Nagalingam Ravishankar, Member Of Sagittus Solutions Private Limited vs Registrar Of Companies, Karnataka

Rajeswara Rao Vittanala, J

C.P. No. 56/BB/2020 is filed by Mr. Nagalingam Ravishankar, one of the Member of M/s. Sagittus Solutions Private Limited ('Appellants') U/s 252 of the Companies Act, 2013, R/w Rule 87A of the NCLT (Amendment) Rules, 2017, by inter alia seeking to restore the name of the Company namely M/s. Sagittus Solutions Private Limited, on the Register of Companies maintained by the Registrar of Companies, Karnataka, Bengaluru etc.

Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows:

(1) M/s. Sagittus Solutions Private Limited, (which is referred to as Company) was incorporated on 08th May, 2006 under the Companies Act, 1956 vide CIN: U72200KA2006PTC039249, having its registered office situated at No. 1271, 15th Main, BTM II Stage, Bangalore 560076. Its Authorized share capital is Rs. 1,00,000/- (Rupees One Lakh Only) divided into 10,000 number of equity shares of Rs. 10/- (Rupees Ten each) and Issued, Subscribed and Paid Up Capital is Rs. 1,00,000/- (Rupees One Lakh Only) divided into 10,000 number of equity shares of Rs. 10/- (Rupees Ten each). The main objects of the Company is to carry on the business of manufacture directly or on contract purchase, make to order, import, export, dealership, distribution ship, agency, sale, contract labour and design and development service of all kinds of Software products and software projects etc. The following are two Directors of the Company, as on the date of this Application;

Sl. No.

Name

Date of Appointment

1

Mr. Nagalingam Ravishankar

08.05.2006

2

Mrs. Rajani Konepalli

08.05.2006

(2) It is stated that the Register of Companies has displayed on the website of MCA the names of the 3178 Companies STK-5 dated 14.08.2019 stating that it has reasonable cause to believe that these Companies have not been carrying on any business or operation for a period of two immediately preceding financial years and have not made any application within such period or obtaining the status of dormant Company under Section 455; that it will strike off the name of these Companies within 30 days from the dated of the display of the aforementioned STK-5 unless objections were filed within the time prescribed. Of the 3178 Companies to whom this notice was applicable, one is the Petitioner Company. Hence this Petition.

(3) It is also stated that the Company is doing it business on an 'ongoing concern' basis and was maintaining the current account in the name of the Company, and was transacting day to day business through this account. A Statement of Bank Account as on 31.03.2018 enclosed to the Petition is conclusive proof that the Company is doing day to day operations on continuous basis. The Board of Directors of the Company has prepared the financial statements for the FYs ended 2016-17 and 2017-18 on time, get them audited on time and adopted them in the AGM within the time prescribed in law. However, due to change in the clerical staff in the finance Department, the new comers forgot to file these audited and adopted financial statements with ROC-Karnataka for the immediate past two years and the certified true copies of the audited financial statements, auditor's report and Directors report for preceding Two (2) financial years namely FYs 2016-2017 and 2017-2018 showing the company is doing business continuously. The non-filing of these documents was a not intentional and wanton and the company is ready to file them with applicable additional filing fee once this Hon'ble Tribunal restores its status to 'active'.

(4) The financial statements and the Annual Returns for the FY 2018-2019 have been prepared, audited and adopted them in the Annual General Meeting and it is showing that Company is doings its business on an going concern basis. The Company has commences operations after incorporation and has been trying to generate revenues from last three years. Further submit that due to his accident during the month of March-2019, he was not able to concentrate on the business of the Company. Presently, the Directors of the Petitioner Company are making out all efforts to improve the business and take the Company to new heights in the coming days. The Directors/shareholders of the Petitioner Company have given their affidavits and stating that the Company is doing its business during the FY 2019-2020 also without any breaking.

(5) The ROC-Karnataka has displayed another Notice in form No STK-7 dated 23.10.2019 on the website of MCA, stating that pursuant to the notice dated 14.08.2019, the name of the Companies has been struck off for the Register of Companies and the Company has been dissolved. Both the Directors/Shareholders of the Company has given affidavits and undertaking that they will file all the overdue returns such as Aoc-4 (balance sheets, Profit and loss accounts, along with relevant schedules) and MGT-7 (annual returns) and other related documents, if any, within 30 days upon restoration of the name of the Petitioner Company by this Hon'ble Bench. Both the Directors/Shareholders of the Company have given Affidavits and stating that no abnormal amount has been deposited into the Company's account during demonetarization period i.e., between September 2016 and January 2017 and no Income Tax notice has been served to the Petitioner Company on the above issue.

