M/s. Swastik Finbuild India Private Limited And Ors vs Registrar of Companies

L. N. Gupta, Member (T)

The present Appeal has been preferred by M/s. Swastik Finbuild India Private Limited (hereinafter referred to as the â€A˜ppellant

Company’) and by its Ex-Directors Sh. Sita Ram Singhal and Smt. Asha Singhal under Section 252(1) of the Companies Act, 2013 for seeking

restoration of the Appellant Company in the register maintained by the Registrar of Companies, NCT of Delhi and Haryana (RoC).

As per the averments, M/s. Swastik Finbuild India Private Limited was incorporated on 19.01.1996 with CIN No. U70101DL1996PTC075596

having its registered office at 59/4336, Padam Singh Road, Karol Bagh, New Delhi-110005, which is within the jurisdiction of this Tribunal.

That as per the Memorandum of Association annexed the Appellant Company has the following objects

“…To carry on the business as Owners, Builders, Colonisers, Developers, Promoters, Proprietors, Occupiers, Lessors, Civil Contractors, Engineers

Consultants, maintainer and mortgagers of residential, commercial and industrial buildings, colonies, mill’s and factory’s sheds and buildings,

workshop’s buildings, place of worship, hospital, schools, college & hostels, playground, cinema houses, cold storage, hotel & restaurant and to deal in all

kins of immovable properties whether belonging to the Company or notâ€​.

It is submitted by the Appellant that the RoC Delhi and Haryana had struck off the Appellant Company’s name from the Register due to

defaults in statutory compliances, namely, failure to file Financial Statements & Annual Returns since in its incorporation. Consequently, the RoC

initiated proceedings under Section 248 of the Companies Act 2013 and struck off the name of the Appellant Company from its Register vide STK-7

Notice No. ROC/DELHI/248(5)/STK-7/5071 dated 01.09.2017. The name of the Appellant Company appeared at serial no. 22002 of the list of

companies, whose names were stuck off due to default in Statutory compliances.

It is submitted by the Appellant that it was established in the year 1996 and during that year, the Company bought a plot vide Sale Deed dated

03.05.1996 registered with the Revenue District of Gurugram, in order to implement a housing project. It is added that a legal dispute arose on the said

plot, as a result of which the Appellant Company could not execute the project for which the plot was purchased.

It is further submitted by the Appellant that on 07.05.1996, it filed a Civil Suit bearing No. 96 of 1996 titled as Swastik Finbuild India Pvt. Ltd. Vs

Bhawani Parshad & Ors., before the court of Civil Judge, Junior Division, Gurugram District Court seeking relief of “Suit for Mandatory Injunction

and Permanent Injunction.†It is added that the suit was decided in the favour of the Appellant Company on 04.01.2014. However, an appeal was

filed before the Additional District Judge, Gurugram against the said order and the same was also decided in the favour of the Appellant Company on

01.09.2015.

It is added by the Appellant that a Second Appeal against the Judgement dated 04.01.2014 and 01.09.2015 has been filed before Hon’ble High

Court of Punjab and Haryana vide RSA no. 841/2016 titled as “Bhawani Prasad Dead Through LR’s & Ors. Versus M/s Swastik Finbuild

India Pvt. Ltd. & Ors., which is still pending and the next date of hearing in the matter is fixed for 29.09.2021. It is further added that the Appellant

Company has also filed a Civil Execution Petition bearing no. 607 of 2019 titled as Swastik Finbuild India Pvt. Ltd. Vs Bhawani Parshad & Ors.

before the court of Civil Judge, Junior Division, Gurugram District Court for Execution of judgement and Decree dated 04.01.2014, which is also

pending before the Civil Court.

That in order to defend/allege its claim before the Courts the Appellant Company has sought restoration of its name in the Register of ROC.

Further, the Appellant Company has averred that it is in position to file its Balance Sheets for the Financial Years from 1996 to 2016-17.

That the RoC has filed its report on 15.03.2021 and submitted that the Appellant Company has not been able to substantiate that it was in operation.

