 60 CompCas 154 (Bom), wherein the Hon'ble Bombay High Court under the old Companies Act 1956 has held that:

"The object of Section 560(6) of the Companies Act is to give a chance to the company, its members and creditors to revive the company which has been struck off by the Registrar of Companies, within period of 20 years, and give them an opportunity of carrying on the business only after the company judge is satisfied that such restoration is necessary in the interest of justice"

In connection with the non-filing of statutory records, it is pertinent to refer to the findings of Hon'ble High Court of Delhi in the matter of Mace Platronics Pvt. Ltd. Vs. ROC, reported in (2010) 104 SCL 277 (Del), wherein it was held that:

"When the name of the company was struck off after following the prescribed procedure for non-filing of statutory records, even though the contentions of the company that the officials entrusted with responsibility of filing documents had failed to do so cannot be accepted, yet since the company was a running company and the application had been filed in time, the court had power to restore the name of the company."

As a sequel to the aforesaid discussion it is seen from the documents available on record that the company was carrying on its business and was operative at the time of its name struck off from the register. The assumption of Registrar of Companies that the company was not in operation was erroneous. Besides it is seen that the appeal has been filed within the stipulated period prescribed under Section 252 of the Act. Needless to say, that Income Tax Department and ROC have raised no specific objection against the restoration of the Company subject to filing of statutory returns with fees as prescribed. Besides nobody would be prejudiced by the restoration of the name of the Company. On the contrary the restoration is clearly in the interest of the Company. Even if the management of the Company entrusted with the responsibility of filing of statutory returns had failed to do so, yet since the Company is a running company and the application has been filed in time, the Tribunal clearly has the power to restore the name of the Company. The lapses on the part of the management in non-filing of annual returns and financial statements in time can be countered by imposing cost.

In the facts and in order to achieve the most satisfactory and fairest solution, the restoration of the running company despite its default is clearly in the interest of justice.

Accordingly, this appeal is allowed. The order of RoC dated 30.06.2017, Vide Dissolution No. ROC-DEL/248(5)/SKT-7/2879 in respect of the Company M/s. East Asia Developers Private Limited CIN No. U 45201 DL 2003 PTC 123598, is hereby set aside.

The restoration of the Company's name to the Register will however be subject to its filing of all outstanding documents required by law and completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late filing of statutory returns and also on payment of cost of Rs. 10,000/- to be paid to the Prime Minister Relief Fund. The name of the Company shall then, as a consequence, stand restored to the Register of the Registrar of Companies, as if the name of the Company had not been struck off under Section 248(5) of the Companies Act, 2013.

Let the copy of the order be served to the parties.