Moh. Iqbal, Hartford Academy Of Insurance And Anr vs Registrar Of Companies

Anil Kumar B., Member (T)

The instant Application has been filed by one Mr. MOH Iqbal in the capacity as a Shareholder of M/s. Hartford Academy of Insurance and Education Private Limited (hereinafter referred to as 'Applicant Company'), under Section 252(3) of the Companies Act, 2013 in relation to the order of striking off the name of the Company passed by the RoC/Respondent under the provisions of Section 248 of the Companies Act, 2013.

The other two Shareholders viz., Mr. M. Balakrishnan and Ms. Raseena I, also have given their consent to restore the name of the Company by way of an Affidavits dated 08.02.2020, in and by which all the Shareholders holding 100% paid-up share capital of the Company are in favour of the restoration of the name of the Company with the Register of Companies.

It is averred in the Application that the Company was incorporated on 14.12.2000 under the provisions of the Companies Act, 1956, having its Corporate Identity Number (CIN) U67200TN2000PTC046292 in the State of Tamil Nadu. The Registered Office of the Company is situated at MOH Buildings, III Floor, No. 576, Anna Salai, Chennai - 600 006. The Authorized Share Capital of the Company is Rs. 5,00,000/- and the Paid-up Share Capital of the Company is Rs. 1,16,000/-.

Ld. Counsel for the Applicant has submitted that the Applicant Company was running an institute, approved by and affiliated and accredited to the Insurance Regulatory Development Authority (IRDA). The main object of the Company as contained in the Memorandum of Association inter-alia includes "to promote, develop education activities in all spheres of human life, to start Institute, College, School and Academy for imparting training, knowledge, professional, etc".

Ld. Counsel for the Applicant submitted that one M/s. Reliance Life Insurance Company (hereinafter referred to as "the Insurance Company") approached the Company for the purpose of imparting training to their sponsored candidates and pursuant to the same an Agreement was entered into between the parties and the Company had trained more than 1000 candidates from the year 2005 till 2008.

It is also submitted by the Ld. Counsel for the Applicant that the Company had been raising bills towards training rendered by them, however, certain amounts had become due to the Company for the services rendered by it. As averred in Para 12 of the Written Submissions by the Counsel for the Applicant that the IRDA brought certain changes permitting the Insurance Companies themselves to provide training to their agents and as submitted by the Ld. Counsel for the Applicant that pursuant to the permission granted by the IRDA, the Insurance Company had created In-house Training Facility and commenced imparting training by themselves. As a consequence the Insurance Company terminated the arrangement with the Applicant Company for imparting training. Thereafter, the Company had issued a legal notice to the said Insurance Company for recovery of the amounts to which a Civil Suit bearing C.S. No. 443/2011 was filed by the Company on the file of the Hon'ble High Court at Madras. The Hon'ble High Court of Madras by its Judgement and Decree dated 26.07.2017 directed the Insurance Company to pay a sum of Rs. 1,62,68,011/- with further interest @ 18% per annum on the principal sum of Rs. 61,50,795/- till the date of realization.

It is stated that the Insurance Company had preferred an Appeal bearing O.S.A. No. 305 of 2018 before the Hon'ble High Court at Madras as against the Judgement and Decree dated 26.07.2017. The Hon'ble High Court at Madras vide Order dated 20.03.2019 admitted the Appeal and granted conditional stay subject to the payment of 25% of the decreed amount to the Applicant Company. However, it is stated that the Insurance Company has filed an Appeal for modification of the Order dated 20.03.2019, to the effect that the said 25% of the amounts be deposited in the Court instead of paying to the Applicant Company and in view of the fact that the Applicant Company has been struck off by the RoC/Respondent.

It is further stated that the Hon'ble High Court at Madras vide Order dated 16.04.2019 has modified the said previous Order dated 20.03.2019 by directing the Insurance Company to deposit 50% of the decreed amount in the court. It is averred in the Application that the Insurance Company has complied with the said Order and has deposited a sum of Rs. 81,34,006/- to the credit of the Appeal. Ld. Counsel for the Applicant submitted that the knowledge of the striking off the name of the Company has come to the notice of the Applicant only when the modification application was filed by the Insurance Company before the Hon'ble High Court at Madras.

Ld. Counsel for the Applicant submitted that the RoC/Respondent had issued a notice for striking off the name of the Company in Form STK-5 on 10.07.2017 and caused publication on 22.07.2017 in the Official Gazette and thereafter Form STK-7 on 08.11.2017 which was also uploaded on the official website of the Ministry of Corporate Affairs. It is the contention of the Ld. Counsel for the Applicant that the RoC/Respondent before striking off the name of the Company ought to have issued notice to its Directors and Company, however, on the contrary it has also been stated that the Applicant is not aware that whether the RoC/Respondent has issued any such notice as required under Section 248 of the Companies Act, 2013.