The Registrar of Companies, Karnataka, has filed a Counter by way of Affidavit dated 08.07.2020, wherein, not opposing the main Company Petition, has inter alia stated as follows:

(1) In pursuant to the verification of the MCA 21 when action under Section 248(1) of the Companies Act, 2013 was initiated against the eligible Companies, it was seen that the Petitioner Company has not filed Balance Sheets and the Annual Returns from the year 2016-2017 and 2017-2018 and Annual Return for the Financial Year 2016-2017 and 2017-2018. Therefore, the Respondent had reasonable cause to believe that the Petitioner Company is not carrying on any business or operation and therefore a notices in Form STK-1 dated 28.06.2019 was sent to the Company and its directors wherein, it was inter alia mentioned that the Petitioner Company was not carrying on any business or operations for two immediately preceding financial years nor has filed Application, under Section 455 of the Companies Act, 2013 and that the Respondent proposes to strike off the name of the Company from the Register of Companies as per Section 248 of the Said Act, unless a cause is shown to the contrary within 30 days from the date of receipt of the STK-1 notices.

(2) Since no cause was shown either to the physical notices or to the website, Gazette and newspaper notices either by the Company or its Directors, and also since no Balance Sheet or Annual Return was filed by the Petitioner Company till the day on which the list of defaulting Companies were crystallized, the Respondent proceeded to strike of the name of the Company from the Register of Companies and published a Notice in STK-7 in the Official Gazette on 09.11.2019 starting that from 23.10.2019 names of the Companies mentioned therein including the Petitioner Company have been struck off from the Register of Companies as per Sec. 248(5) of the Act.

(3) It is declared that there is no inquiry, investigation and Complaints against this Company and expressed no objection to restore the name of Company, as prayed for, however, subject to payment of cost and complying with pending statutory returns etc. within stipulated period as prescribed by the Tribunal.

Heard Shri Girish Kumar, learned Counsel for the Applicant, through Video Conference. We have carefully perused the pleadings of the Party and extant provisions of the Companies Act, 2013 and the Rules made thereunder.

Shri Girish Kumar, learned Counsel for the Applicant, while reiterating various averments made in the Applicant/Petition, as briefly stated supra, has further submitted that the Company is active and non-filing of Annual Returns/Audited Reports in question, was neither intentional nor deliberate as it was happened in in-adherently. Therefore, the Tribunal may consider the case sympathetically to restore the name of name Company as prayer for, on the principle of ease of doing business and in the interest of justice.

It is not in dispute that the Registrar of Companies is conferred with power U/s. 248(1) to strike off the Company, if the Company has failed to commence its business within one year of its incorporation or a 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 U/s. 455. However, Section 248(6) states that the Registrar of Companies, before finally striking off Company, has to satisfy himself that sufficient provision has been made for the realization of all amounts due to the Company and for the payment or discharge of its liabilities and obligations by the Company within a reasonable time, and, if necessary, obtain necessary undertakings from the Managing Director, Director or other persons in charge of the management of the Company. Though the impugned striking off the Company was in accordance with law, the Tribunal has to take into consideration of bona fide contentions of Petitioners seeking to restore name of Company, by taking a lenient view of the issue in the interest of justice and ease of doing business, instead of rigidly interpreting the law on the issue. It is also not in dispute that the instant Company Petition is filed in accordance with law; there are no investigations pending against the Company; the Respondent has not opposed the Petition; and left the issue to Tribunal to consider the case subject terms and conditions. Therefore, we are of the considered opinion that interest of justice would be met if the name of Company is restored as prayed for, however, subject to conditions mentioned below.

Hence, by exercising the powers conferred upon this Tribunal, U/s. 252 (3) of the Companies Act, 2013, and following the principle of ease of doing business, C.P. No. 56/BB/2020 is hereby disposed of with the following directions:

(1) The Registrar of Companies, Karnataka, the Respondent herein, is ordered to restore the name of the Company in the Register maintained by the Registrar of Companies, Karnataka as if its name had not been struck off from the rolls of the Register of Registrar of Company, by restoring all consequential action taken by Registrar of Companies, in pursuance to the impugned, which includes restoration of DINs of its Directors if any;

(2) 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;

(3) The Company's representative, who has filed the Company Petition, is directed to personally ensure compliance of this order;

(4) The restoration of the Company's name is also subject to the payment of cost of Rs. 10,000/- (Rupees Ten Thousand Only) to be paid online to the account of Central Government in favour of the Pay & Accounts Officer, Ministry of Corporate Affairs, Southern Region, Chennai, within three weeks from the date of receipt of this order, failing which the order will lapse.

(5) The Petitioner is permitted to deliver a certified copy of this order to the Registrar of Companies;

(6) On such delivery and after duly complying with above directions, the Registrar of Companies, Bengaluru is directed to, on his office name and seal, publish the order in the official Gazette;

(7) This order is confined to the violations, which ultimately led to the impugned action of striking off the Company, and it will not come in the way of Registrar of Companies to take appropriate action(s) in accordance with law, for any other violations/offences, if any, committed by the Company prior or during the striking off the Company.

(8) The Company is directed is directed to resume its business operations, as expeditiously as possible, after the name of Company is restored, in terms of this order.