Late Mr. Anand Prakash And Anr. vs Registrar Of Companies And Anr.

The present appeal was originally preferred by Late Mr. Anand Prakash and Mr. Chandra Shekhar, Directors of the company, for M/s Anil Arc

Electrodes Private Limited (for brevity the ‘Company’) before Hon’ble High Court of Delhi on 24.12.2016 by filling the petition under

section 560 of the Companies Act, 1956 against the order dated 31.05.2007 which was published in official gazette dated 23.06.2007 issued by

Ministry of Corporate Affairs passed by the Registrar of Company, respondent herein, where the name of the company was struck off from the

Register of Companies under section 560 of the Companies Act, 1956. However, the petition, before getting accepted by the Registry of High Court,

was then transferred to the National Company Law Tribunal in pursuance of notification dated 26.12.2016 issued by Ministry of Corporate Affairs

wherein section 248-252 of the Companies Act, 2013 relating to removal of names of company were notified repealing the provisions of the

Companies Act, 1956.

This Appeal is, hence, preferred by the Appellants under Section 252(3) of the Companies Act, 2013 which is pari materia with section 560 of the

Companies Act, 1956 against the order dated 31.05.2007 which was published in official gazette dated 23.06.2007 issued by Ministry of Corporate

Affairs passed by the Registrar of Company, where the name of the company was struck off from the Register of Companies under section 560 of

the Companies Act, 1956, before National Company Law Tribunal in pursuance of the notified provisions of Companies Act, 2013, with respect to

striking off and revival of the company being section 248 to section 252 of Companies Act, 2013.

During the pendency of present appeal, before the NCLT, Principal Bench, one of the appellant Mr. Anand Prakash passed away on 03.03.2017.

Thereafter, the second appellant Mr. Chandra Shekhar Gupta filed an application to bring the legal heirs of the first Appellant on record. The

Hon’ble Principal Bench allowed the said application and accordingly the legal heirs of late Mr. Anand Prakash, being Smt. Santosh Kumari, Mr.

Shailesh Gupta and Ms. Ritu Gupta, were permitted to be brought on record in compliance of the order dated 17.05.2017 passed by the Principal

Bench, National Company Law Tribunal.

The company is incorporated as a Private Limited Company under the provision of Companies Act, 1956 with the Registrar of Companies, NCT of

Delhi and Haryana on 26.12.1986 having CIN U32101DL1986PTC026491.

The company is having registered office at 4/68, Gali No. 5, Roop Nagar, New Delhi.

Authorized share capital of the Company is Rs.10,00,000/-divided into 10,000 equity shares of Rs. 100 each and presently issued, subscribed and

paid up share capital of the Company is Rs.5,13,000/- divided into 5130 equity shares of Rs. 100/- each.

The main objects of the company are:

i. To carry on the business of manufacturers, buyers, sellers, distributors, importers, exporters of and dealers in welding rods and gases of all types

meant for any industrial or non-industrial use.

And other main objects.

As per the order dated 31.05.2007 which was published in official gazette dated 23.06.2007 passed by the Registrar of Company the name of the

company was struck off from the Register of Companies in terms of provision of section 560 of the Companies Act, 1956 which are now notified as

section 248 of the Companies Act, 2013 for non- compliance of provisions of the Companies Act, 1956/2013, in respect to filing of annual returns and

financial statements, since financial year ending on 31.03.2001. The respondent has stated that the erstwhile company was in contravention of section

159 and section 200 of the Companies Act, 1956, relying on which the respondent believed that the erstwhile company was not carrying on business

and the name of the company was struck off from the Register of Companies.

The appellants have submitted that somewhere in the year 2004 the company was going through the tough phase and was bearing heavy losses due

to which the management was burdened with reviving business and the activities of the company. Therefore, from the year 2002 to 2015, the annual

returns of the company were duly prepared but the same could not be filed with the Registrar of Companies due to lack of professional guidance and

inadvertence on the part of the management of the company.