Upon the notice being issued to the RoC/Respondent, the RoC has filed its Report and stated inter-alia that the Applicant Company had failed to file its Annual Return and Balance Sheet for the year 2003-2004 and onwards and no cogent reason is furnished in the Appeal for such default. It is also stated in the Report of the RoC that the Company has not enclosed its last Income Tax Acknowledgement copies for the Assessment Years 2003-2019 along with the Application and hence sought for the following directions,

"a. The Company may kindly be directed to prove that it was carrying on business or was in operation and that it is just that the name of the Company be restored to the register;

b. The Company may kindly be directed to file the financial statements and annual returns up to date within specified time as provided by the Act, in case the prayer is granted;

c. The Shareholders of the subject company may kindly be directed to give an undertaking stating that the accounts of the company were not used/permitted as means to transact tainted money during the period of demonetization;

d. To pass such other orders as deemed fit and proper in the circumstances of the case."

Heard the submissions of the Ld. Counsel for the Applicant and Ld. Counsel for the RoC/Respondent through Video Conferencing Mode and perused the documents placed before this Tribunal. It is the contention of the Ld. Counsel for the Applicant that the name of the Company has to be restored to the Register of Companies since the Company is bona fide to prosecute the case before the Hon'ble High Court at Madras to recover a sum of Rs. 1,62,68,011/- with interest @ 18% per annum which is due and payable by the Insurance Company. Further it has been contended that the Insurance Company has already deposited a sum of Rs. 81,34,006/- to the credit of the Appeal with Indian Bank, Madras High Court Branch, Chennai-104, which the Applicant Company is entitled to receive, however, could not receive owing to the action of striking off the name of the Company from the Register of Companies by the RoC/Respondent.

In order to buttress his arguments, the Applicant relied on the Order passed by the Hon'ble NCLT, New Delhi Bench-III in the matter of Mrityunjaya Bhaskar -vs- The Registrar of Companies dated 17.09.2018 wherein while one of us sitting in the said Bench has held as follows:-

"6. The Appellant has relied on a judgment of the Hon'ble High Court of Gauhati in Felpact Private Limited and Ors. Vs. The Registrar of Companies and Ors., the relevant part of which is quoted below:

In the present case in hand, as mentioned hereinbefore, the petitioner No. 1 Company is the owner of land ad-measuring 10 bigha-4 kathas-19 lechas at Bongaigaon District. Hence, this appears to be a fit case wherein this Court may take judicial notice of the ever rising market value of land. In this regard, I find support from the case of Rattan Arya V. State of Tamil Nadu, AIR 1986 SC 1444 : (1986) 3 SCC 385. The ownership of such a big estate is indicative of the fact that if there is no owner of any land, there is every likelihood of the said land will waste away by encroachment or otherwise or it will become a den for anti-social activities. Fraudulent sale of land in our Country is not uncommon, which would be revealed from the perusal of innumerable case reports where land involved in the suit or proceeding was illegally and fraudulently transferred.

In so far as the judgment of Siddhant Garg (supra), cited by the learned Counsel for the respondent is concerned. I'm afraid that paragraph 14, on which reliance was placed does not at all help the respondents. Rather, the reading of paragraph 14 shows that it has been laid down therein that the discretion of the court must be applied in favor of allowing the application under section 560(6) of the Act unless there are special circumstances against restoration. Ultimately, in the said case, restoration of Company in register of the jurisdictional Registrar of Companies was allowed. Similarly, in the case of M/s. Kesinga Paper Mills (supra), the Hon'ble Delhi High Court allowed the name of the petitioner Company to be restored in the application filed under section 560(6). In this case, it was, inter-alia, held that if there was a pending litigation, it would be proper to restore the name of the Company to the register so as to enable the matter to be carried to its logical conclusion. Viewed from this angle, it has been admitted to the affidavit-in-opposition filed by the respondents that W.P. (C) No. 5371/11 involving the Petitioner No. 1 Company is pending before this Court, which was separated from this present case by order dated 30.05.2017 passed in the said writ petition. A pin-pointed reading of only a part of one or two paragraphs of the cited judgment does not display the ratio of the point decided by the Court. I do not find anything contained in the said two cited cases, which helps the respondent. Rather, both of the said judgments itself present the grounds on which an application under section 560(6) of the Companies Act, 1956 deserves to be allowed. Therefore, I do not feel it appropriate to burden this judgment by quoting various paragraphs of both the two decisions cited by the learned counsel for the respondent.

In view of the submissions of the Appellant and the observations made by the Hon'ble High Court of Gauhati it is just and expedient to direct the Company's restoration. The action of RoC is founded merely on grounds of non-filing of the statutory returns. The Act itself provides for redressal of these defaults. A step as stringent as what has been taken at least requires an opportunity to the Appellant to take remedial measures. Merely to disallow restoration on grounds of its failure to file annual returns would neither be just nor equitable."

