M/s Shree Balaji (India) Pvt Ltd vs Registrar of Companies, Odisha

JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)

The present appeal has been instituted by Shree Balaji India Private Limited (“Appellant”) impugning the order dated 28 December 2020 passed by the Ld. NCLT, Cuttack Bench in CP (Appeal) No. 149/CTB/2020.

The Appellant filed an appeal under Section 252(3) challenging the Registrar of Companies (“ROC”) decision dated 25 August 2018 to strike off the Appellant from the register of companies, which was purportedly taken under Section 248(1)(c) of the Act.

The Appellant was in the business of screening and crushing iron ore in Odisha. In 2012-2013, the Departments of Mines & Geology, Government of Odisha imposed restrictions on setting up or continuing crusher units within 10km of existing Iron Ore Mineral Concessions if the company does not own a lease in its name. This restriction directly impacted the business of the Appellant, the Appellant accordingly had to cease its prime business activity.

Given the Appellant’s prime business activity came to an end, the Appellant was unable to ensure regular filing of its returns. Citing the Appellant’s failure to file returns after March 2015, the ROC vide order dated 25 August 2018 struck off the Appellant from the register of companies. The Appellant thereafter filed CP (Appeal) No. 149/CTB/2020 under Section 252(3) of the Companies Act seeking restoration and it was dismissed by the Impugned Order.

The Learned counsel for the Respondent argued the company was not filing its Statutory Return i.e. Balance Sheets and annual Returns since the financial year ended 31.03.2015, hence the Registrar having reasonable cause to believe that the above named company is not carrying on any business or in operation for a period immediately preceding last financial years and has not made any application within such period for obtaining the status of a Dormant Company under Section 455 of the Companies Act, 2013 and issued Notice in Form No.STK-I under Section 248(1)(c) of the Companies Act, 2013 to the Companying enquiring whether the said company was carrying on any business or was in operation, but no reply to the said show cause notice was received by this office. Subsequently this office published in the official gazette and newspaper for the information of the general public regarding strike off the name of the said company. Finally after the expiry of the time mentioned in the above notice the Registrar struck off the name of aforesaid company from his register and published the same in Form No.STK-7 in the Official Gazette dated 25.08.2018 and on the publication of such Notice in the Official Gazette, the company stood dissolved on and from 27.07.2018. Heard.

However, the learned counsel for the appellant argued the appellant company be restored since it holds assets and is carrying on business activity. It is submitted as on 31.01.2021 the appellant had a bank balance of Rs.5,04,130.61 with ICICI Bank and in April, 2018 certain business transactions were carried out in its bank account. Apart from maintaining a bank balance the appellant also has significant assets. A sale deed dated July, 2003 shows the appellant’s title over certain parcel of land measuring 206 acres bearing Khatiyan serial No.54/8 in Hathisikuli, Odisha. In addition to this land, the Appellant is also possessed of a parcel of land bearing Khata No. 54/7 in Hathisikuli Odisha by a lease agreement with the Government of Odisha dated February 2004. Further evidence of land ownership can be gathered by the No-Encumbrance certificate dated 01 October 2020 issued by the Sub-Registrar, Rairangpur

In addition to land, the Appellant also owns 5400 – 5700 MT of Iron Ore which is worth approximately INR 28.16L. The Appellant has made attempts to get permission to sell Iron Ore as is evident from a letter issued by the Mining Officer, Baripada to the Director of Mines, Odisha dated 12 February 2021. Permission to sell the stock was granted by the concerned authority on 25 February 2021). In addition to the stock the Appellant also owns crushers and commercial vehicles as is evident from the pictures. Additionally, the Appellant also has one debtor Mr BC Dagra whose debt is reflected in the balance sheet of the Appellant.

Ever since the prime business activity of the Appellant was restricted by the Government of Odisha, the Appellant has earned income through other sources. One such source is renting Excavators / Hywa on Rental or Lease basis and also its crushing equipment to one M/s Sri Kirshna Enterprises under the terms of a Rental Agreement dated 20 February 2020. The income derived by renting its equipment is duly reflected in the Appellant’s balance sheet for FY 15-16, FY 16-17, FY 17-18 and FY 18-19. The Appellant has also entered into various agreements for the buying and selling of Iron Ore through registered agreements.

The Appellant has been made a party to certain litigation concerning office rent, while the suit has been decreed against the Appellant, the appellant has filed an application under Order 9 Rule 13 CPC seeking setting aside of the decree. The Appellant also has one employee, namely Mr Satya Narayan Mahkud.

The Appellant intends to carry out the business of stone crushing by using the same equipment to crush stone instead of iron ore, the Appellant has applied for permission for the same to the Collector Mayurbhanj and Forest Office and various Clearances have been awarded in its name and is under process.

11 The documents in support of the above submission have been filed algonwith the appeal and we have perused the same. It is a well settled that Ld. NCLT is empowered to restore the company where it thinks it to be just and equitable to restore it i.e. it is fair and prudent from the commercial point of view to restore the same.

Considering the assets and further that the appellant is inclined to shift its business from iron ore to crushing stone, it would be appropriate to restore the appellant and it is in the benefit to State Exchequer and would also aid employment generation.

In M/s Durga Builders (P) Ltd Vs ROC; Company Appeal (AT) No.154 of 2021 this Tribunal held:-

In `Dashmesh Impex Pvt. Ltd. & Ors. Vs ROC: Company Appeal (AT)No.116/2021 this Tribunal held as follows:

The appellant further undertakes that it shall be more cautious and vigilant in future in filing compliances under the applicable Laws and would adhere to all stipulated timelines designated without fail and shall pay cost imposed as per law. An affidavit in this regard be filed within a week from today before this Tribunal.

For the reasons aforesaid we find it just and equitable to restore the name of the appellant company to the record of ROC and thus we set aside the impugned order dated 28.12.2020 passed by the Ld. NCLT, Cuttack Bench and direct the ROC, Odisha to restore the name of the company to the Register of Companies subject to the following compliances:

Thus in the circumstances the appeal is allowed to the above extent.