The appellants have stated that no show cause notice under section 560(1) and 560(2) of the Companies Act, 1956 was received by the Company

or any of the directors or any person on their behalf, before striking off the name of the company from the register of the companies and no

opportunity was granted to explain or reason the non-filing of the statutory records, therefore, the order has been passed against the basic principle of

natural justice.

The appellants have contended that the Registrar of Companies did not follow the procedure mentioned under section 560 of Companies Act, 1956

and Rules made there under, which clearly envisages that in order to declare a company defunct, the registrar shall send a letter to the company

inquiring whether the company is carrying on the business or not and if within one month, the registrar does not receive any reply, the registrar shall

within 14 days after the expiry of one month, send a second letter stating no reply has been received to the first letter sent to the company and if reply

to the second letter is also not received from the company by the registrar shall within one month has to publish a notice in official gazette to strike off

the name of the company from the register of companies and copy of such notice had to be send to the company by registered post stating that at the

expiry of the three months from the date of the first notice, name of the company will be struck off from the register unless the cause for the contrary

is shown. However, further on the expiry of the period of three months as mentioned in the notice the registrar shall strike off the name of the

company and publish the notice thereof in the official gazette and the company shall stand dissolved. The appellants have further stated that none of

the procedure mentioned above has been followed by the registrar of companies and hence no opportunity was afforded to the appellants to explain or

to give reason and defend against such drastic step, thus violating the principles of natural justice and equity.

However, without going into the controversy of the latches in following the due procedure of law by Registrar of Companies before the final act of

striking off, the name of the company from the register of companies maintained by Registrar of Companies, for non-filing of statutory documents by

company for the relevant period, the appellants have preferred to submit the records and requesting that it is “just†as defined under section

252(3) that the name company be revived. The appellants have also relied upon various judgements of High Courts and views taken by the National

company Law Tribunal in number of cases where though the company was not in operation but was holding/ owning immovable property, the

Court/Tribunal is vested with ample powers to revive the company under the “just†ground as contemplated under section 560 of Companies Act

1956 as well as section 252(3) of Companies Act ,2013.

The appellants stated that they have filed this appeal in the interest of the shareholders and other stakeholders, that the name of the company may

be restored and the company is allowed to file all the statutory documents and get back to the active status in order to reap the benefits of the present

assets in the form of immovable property owned in the name of the company.

The case of the Appellants is that due to slump in business, the management was burdened with reviving business and the activities of the

company and because of lack of professional guidance and inadvertence on the part of management there was non-compliance in filing Statutory

Documents. However, the appellants intend to carry out the business in this company. Further, there is immovable property in name of the company of

which the appellants have submitted the copy of the sale deed, dated 28.08.1987, situated at village Sarwarkhera, Tehsil Kashipur, Nainital purchased

for Rs. 1,05,000/- which is paid through cheque as back as soon, in 1987 after incorporation and the copy of khatoni, dated 20.09.2017 duly attested by

Tehsil Kashipur, reflecting the name of the company as the owner, in records of land is annexed. The copies of financial statements for the period

2002-2017 are also submitted by the appellant. It is further stated that last income tax return of the company was filed in 2000 and thereafter no

returns are filed.

It is a peculiar case that the name of company is struck off on 23.06.2007 under the provision of the Companies Act, 1956 as per claim of the

appellant the company directors /management came to know about the striking off the name of the company from the registers of the companies only

in August 2016. The petition for revival was filed in December 2016 by the Appellants under section 560 before Hon’ble High court of Delhi.

Thereafter due to repealing of the provisions of the Companies Act, 1956 and notifying the provisions of Companies Act, 2013, came into force.

Section 560 (a) to (c) of the Companies Act, 1956 and section 248 to 252 of Companies Act, 2013 deals with the provisions with respect to procedure

for striking off the name of the company by Registrar of Companies as well as revival thereafter of the name of the company.

While considering the revival of the company, it is required to check the compliance by the company of the provisions mentioned for revival under both

the Companies Act, 1956 and the Companies Act, 2013 which are mainly:

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

ii. Or it was in operation

iii. Or it is otherwise just that the name of the company be restored on the register.

In present case it is already admitted by the Appellants that the Company was not in operation and was not doing business which is also seen from the

period of non-filing of the statutory documents from 2001 to 2018.

