Master Comfort Inn Private Limited vs Registrar of Companies

This Company Appeal has been filed under Section 252 of the Companies Act, 2013 by Mr. Earnest Augustine Parakkal, a shareholder of Master Comfort Inn Private Limited (the Company), against order of the Registrar of Companies, Kerala (ROC) vide notice No. ROC/KERALA.S.248(5)/STK-7/2019 in Form STK-7 dated 19.10.2019 published in the official gazette on 26.10.2019, seeking restoration of the name of the Company in the Register of Companies maintained by Registrar of Companies.

The Brief facts of the case as stated in the pleadings are under: -

M/s. Master Comfort Inn Private Limited (the Company), was incorporated on 26th August, 2004 under the Companies Act, 1956 with the Registrar of Companies (RoC), Kerala having its Registered Office at 35/1584C, South Janatha Road, Palarivattom, Ernakulam 682025. The Corporate Identification Number of the Company is U55101KL2004PTC017391. The main object of the company stated in the Memorandum of Association is “To carry on and undertake the business of Construction, setting up, management and running of Hotels, Motels, Resorts Holiday Homes and leisure centres of various types”. The Authorised share capital of the Company is Rs. 20,00,000/- (Rupees Twenty lakhs Only) divided into 2,00,000 number of equity shares of Rs. 10/- (Rupees Ten each) and the Issued, Subscribed and Paid-Up share capital of the Company is Rs. 13,50,000/- (Rupees Thirteen lakh Fifty Thousand only). Company was closely held by its 3 shareholders.

The Respondent ROC had struck off the company from the Register of companies on 19/10/2019by publishing Form STK-7 vide notice No. ROC/KERALA.S.248(5)/STK7/2019 for default in filing Financial Statements & Annual Return for the FY 2016-17 and 2017-18 under section 248 of the companies Act, 2013.

The appellant has stated that the company was carrying on the business since its incorporation and has purchased approximately 4.37 hectares of land at Padiyoor village in Thrissur district with a view to construct tourist resorts but due to adverse market conditions and financial crunch the construction of the Resort was kept in abeyance for short period. The appellant further stated that the company originally planned to construct the resort in the year 2018 and wanted to keep it as a going concern due to which it did not apply for dormancy status. The appellant stated that the company was active and it owned land, plant and machinery, furniture, motor vehicles and has cash balances as well as long term borrowings and trade payables. Appellant also stated that the company is still paying salary to some of its staff, and as proof, certain salary slips have been annexed along with the appeal. It is stated that the company was continuing its operations at lower scale to cope with the market conditions.

Further the appellant stated that the company was regular in filing the Annual Financial Statements and Annual Returns till the year ended 31/03/2015 and that the default in filing of financial statements and annual return from 2015-16 onwards is not intentional and purely due to inadvertence of some key staff who left the company due to its cost cutting arrangements. It is stated that the company is now ready with Audited Financial Statements upto the year ending 31/03/2021 and that it can very well file all the statutory returns henceforth. The appellant has submitted land tax receipts of the company dated 19/01/2017, 31/08/2018, 02/09/2019 and the property tax receipts for Year 2013-14 to 2015-16 and 2017-18 and 2018-19 together with GSTR 3B returns for the month of March, 2017 and March, 2018.

The respondent ROC, filed a Report on 30/06/2022 stating that the Ministry of Corporate Affairs vide communication dated 25/06/2019 had instructed all Regional Directors and Registrars of Companies to take strike off action against companies which have failed to file Financial Statements or Annual Returns of the financial years i.e., 2016-17 & 2017-18 and did not file an application under Section 455(1) of the Companies Act, 2013 for making them as “Dormant”. In view of the same, it was observed that the company has not applied for dormancy status under section 455 neither filed its Annual financial statements or annual returns under the Act. Accordingly, the strike off action was initiated wherein a notice dated 10.07.2019 in Form STK-1 was issued to the company and all its directors giving 30 days’ notice to show cause against the strike off against which no positive response was received from them. Simultaneous representations were also elicited from (1) Reserve Bank of India, (2) SEBI, (3) Department of Registration (Chits) Kerala State, (4) Customs & Central Excise Department, (5) Sales Tax Department, (6) Income Tax Department, (7) Chief Secretary, Government of Kerala for the action under Section 248(1) of Companies Act to file objection, if any, within a period of 30 days. Consequently, a notice in Form STK-5A in Newspaper Dailies (English & Malayalam), as well as in Form STK-5 in the Official Gazette was published on 10.08.2019 and 24.08.2019 respectively intimating about the strike off. Finally, after due compliance with all procedural formalities, the name of the company was struck off under Section 248(5) of the Act by notice No. ROC/KERALA.S.248(5)/STK-7/2019 in Form STK-7 dated 19.10.2019 in the official gazette.

