M/s EDUCOMP Raffles Higher Education Limited vs Registrar Of Companies And Anr.

The present appeal is filed by the company M/s Educomp Raffles Higher Education Limited (for brevity the ‘Company’), through its member M/s Raffles Education Investment India PTE Limited through its authorized representative Mr. Saurabh Sharma (for brevity the ‘appellant’), under Section 252 of the Companies Act, 2013 (for brevity ‘the Act’) against the order of striking off the name of the company M/s Educomp Raffles Higher Education Limited passed by the respondent under section 248 (1) of the Act read with Rule 7 of Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 published on 08.08.2018 vide notification no. ROC-DEL/248(5)/STK-7/4865 by Registrar of Companies, the respondent herein.

It is stated that the company is incorporated as a Private Limited Company with the Registrar of Companies, NCT of Delhi and Haryana on 06.06.2008 under the Companies Act, 1956 with CIN U80302DL2008PLC179177 and having its registered office at Plot No. 9B Rajendra Park, Pusa Road, New Delhi- 110060.

The Authorized Share Capital of the company is Rs. 5,00,00,000/- divided into 50,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid up share capital of the Company is Rs. 3,77,20,440/- divided into 37,72,044 equity shares of Rs.10/- each.

The main objects of the company are:

To establish, set up and run in any part of India schools, colleges, universities coaching institutes, where in professional, technical, vocational or higher education in every filed of science, commerce, arts, management, engineering, law, banking, insurance, finance, medicine, hospitality, tourism, computers, or any other type of education be imparted through regular, part time, weekend or distance learning degree/ diploma courses, subject to such approval/ license or permission as may be required from state, central government or All India council of technical institute, Bar council of India or such other statutory bodies respectively by conducting regular, evening or weekend interactive classes or through distance learning or e-learning mode and to award degree/ diploma or certificates respectively.

And other main objects.

As per the notice of non-compliance of provision of the Companies Act, 2013 in respect to filing of annual returns and financial statements for financial years 2014-2015 to 2016-2017, the name of the company was struck off in terms of provision of Section 248(1) of the Companies Act, 2013 read with Rule 7 and Rule 9 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

The Appellant has submitted that the company was in operation and the business activities were carried out by the company during the period of striking off but the reporting of such activities through Annual Returns and Financial Statement could not been filed with Registrar of Companies due to the management dispute and the same is pending before the Hon’ble Principal Bench, NCLT, New Delhi, vide Company Petition no.

79(ND)/2016 which was originally filed before Hon’ble Company Law Board, New Delhi under Sections 397, 398, 402 and 403 of the Companies Act, 1956.

It is submitted that main reason behind the management dispute within the company and its stakeholder is, one of the two principal shareholders, namely Educomp Professional Education Limited is not following the intent as expressed in share purchase agreement (the “Agreement”) that has been executed on 12th March, 2015 between the Raffles Education Investment India PTE Limited and Raffles Design International India Private Limited (“Raffles”), holding 58.18% and Educomp Asia Pacific PTE Limited, Educomp Professional Education Limited, holding 41.28%, which shares were to be sold and transferred to Raffles under the Agreement. Due to the management dispute, Raffles Education Investment India PTE Limited had filed a Company Petition bearing no. CP 79(ND)/2016 under Sections 397/398 read with Sections 402, 403 of Companies Act 1956 on 17.05.2016 before the Hon’ble Company Law Board, New Delhi Bench, thereby alleging oppression/mismanagement. The aforesaid petition was transferred to Hon’ble Principal Bench, NCLT New Delhi in pursuance to the notification dated 01.06.2016 and which is still pending before the Hon’ble Principal Bench. The Hon’ble Tribunal vide its order dated 12.11.2018 directed the appellant company (Respondents therein) that —

“M/s Educomp- Raffles Higher education Ltd. is likely to file a petition for its revival after it has been struck off by the gazette notification dated 08.08.2018. Liberty granted to file appropriate application after the revival"".