Further reliance was also placed upon the decision of the Hon'ble High Court at Delhi in the matter of M.A. Panjwani -vs- Registrar of Companies & Ors. 2015 192 CompCas 380 (Delhi) is as follows:-

"16. In Helen C. Rebella vs. Maharashtra S.R.T.C. (1999) 1 SCC 90, it was observed by the Supreme Court that the word "just" denotes equitability, fairness and reasonableness having a large peripheral field. In understanding its scope, one must take into account all the facts and circumstances of the case and then decide what would be just and equitable. In M.A. Rahim and Anr. vs. Sayari Bai: (AIR 1973 Mad. 83) it was held by a Division Bench of the Madras High Court that the word "just" connotes reasonableness and something conforming to rectitude and justice, something equitable and fair. In Sidhant Garg and Anr. vs. Registrar of Companies & Ors.: (2012) 171 Comp.Cas. 326 it was held by this Court (Manmohan, J.) that the word "just" would mean that it is fair and prudent from a commercial point of view to restore the company and that the Court has to examine the concept of 'justness" not exclusively from the perspective of a creditor or a member or a debtor, but from the perspective of the society as a whole. The special facts of the present case attract this principle. The respondent has received monies from the petitioner. He was entrusted with the job of finding a house for the petitioner in Delhi. The averments in the petition prima facie indicate that the property "Jodhpur Gardens" was purchased not in the name of the petitioner but in the name of the company. The shares held by the petitioner in the company were also taken away from him without his knowledge or consent. The settlement entered into between Quli and Singhania by which the shares were transferred to Quli was held by this Court to be collusive. These are disputes which are pending in the trial court. The company is a defendant in the trial court. If its name is not restored, it would cause injustice to the petitioner and also cause prejudice to the trial as a whole. The message sent to the society as a whole, if the name of the company is not restored to the register, would be quite disturbing. The Petitioner has to be protected in the litigation pending before the trial court. As observed by the Indore Bench of the Madhya Pradesh High Court in Bhogi Lal Chiman Lal vs. Registrar, Joint Stock Companies: AIR 1954 M.B. 70, the effect of the order of the Registrar of Companies striking off the name of the company from the register would be that the company will be deemed to be dissolved and it may be difficult for the petitioner to obtain a relief in the suit pending before the trial court. It is not also known whether the company had brought to the notice of the ROC about the pendency of the litigation in the trial court. If it had, perhaps the ROC would not have struck off the name from the register."

Thus, from the contention raised by the Counsel for the Applicant it can be seen that the Applicant is relying on the "just ground" as envisaged under Section 252(3) of the Companies Act, 2013 to restore the name of the Company in the Register of Companies maintained by the RoC/Respondent.

Apart from the said "just ground" relied on by the Applicant from the typed set of documents filed in the Application, it may be seen as rightly pointed out in the Report of the RoC/Respondent that the Company has not filed any Income Tax Returns for the period from 2003-2019 nor any GST Returns in order to show that the Company is a going concern. However, as already stated that the Applicant relies only upon the "just ground" as contemplated under the provisions of Section 252 of the Companies Act, 2013.

Thus, in view of the precedents cited by the Ld. Counsel for the Applicant, it is just for this Tribunal to restore the name of the Company to the Register of Companies maintained by the RoC/Respondent. However, it may be seen that the Company has not filed its Annual Return and Balance Sheet with the RoC/Respondent from the year 2003 to till date. Under the circumstances, the Company is required to be imposed an exemplary cost in a sum of Rs. 50,000/- (Rupees Fifty Thousand Only) payable to the "The Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (the PM CARES Fund)" and further the Application is allowed subject to the following terms and conditions:-

The Company shall:-

(i) Within a period of 15 days from the restoration of the Company's name in the register being maintained by the RoC/Respondent, the Applicant will ensure that the Company files inter-alia, its annual returns and balance sheets as well as make other compliances statutorily required to be made under the Companies Act, 2013 for the period from which there has been default with requisite charges/fees as well as additional fee/late charges.

(ii) That the Company out of its funds, set apart a sum of Rs. 2,00,000/- (Rupees Two Lakh Only) and deposit the same with the RoC/Respondent which amount shall be for the purposes of payment of all fees/charges as contemplated in clause (i) above as well as to defray the cost and expenses of Register of Companies incurred in striking off, within a period of one month from the date of this order. In case of any amount payable in excess of the sum specified towards defraying the cost incurred by the RoC/Respondent and towards other amounts as are required to be paid by the Company statutorily, the same shall be remitted by the Company. Any excess amount left after appropriating for all the above shall be meticulously returned by RoC/Respondent to the Applicant.

(iii) Till all compliances are made by the Company, the Company shall not alienate or dispose of any of its valuable assets.

(iv) It is further observed that by virtue of this order of restoration of the name of Company in the register it will not entitle the Directors of the Company whose names in case have been disqualified by virtue of provisions of Section 164 of the Companies Act, 2013 by the RoC/Respondent automatically to be restored to directorship except in accordance with law.

(v) An affidavit of compliance of the aforesaid directions shall be filed by the Applicant within a period of 2 months from the date of this order.

(vi) The Shareholders of the Company shall jointly submit an Undertaking to the RoC/Respondent stating therein that the accounts of the Company were not used as means to transact tainted money during the period of demonetization.

(vii) Further this order allowing the Application shall also not circumscribe the power of the RoC/Respondent to proceed against the Company and its Directors as mandated for alleged late filing of any forms, documents, returns and such other compliance under the provisions of Companies Act, 2013.

The Application is disposed of accordingly.