It is also admitted by the Appellants that though the company was struck off in the year 2007, the fact of the Company being struck off came to the

knowledge management of the Company only in and around August 2016 when after long period of vacuum in respect of filing statutory records,

company took initiative of filing the statutory documents from 1998 to 2016, the documents could not be uploaded. The management came to know the

reason being status of the Company shown in master data as “struck off†after the appellants filed the filing an application, dated 15.09.2016, to

Registrar of Companies under Right to Information Act, 2005 whereby the Registrar of Companies informed the Appellants vide their letter dated

14.10.2016 the name of the company has been struck off under section 560 of Companies Act, 1956.

The moot question now arises that what is the status of activities and/or operations of the Company from 2007 till date. From the records it is seen

that the Company has not been in operations since 1998 in true sense except holding on an immovable property purchased on 28.08.1987. Thus, the

only reliance placed by the Appellants seeking revival of the company is an immovable property owned and possessed by the company till date. The

legal heirs of one of the Appellants have also filed an affidavit in support of revival of the Company and proposing to bring Company in actions and

showing themselves as being interested parties and proposed shareholders as per the will of deceased directors which is placed on record by the heirs.

It is further submitted by the Appellants that the failure to file financial statements and annual returns with the Registrar of Companies, NCT of

Delhi and Haryana was due to inadvertence on part of the management and as such there was no wilful or mala-fide motive behind non-filing of the

Financial Statements and Annual returns. Therefore, it is humbly prayed by the appellant that an opportunity be granted to the appellants by way of

reviving the company in the interest of the shareholders and other stakeholders of the company.

The Registrar of Companies has stated that it has no objection if the name of the Company is restored on proving by the Company that it was

carrying on business or was in operation and the Company be also directed to file financial statements up to date with appropriate filing and additional

fees. The Registrar of Companies is hereby directed to inquire into the activities of the companies from financial year 2007 to 2016.

The Ld. Counsel for Income Tax Department stated that no records are available with respect to Appellant Company, and reply cannot be filed.

The present appeal was originally filed in December 2016 against the order passed by the respondent under section 560 of the Companies Act,

1956, which is reproduced as under:

“560. Power of Registrar to strike defunct company off register. - (1) Where the Registrar has reasonable cause to believe that a

company is not carrying on- business or in operation, he shall send to the company by post a letter inquiring whether the company is

carrying on business or in operation.

(2) If the Registrar does not within one month of sending the letter receive any answer thereto, he shall, within fourteen days after the expiry

of the month, send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been

received and that, if an answer is not received to the second letter within one month from the date thereof, a notice will be published in the

Official Gazette with a view to striking the name of the company off the register.

(3) If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or does not

within one month after sending the second letter receive any answer, he may publish in the Official Gazette, and send to the company by

registered post, a notice that, at the expiration of three months from the date of that notice, the name of the company mentioned therein will,

unless cause is shown to the contrary, be struck off the resister and the company will be dissolved.

(4) If, in any case where a company is being wound up, the Registrar has reasonable cause to believe either that no liquidator is acting, or

that the affairs of the company have been completely wound up, and any returns required to be made by the liquidator have not been made

for a period of six consecutive months, the Registrar shall publish in the Official Gazette and send to the company or the liquidator, if any,

a like notice as is provided in subsection (3).

(5) At the expiry of the time mentioned in the notice referred to in sub- section (3) or (4), the Registrar may, unless cause to the contrary is

previously shown by the company, strike its name off the register, and shall publish notice thereof in the Official Gazette; and on the

publication in the Official Gazette of this notice, the company shall stand dissolved: Provided that-

(a) the liability, if any, of every director, the managing agent, secretaries and treasurers, manager or other officer who was exercising any

power of management, and of every member of the company, shall continue and may be enforced as if the company had not been dissolved;

and

(b) nothing in this sub- section shall affect the power of the Court to wind up a company the name of which has been struck off the register.

