Karam Chand Estates Pvt. Ltd. vs Registrar Of Companies (Delhi)

Karam Chand Estates Private Limited has filed the instant appeal under Section 252 of the Companies Act, 2013 with a prayer for restoring the

name of the appellant on the register of the Registrar of Companies.

It is appropriate to mention that the name of the appellant company was struck off from the register of the Registrar of Companies vide notification

dated 01.09.20:17 wherein the name of the appellant company figures at serial No. 10746 (Copy of Form No. STK-7 at pgs. 109-110). A perusal of

the averments made in the petition discloses that the appellant company was incorporated on 22.07.2004 and it has authorized share capital of Rs.

2,00,000/- (Rupees Two Lakh) divided into 20,000 equity shares of Rs. 10/- each and the same continues. The appellant company is engaged in the

business of renting of office spaces as per the provisions of the Memorandum of Association (Annexure A- I). The appellant company has been

struck off on the assumption that it is not carrying on any business or not in operation for a period of two year immediately preceding financial year as

it did not file statutory returns with the Registrar of Companies as per the provisions of the Companies Act, 2013. Admittedly there was a failure of

the appellant company to file its annual return and financial statements for the last three years preceding the date of striking off its name. The factum

of non filing of its annual return and the financial statements for the last three years has been candidly admitted by the appellant. It is however, sought

to be explained that the non submission of its annual return and the financial statements was neither intentional nor to evade any tax liability. It was

occasioned on account of lack of professional advice. The appellant company has prepared the financial statements and statutory annual returns for

the defaulting years which have been audited by the statutory auditor (Annexure A-2). It is claimed that the appellant company has been carrying on

the business since its incorporation and has also been filing its income tax return with the Income Tax Department (Annexure A-3) which leaves no

doubt that it is in operation at the time of issuing the Form No. STK-7 dated 01.09.2017. It is not a defunct company nor it is nonoperational or

dormant. It is further claimed that the striking off the appellant company by the Registrar of Companies would impair its functioning and result in loss

of jobs and business of its existing tenants including employment being provided by it.

The appellant company has placed on record the proof of business dealing in the form of license deed dated 21.07.2017 (Annexure-C), current

account statements in the RBL Bank showing transactions between 22.12.2013 to 11.09.2018 (Annexure-D), Form 26AS for the period 01.11.2017 to

01.03.2018 (Annexure-E), Municipal Tax Receipt dated 30.12.2017 issued by Municipal Corporation, Gurgaon (Annexure-F) and Auditor's Report &

Audited Balance Sheets of the appellant company for the years ending 31.03.2005 till 31.03.2017 (Annexure-G). Notices for the annual general

meetings for the years 2005-2017 along with annual returns of the appellant company have also been placed on record along with the photographs

showing its functioning.

Reply by the Registrar of Companies has been filed and it has been pointed out that the last Directors of the appellant company were Mr. Ankit

Raheja, B-11, Defence Colony, Mavana Road, MerrutCannt.-250001 & Vijay Lakshmi, B-11, Defence Colony, Mavana Road, Merrut Cannt.-250001.

The main objects stated in the Memorandum of Association have not been controverted. The Registrar of Companies has submitted that the prayer of

the appellant company be accepted if it is proved that it was carrying on business or was in operation and direction be issued to file the financial

statements up to date.

The Income Tax Department has also filed its reply accepting that the returns upto 2016-2017 have been filed and the last return was filed on

23.01.2018 and total amount of tax paid was Rs. 4,81,184/-.

We have heard learned counsels for the parties.

Having heard the learned counsels and after perusing the record it becomes evident that the appellant company has been carrying on its operation

which is adequately proved by authentic evidence of income tax returns filed upto January, 2018 whereas the appellant company was struck off from

the register of the Registrar of Companies on 01.09.2017. The aforesaid evidence is further supported by the license deed dated 21.07.2017

(Annexure-C), current account statements for the period 22.12.2013 to 11.09.2018 (Annexure-D), Form 26AS for the period 01.11.2017 to 01.03.2018

(Anncxure-E), Municipal Tax Receipt dated 30.12.2017 (Annexure-F) and Auditor's Report &Audited Balance Sheetsfor the period ending

31.03.2005 till 31.03.2017 (Annexure-G). In the face of this overwhelming evidence it is patent that the appellant company is in operation and the case

is clearly covered by the provisions of Section 252 (3) of the Act, 2013 as we are satisfied that the appellant company was carrying on business and

was also in operation at the time of its name being struck off.

The provision pertaining to restoration of the name of the company have been enumerated in Section 252 of the Companies Act, 2013, which

envisages that:-

Appeal to Tribunal

(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 appellant 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 its latest audited Balance sheets and accounts for the financial year ending 31.03.2017. It is accordingly evidently clear that the company

was in operation and was active at the time when its name was struck off.

In the facts and circumstances explained in the preceding paras we are of the view that the appellant company fulfils the requirement of Section

252(1) read with Section 252 (3) of the Companies Act which overwhelming warrants its restoration.

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

factual background and in the interest of justice the appeal filed by the appellant deserves to be allowed subject to payment of cost. Once the appeal

has been filed in time and as the Company is in operation, 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 above discussion this appeal is allowed. The notification dated 01.09.2017 (Form No. STK-7 at pgs. 109-110) wherein the name

of the appellant company figures at serial No. 10746 is hereby declared illegal to the extent it strike off the name of the appellant and the same is set

aside. The appellant company is restored to its original name. A copy of this order as per the provisions of Section 252 shall be filed by the appellant

company with the Registrar of Companies within thirty days from the date of the order and the Registrar shall then restored the name of the company

on the register of the companies and shall also issue a fresh certificate of incorporation. It is needful to say that the company would be deem to have

come back on the register of the Registrar of Companies as if it never was struck off. Since the appellant did not file the annual returns/balance

sheets which resulted in triggering of whole process it is saddled with cost of Rs. 50,000/- and the same be deposited with the ROC. It is clarified that

the cost shall not be set off against any other penal action which may be initiated by competent authority for the default of the appellant company in

accordance with law.

The appeal is disposed of accordingly.

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