The learned ROC has also stated that as per provisions of Section 137 of Companies Act, 2013, Financial Statements for FY 31/3/2016, 31/3/2017, 31/3/2018, 31/3/2019 31/3/2020 and 31/3/2021 were due to be filed on or before 30/10/2016, 30/10/2017, 30/10/2018, 30/10/2019, 30/10/2020 and 30/10/2021 respectively. Similarly, as per Provisions of Section 92 of Companies Act, 2013 Annual Returns for FY 31/3/2016, 31/3/2017, 31/3/2018, 31/3/2019, 31/3/2020 and 31/3/2021 were due for filing on or before 30/11/2017, 30/11/2018, 30/11/2019, 30/11/2020 and 30/11/2021 respectively.

Heard the arguments for the appellant through video conferencing and perused the documents on record. The Audited Balance sheets dated 31/03/2016, 31/03/2017, 31/03/2018 submitted by the appellant has shown that company had considerable, though declining, fixed assets to the tune of more than Rs. 1.5 crores and revenue from operations to the tune to Rs. 13 lakhs as on the financial year ending 31/03/2018, the period prior to strike off. We also perused the land tax receipts of the company dated 19/01/2017, 31/08/2018, 02/09/2019 and the property tax receipts for Year 2013-14 to 2015-16 and 2017-18 and 2018-19 which shows that company was regular in making the payments related to land owned by it as stated above. Two GSTR-3B returns for the month of March 2017 and March 2018 is seen on record. Hence there is sufficient evidence to show that the company, though was facing some financial crunch during the period prior to its strike off, was still actively continuing its operations as a going concern.

We have gone through the report of the respondent ROC filed on 30/06/2022 in the instant Appeal. The Respondent AROC who appeared in the matter in person stated that he does not have any objections as to the restoration of the company back to the register of companies provided the company duly follows the statutory provisions and compliances under the Companies Act, 2013.

The statutory provision with regard to restoration of the name of the company as provided in Section 252 of the Companies Act, 2013 is reproduced below: -

Section 252(1):

(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:

Provided that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned :

Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its Directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company.

(2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation.

(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 being the shareholder of the company is eligible under section 252 of the Act to file the same and seek restoration of company's name in the register of the RoC. Also the respondent RoC had struck off the company on 19/10/2019 and the appellant filed his appeal on 25/05/2022 i,e. within 3 years from the publication of Form STK-7 notice in the Official Gazette under sub-section (5) of section 248 of the Act meaning that the appellant has filed his appeal well within the limitation period.

On a conjoint reading of the above provisions of Companies Act, 2013 along with the records submitted by the appellant as well as the reasons mentioned in the Appeal and considering the additional affidavit of the appellant, we are of the considered opinion that it would be just and equitable to order restoration of the name of the Company in the Register of Companies from the date of its striking off subject to payment of cost for non-compliance of rules relating to filing the Statutory Returns and Audited Financial Statements. Hence this Tribunal pass the following orders: -

i. The Registrar of Companies, the Respondent herein, is ordered to restore the original status of the Company, as if the name of the company has not been struck off from the Register of Companies, and take all consequential actions like change of company’s status from ‘Strike off’ to “Active” (for e-filing and to intimate the bankers about the restoration of the name of the Company to defreeze its accounts).

ii. The Company is directed to file all the statutory document(s) along with prescribed fees/additional fee/fine as decided by Registrar of Companies within 30 days from the date on which its name is restored on the Register of Companies by the Registrar of Companies, subject to the payment of cost of Rs. 25,000/- (Rupees Twenty-Five Thousand only) to the Prime Minister's National Relief Fund and proof of payment be filed with the Registrar of Companies, Kerala and a copy to Registrar, NCLT, within three weeks from the date of receipt of this order, while submitting the documents to them, failing which this order will lapse.

iii. The appellant is directed to deliver a certified copy of this order with ROC within thirty days of the receipt of this order as per the provisions of the Companies Act, 2013; iv. Till all compliances are made by the Company, the Company shall not alienate or dispose of any of its valuable assets.

v. On such delivery and after duly complying with the above directions, the Registrar of Companies, Kochi is directed to, on his official name and seal, publish the restoration order in the official gazette.

vi. Further, this order allowing the Appeal shall also not circumscribe the power of the respondent to proceed against the appellant Company and its Directors as mandated for the alleged late filing of any forms, documents, returns, and such other compliances under the Provisions of the Companies Act, 2013.

The Company Appeal No. CA/15/(KOB)/2022 stands allowed and disposed of on the aforementioned terms.