Mr. Harish Purohit vs Registrar Of Companies, Bilaspur Chhattisgarh

Justice Anant Bijay Singh;

The present Appeal under Section 421 of the Companies Act, 2013, has been filed by the Appellant being aggrieved and dissatisfied by the order dated 28.12.2020 passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) in CP(Appeal) No. 253/CB/2020whereby and whereunder appeal filed by the Appellant Company for restoration of the name of the Appellant Company in the Register maintained by the Registrar of Companies (RoC), Chhattisgarh was dismissed by the Tribunal.

The facts giving rise to this Appeal are as follows:

The Appellant is a Shareholder/Director of a Private Limited Company, i.e. M/s Live In Home Builders Private Limited (hereinafter referred to as ‘Company’) which is Limited by Shares having its Registered office situated at Raipur-494001, incorporated in year 2005 and is involved in business of real estate. In order to expand its business, in the year 2008, the Company, bought 3 separate land parcels, situated at Raipur, Chhattisgarh, admeasuring 1.149 Acres, 0.4009 Acres and 1.71 Acres for the sum of Rs. 26,97,000/-, Rs. 6,48,000/- and Rs. 27,68,000/-. The said lands parcels are situated at the prime location of the capital city and same would be used for the development of the residential complex and premises.

ii) Further case is that the Respondent, strike off the company’s name from the Register of Companies due to defaults in statutory compliances, namely, failure to file Financial Statements & Annual Returns for the period 2016-17 to 2017-18 by initiating proceedings under Section 248 of the Companies Act, 2013, for the purpose of striking off the name of the company from the Register maintained by the Registrar of Companies. The Appellant Company realized the non-compliance of the requirements relating to filing of returns and other documents with the Registrar only after receiving the notice from the Respondent. After receiving the said notice under Section 248(1), the Appellant Company was in the process of filing requisite annual returns and documents but in the meantime the company was struck off by the Respondent and its name was published in STK-5A dated 05.06.2018 as mentioned in Sr. No. 354.

iii) The financial statements of the company have been prepared and audited but due to inadvertence the same could not be filed with the Registrar of Companies. However, the non-filing was neither wilful nor intentional. Since the Company is located in a remote area of Bastar region of Chhattisgarh, therefore, due to lack of professional guidance/help available to the Appellant Company in the initial years of its incorporation it had escaped the filing of returns with the concerned Registrar of Companies.

iv) The Appellant being a Shareholder / Director of a Company which is carrying real estate business, it is matter of fact that the turnover and profits/losses depends on the sales taken place in the relevant financial year. The Company has taken loans and invested the same in the residential plots for furtherance of the Business. As such it was unfortunate that the Company could not make turnovers in the preceding years. The Company had some operations till the year 2016, however, it has not filed Income Tax Return (ITR) up to Financial Year 2016-17 and 2017-18. The Company has filed Income Tax Return for the Financial Year 2018-19 and 2019-20.

Further case is that being aggrieved with the step taken by the Registrar of Companies, the Company had filed a petition before the Tribunal for issuing directions for restoration of the name of the Company so that the properties of the company can be utilized and the business of the company can be carried out by the Company. The Tribunal after hearing the parties, dismissed the said petition which led to filing of this Appeal.

The Ld. Counsel for the Appellant during the course of argument and in his memo of Appeal submitted that the Tribunal while passing the impugned order has erred in law and fact by not considering that the Appellant Company have the land holding in its name and done business in past. Further, the Tribunal has failed to appreciate the merits of the case, in the present case, the genesis of the entire matter is non-filing of annual returns which is a compoundable offence under the provisions of company’s law, the Respondent themselves had issues various amnesty schemes at various occasions for filing of the annual return, to which the Appellant failed to draw the benefits from such schemes. It is further submitted that the working of the company has been transparent and there were assets and liabilities as on the date of striking off its name. The Appellant has filed the copies of sale deeds executed in favour of the Appellant Company which are Annexure A-2 (Colly) at page 33 to 98 of the Appeal Paper Book. It is further submitted that the Appellant Company is ready to abide by all the conditions as imposed by this Tribunal and also willing to pay the penalties as imposed by this Tribunal and undertake to be more vigilant and careful about the annual filings of the company.

On the other hand, the Respondent/Registrar of Companies in his reply affidavit it is stated that the Appellant Company has not filed Annual Returns and Balance Sheet for the year ending 31.03.2016, 31.03.2017, 31.03.2018 and 31.03.2019. The Respondent, as per Ministry directions vide letter No. 03/53/2017/CL-II dated 17.02.2017 and letter No. 3/53/2017-CL-II(DGCOA) dated 16.04.2018, accordingly, pursuant to sub-Section (1) of Section 248 of the Companies Act, 2013 and Rule 3 of the Companies (Removal of Name of Companies from the Register of Companies) Rule, 2016, the Registrar gave a notice in writing in Form STK-1 dated 10.05.2018 to the company and all its directors at the addresses available on record. The notice in Form STK-1 is issued to the company on the ground that the company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under Section 455 of the Act. The notice seeks representation, if any against the proposed action from the company and its Directors within a period of thirty days from the date of notice. However, no such reply was received by this office from the Appellant company or its directors in response to the above said notice in Form STK-1. This office caused notice under sub-section (5) of Section 248 of striking off the name of the company from the register of companies and published in the Official Gazette in Form STK-7 on 29.08.2018 and same had been placed on the official website of the Ministry of Corporate Affairs on 29.08.2018. It is further stated that the instant Appeal may be decided on merit subject to filing of Balance Sheet till the year ending 31.03.2020 with additional fees as per the requirement of Companies Act, 2013.

After hearing the parties, going through the pleadings made on behalf of the parties and in view of the fact that the sale deeds executed in favour of the Appellant Company and Audited Balance sheet from Financial Year 2015-16 to 2018-19 as also Income Tax Return of the Appellant Company shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore, it cannot be said that the Appellant Company is not carrying on any business or operations. Hence, we are of the view that the order passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) as well as Registrar of Companies, Chhattisgarh is not sustainable in law.

In view of the aforenoted, we set aside the impugned order dated 28.12.2020 passed by the National Company Law Tribunal (Cuttack Bench, Cuttack) in CP(Appeal) No. 253/CB/2020. The name of the Appellant Company be restored to the Register of Companies subject to the following compliances.

Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the National Company Law Tribunal (Cuttack Bench, Cuttack), forthwith.