(6) If a company, or any member or creditor thereof, feels aggrieved by the company having been struck off the register, the Court, on an

application made by the company, member or creditor before the expiry of twenty years from the publication in the Official Gazette of the

notice aforesaid, may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise

that it is just that the company be restored to the register, order the name of the company to be restored to the register; and the Court may,

by the order, give such directions and make such provisions as seem 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.

(7) Upon a certified copy of the order under sub- section (6) being delivered to the Registrar for registration, the company shall be deemed

to have continued in existence as if its name had not been struck off.

(8) A letter or notice to be sent under this section to a company may be addressed to the company at its registered office, or if no office has

been registered, to the care of some director, the managing agent, secretaries and treasurers, manager or other officer of the company, or

if there is no director, managing agent, secretaries and treasurers, manager or officer of the company whose name and address are known

to the Registrar, may be sent to each of the persons who subscribed the memorandum, addressed to him at the address mentioned in the

memorandum.

(9) A notice to be sent under this section to a liquidator may be addressed to the liquidator at his last known place of business.â€​

It is case of the Appellants that the respondent has not followed the due procedure of law as prescribed under section 560 of Companies Act,

1956 and has not accorded the opportunity to the Appellants of being heard which is against the process of natural justice. The said claim of the

appellants is neither disputed nor rebutted by the Registrar of Companies. On the contrary Registrar of Companies has pleaded that the company may

be revived if the satisfy the provisions of law.

Also, the grounds contemplated under section 252 of Companies Act, 2013, namely, that of the company carrying on business or was in operation

at the time of striking off its name, and where it appears “just†to the adjudicating authority that the name of the company is to be restored to the

Register of Companies. It is also seen from the perusal of the provisions under Section 252(3), that if Tribunal is of the opinion it is “just†that the

name of the company is to be restored to the register of companies maintained by Registrar of Companies, such orders can be passed for the name of

the company to be so restored. For reference, the provisions of Section 252(3) of the Companies Act, 2013 is extracted hereunder:

252(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.

The appellant has relied on the following Judgements, namely, order of the Honourable High Court of Guwahati in Company Petition 24/2012

dated 05.06.2017; order of Honourable High Court of Bombay in Company Petition No. 6 of 1981 dated 06.04.1994, order of Honourable High Court

of Delhi in Company Petition No. 174/2013 dated 02.12.2013; and order of Honourable High Court of Delhi in Company Petition No. 200 of 2011

which in brief can be summarised and ratio can be drawn as follows:

In aforementioned decisions, while construing Section 560(6) of the Companies Act, 1956 which is pari materia to present Section 252(3), as extracted

above of the Companies Act, 2013, it has been held that the word “just†has to be understood in the background of the specific language of the

sub-section not on the basis of the principle of ejusdem generis. Further, the aforementioned judgements therein elucidates that apart from the situation

in which the company court can order restoration namely (i) when the company was carrying on business or was in operation at the time of striking

off its name there exists an alternative situation (ii) where it appears “just†to the company court that the name of the company be restored to the

register and that the rule of ejusdem generis will not apply because of the presence of the words “or otherwise†between the words thereby

providing for the following two types of situations. Further, the grounds for restoration as earlier provided Section 560(6) of Companies Act, 1956 has

been retained as such without any change by the Legislature from which the intention of Legislature can be clearly gathered in the present

dispensation as well. Furthermore, it is also seen that where litigations are pending and where immovable property rights are involved and in the instant

case also the facts vouch for the similar decision, it is only proper that the name of the company be restored to the Register of Companies. Hence,

there exists a “justâ€​ ground for the restoration of the name of the appellant company in the Register of Registrar of Companies.

Accordingly, in my view this appeal deserves to be allowed in the interest of justice under the umbrella of the “Just†which has capacity to

include wider connotation. The Public Notice of Registrar of Companies striking the name of the company is set aside. The restoration of the

company’s name to the Register of Registrar of Companies is ordered subject to its filing of all outstanding documents with proper filing fees

along with additional fees required under 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 subject to payment of cost of Rs. 50,000/- to be paid to Prime Minister’s

Relief Fund. The name of the Appellants 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 accordance with Section 560 of the Companies Act, 1956.

The appeal is disposed of accordingly.

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