Even since launching of MCA-21 portal in 1996, no records of the Annual Return and balance sheet of the Company exist on the portal. The have

added that Company has not submitted any document except the balance Sheet for one Financial Year i.e. 2016-17 only in which too, the revenue

from its operations is “Zero’. Scanned copy of the relevant extracts of the report of RoC is reproduced below:

That the Income Tax Department has also filed its Report and has submitted that there are “NO ITR’s on e-filing/ITD portalâ€​. Though

the IT Department has stated no objection to revival of the Company, it has submitted ……“That while passing any order this Hon’ble

Court may consider the Judgement of Hon’ble NCLAT (passed) in the case of M/s Alliance Commodities Pvt. Ltd. Vs. Office of Registrar

of Companies - WB, CA (AT) No. 20 of 2019, which was subsequently upheld by the Hon’ble Supreme Court in the matter of M/s Alliance

Commodities Pvt. Ltd. Vs. Office of Registrar of Companies - WB (CA No. 7258 of 2019) vide order dated 23.09.2019.

That vide order dated 07.07.2021, this Bench had directed the Appellant to file a short written synopsis along with the present status of Execution

proceedings and Second Appeal. The same is on record.

That the Appellant Company, in its written synopsis dated 15.07.2021, has reiterated the same facts and indicated the current status of the cases

as per which the Second Appeal is listed before Hon’ble High Court of Punjab and Haryana on 29.09.2021 and Execution Proceedings are listed

on 19.07.2021 in the Civil Court.

After hearing submissions and perusing documents placed on record by both the parties, this Bench, is of the view that the only ground on which

the Appellant Company is seeking its revival is the Litigations that are pending by or against it.

From perusal of the documents placed on record, it is observed that the Company was incorporated in the year 1996 and since then, it has never

filed its Financial Statements and Annual Returns. The Report of RoC also confirms that the only balance sheet filed by the company for the FY

2016-17 also depicts ‘nil’ revenue from its operations. Further, the Income Tax Department has stated tha though it has no objection towards

the revival of the company, it has no record of its Income or Income Tax Returns in its data base.

Although the Appellant Company has averred in its Appeal that it has a plot of land, but no sale deed of the said plot to support its claim has been

placed on record by the Appellant, which could depict the title of the land in its favour.

We notice that the Company has not done any business since its inception i.e., from 1996 to 2017, which is a long period of 21 years. This clearly

depicts that the Company never had any intention to do any business.

From perusal of the record of Litigation also, it is observed that there are other parties too on the side of Appellant Company through which the

Litigation may continue and be pursued. That the pending litigation against the Appellant Company cannot be the sole ground to seek its revival since

the Litigation can still be carried on by the other contesting parties.

That the Appellant Company has not brought anything on record, which could substantiate that the Appellant Company was in operation or was

doing any significant business, at the time when its name was struck off from the register of RoC. Further, we are of the view that a company cannot

be restored solely to litigate.

In the current circumstances, it is worthwhile to refer to the paragraph 9 of the Judgement of Hon’ble NCLAT in the matter of Alliance

Commodities Private Limited Vs. Office of Registrar of Companies, West Bengal, Company Appeal (AT) No. 20 of 2019:

“9. Section 252 (3) of the Companies Act, 2013 empowers the Tribunal to order restoration of a Company whose name has been struck off from the Register of

Companies, if such company, any member or creditor or workman thereof feeling aggrieved by such striking off applies before the Tribunal seeking restoration of

the struck off company to the Register of Companies before the expiry of twenty years from the publication in Official Gazette of notice under Section 248(5). The

exercise of such power is properly regulated and depends upon satisfaction of the Tribunal that the Company at the time of its name being struck off was carrying

on business -10- Company Appeal (AT) No. 20 of 2019 or in operation or otherwise it is ‘just’ that the name of company be restored. We do not find

ourselves persuaded to agree with the proposition canvassed by learned counsel for the Appellant that inspite of Appellant’s inability to demonstrate that the

Company was at the relevant time carrying on business or in operation, the Tribunal had vast powers to order restoration of Company on the ground “or

otherwiseâ€. This term “or otherwise†has been judiciously used by the legislature to arm the Tribunal to order restoration of a struck off company within the

permissible time limit to take care of situations where it would be just and fair to restore company in the interest of company and other stakeholders. Such

instances can be innumerable. However, this term “or otherwise†cannot be interpreted in a manner that makes room for arbitrary exercise of power by the

Tribunal when there is specific finding that the Company has not been in operation or has not been carrying on business in consonance with the objects of the

Company. A Shell Company or a Company having assets but advancing loans to sister concerns or corporate persons for siphoning of the funds, evading tax or

indulging in unlawful business or not abiding by the statutory compliances cannot be allowed to invoke this expression “or otherwise†which would be a

travesty of justice besides defeating the very object of the Company….â€​

In view of the above, this Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under

Section 248(5) of the Companies Act, 2013.

The Appeal is accordingly Dismissed.