J M D Hotels Private Limited vs Registrar Of Companies NCT Of Delhi And Haryana

S.K. Mohapatra, Member (T)

The directors of J M D Hotels Private Limited (for brevity “Company”) have filed the present appeal under Section 252(3) 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 J M D Hotels Private Limited was incorporated on 07.12.1999 as a private limited company under the provisions of Companies Act 1956. The registered office of the company is situated at G-6, Janak Place District Centre Janak Puri, New Delhi-110058, 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 the Registrar of Companies under Section 248 of the Companies Act, 2013, by his suo moto action, after issuing notice under Section 248(5) in STK-7 dated 08.08.2018. The aforesaid action was taken on account of failure of the Petitioner Company to file its statutory returns and other documents since financial year ending on 31.03.2015, giving rise to the reasonable belief that the company was not operational.

It is the case of the applicant company that the company was active since its incorporation and was carrying on business during the period when its name was struck-off. In support of the contention it is submitted that the company had filed its Income Tax Returns for the financial year 2014-15, 2015-16 and 2016-17 on 27.02.2016, 30.03.2017 and 31.03.2018 respectively. In addition, it is contended that the company was registered with DVAT, ESIC and EPF and was regular in paying Value Added Tax (VAT), ESI and PF. The appellants have placed on record all the relevant challans and returns in proof of the submission. In addition, Bank Statement for the period 2014-2017 has been placed on record with lot of debit and credit transactions. Besides, bills of purchases made during the relevant period have also been relied upon.

From a perusal of the Income Tax Returns and other relevant documents filed by the company and also from a scrutiny of the bank account statement of the company, it is manifestly established that the company was in operation and therefore it could be said that the Company is not a defunct or non-operational or dormant company within the meaning of Section 252 of the Companies Act, 2013.

The Registrar of Companies has filed its response on 05.10.2018 and submitted that the name of the company was stuck off as the company has not filed its financial statements since 31.03.2015. It is further stated that due steps had been taken in accordance with the statutory provisions under Section 248 (1) of the Companies Act, 2013 read with Rule 7 Rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 before striking off the name of the company from their register. 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 31.03.2015, which gave rise to the reasonable presumption that the petitioner company was not in operation.

The respondent Registrar of Companies in its report, however, has stated that the company may kindly be directed to prove that it was carrying on business or was in operation and also direct that the company will file its pending Annual Returns and Balance Sheets till date along with the requisite late filing fee as prescribed under the law.

The report of Income Tax Department filed on 03.01.2019 shows that the company has regularly filed income tax returns for the Annual years 2012-13 to 2016-17. It is also stated in the report that there are some tax dues pending to be paid by the company. Therefore, the Income Tax Department has given its no objection for restoration of the company.

The provision pertaining to restoration of the name of the company has been enumerated 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:.......................................

(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 provision shows that any person aggrieved by the order of the Registrar, notifying a company as dissolved under Section 248 is competent to file an appeal to 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 other documents filed by the appellants that the Company was carrying on business at the time when its name was struck off from the register of companies. The company has also filed with the application copies of its latest audited Balance sheets and accounts from the financial year ending 31.03.2015 to 31.03.2017. In addition, the company has enclosed its Bank statement from 2014 to 2017. It is accordingly evidently clear that the company was in operation and was active at the time of struck off.

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 enough evidence to show that the company was active and running at the time of struck off.

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.”

In the present case also 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.

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 clearly 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 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. In these factual backgrounds and in the interest of justice the appeal filed by the petitioner deserves to be allowed.

Accordingly the appeal is allowed. The notice dated 08.08.2018 in so far as the name of the appellant company shown as at entry No. 9615 bearing CIN No. U55101DL1999PTC102716 is hereby declared illegal and is set aside. 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 in terms of Section 248(5) of the Companies Act, 2013.

Liberty is granted to the respondent to proceed with penal action against the petitioner, if so advised, on account of the company’s alleged default in compliance with any provisions of the Companies Act, 2013.

The appeal is allowed accordingly.

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