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 the aforesaid management dispute and the pendency of the same before the Hon’ble Tribunal. Due to the management dispute, it was not possible to conduct the Annual General Meeting for the financial year 2014-15, 2015-16, 2016-17 and 2017-18 as the members were not ready to sit under the same roof and to finalise the financial statements for the financial year 2014-15, 2015-16, 2016-17 and 2017-

There was no wilful or mala-fide motive behind non-filing of the Financial Statements and Annual returns, but due to the internal management dispute.

The appellant has further submitted that despite all the management dispute, company still manages to file Income Tax Return for the financial year 2013-14 and 2014-15, though the said returns are not annexed to appeal. Further on 16.12.2016, company received a notice of Demand from Income Tax Department under Section 156 of the Income Tax Act, 1961 imposing a penalty of Rs. 2.31 Cr/-.

It is further stated that no notice under section 248(1) of the Act in the form of STK-1 was received by the Company or any of the directors or any person on their behalf, before striking of the name of the company.

It is further submitted by the appellant that due to unlawful striking off the name of appellant company from the register as maintained by the ROC Delhi and Haryana, the said act of ROC has caused lot of hardships to the Company and management, and no compliance can be made with respect to filing of any documents with ROC till the name of the company is revived on the portal of MCA hence the appeal.

The Appellant has brought forward the following facts about it being in operation and functional during the period of striking off:

a) The copies of financial statement of the company for the financial year 31.03.2013 to 31.03.2014. The Balance Sheet as on 31.03.2014 reflects Revenue from Operations of Rs. 21,66,97,710/- and Employee Benefits expenses of Rs. 17,07,30,287/-.

b) Copies of various orders of CLB, New Delhi of pending litigations during that period and order of Hon’ble NCLT in respect of pending proceedings in Company Petition no. 79(ND)/ 2016.

c) The copy of final award dated 31.03.2017 passed by Singapore International Arbitration Centre (SIAC) under SIAC Rules, 2013 in the matter of arbitration between Raffles Education Investment (India) PTE Ltd., Raffles Design International India Pvt. Ltd. and Educomp Asia Pacific PTE Ltd, Educomp Professional Education Ltd. before Sole Arbitrator Mr. Andrew Jeffries.

d) The copies of assessment orders which were passed on 16.12.2016 and 28.12.2017 under section 144/143(3) of the Income Tax Act, 1961.

e) The copy of Master Joint Venture Agreement dated 16.05.2008 executed between Educomp Solutions Limited and Raffles Education Corporation Limited.

f) The copies of share certificates issued in the name of the appellant company during the period 09.08.2008 to 30.03.2013.

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 Income Tax Department has not submitted its report. Considering the ITRs filed by appellant company and the demand notice issued by Income Tax Department for period 2016-17, there is no need to give further time to Income Tax Department for filing reply.

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 and the Section 252(3) further contemplates that one of the above three conditions are required to be satisfied before exercising jurisdiction to restore company to its original name on the register of the Registrar of Companies.

The Appellants have submitted sufficient evidence that it has been in operation though having management disputes since last few years and therefore could not be termed as defunct company as per section 252 of the Act. Thus, taking into consideration the provisions of Section 252(1) of the Companies Act,2013 which vests this Tribunal with a discretion where the Company whose name has been struck off and such Company is able to demonstrate that there is a running business as on the date when the name was struck off and also keeping in consideration that it is just to do so can restore the name of the Company in the Register and in the interest of all stakeholders including the Appellant itself who seeks restoration of the name of the Company in the register maintained by Registrar of Companies, the company deserved to be restored.

Accordingly, this appeal is allowed. The Public Notice of Registrar of Companies striking the name of the company is hereby declared illegal and 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. The ROC is directed not to levy any additional charges, late fees and/or any penalty against the company. The name of the Appellant Company shall on filing of all relevant documents 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 248(1) of the Companies Act, 2013.

The appeal is disposed of accordingly.

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