Parinda Buildcon Private Limited vs Registrar of Companies NCT of Delhi & Haryana

Justice Rakesh Kumar Jain:

This appeal is directed against the order dated 11.04.2022, passed by the National Company Law Tribunal, Bench II, New Delhi by which an Appeal No. 509/252/(ND)/2020, filed by the Appellant, under Section 252 of the Companies Act, 2013 (in short ‘the Act’) for restoration of the name of the Appellant Company to the register of the Registrar of Companies, NCT of Delhi and Haryana (Registrar) has been declined.

The  brief  facts  of  this  care  are  that  the  Appellant  Company  was incorporated under the Companies Act, 1956 on 26.04.2007 vide CIN U45400DL2007PTC162637 as a Pvt. Company Ltd. by shares with the Registrar of Companies, NCT of Delhi and Haryana having its registered office at New Ashok Nagar, New Delhi.

The main objects of the Appellant was to carry on the business of builders, promoters, developers, colonizers, contractors, architects, town planners, and to purchase, take on lease or in any other lawful manner any area, land building structures, space and to sell, build, repair, construct, promote, develop, maintain, manage, let, sublet, give on lease, dispose off or otherwise deal in all types of land, building, markets, factory, sheds, flats, residential commercial and industrial part, etc.

The Registrar of Companies Delhi and Haryana initiated proceedings under Section 248 of the Act and struck off the name of the Appellant Company  from  its  register  vide  notice  no.  RoC-DEL/248(5)/STK-7/4865 dated 08.08.2018. The name of the Appellant Company appeared at serial no. 15095 in the list of companies whose names were struck off. The name of the Appellant Company was struck off from the register on account of default in statutory compliances, namely, failure to file financial statements & annual returns since 31.03.2014.

The Tribunal noticed in its order that audited balance sheets of the Appellant for the financial year 2013 -14 to 2018-19 has shown ‘Nil’ revenue from the operations, copies of the income tax returns for the assessment year from 2015-16 to 2020 -21 reflected total income and payment of taxes as ‘Nil’. It has also noticed that the Department of Income Tax filed its report observing that “huge amount of work in progress amounting to Rs. 502224949 (approx.) is pending since many years. This amount is almost equivalent to loan taken from related concern. In earlier years, this amount has been shown as sundry creditors” The Tribunal sought specific comments from the Registrar in respect of this observation of Income Tax Department. The Registrar filed an additional affidavit on 01.12.2021 which has been noticed in the impugned order and it has also noticed that the Registrar has stated that it has no objection if the name of the Company is restored to the register of ROC. However, the Learned Tribunal noticed in the impugned order that the Appellant has paid the Income Tax only in the assessment year 2009 -10. The tripartite collaboration agreement dated 05.07.2008 signed amongst Mr. K.H. Khan, Mrs. Shaheda Begum and Mr. Karar Ahmad as first party and M/s Upkar Developers (India) Pvt. Ltd. as second party and M/s Era Landmarks (India) Limited as the third party did not depict, in any manner, that the Appellant Company was either in operation or carrying on its business. The assignment agreement dated 25.01.2020 between M/s Adel Landmarks Ltd. and the Appellant Company does not give any ownership rights over any of the immovable properties. In this background, the Tribunal formed a opinion that inventories reflected in the report of Registrar are merely book entries and the Appellant has failed to demonstrate that such inventories physically exist and that the Appellant Company has not filed its financial statements since 2014. The Tribunal relied upon a decision of this Tribunal rendered in the case of Alliance Commodities Pvt. Ltd. Vs. Office of Registrar of Companies, West Bengal, CA (AT) No. 20 of 2019 and dismissed the appeal.

Aggrieved against the said order, the present appeal has been filed.

Counsel for the Appellant has submitted that the Appellant is a 100% subsidiary of Adel Landmarks Limited which is under insolvency vide order dated 05.12.2018 passed in CP (IB) 1083 of 2018 by the Tribunal. The Appellant is a land owning company whereas Adel Landmarks Ltd. is the developer company. It is submitted that the Tribunal has erred in making an observation that the Appellant is neither in operation or carrying on its business at the time when the name of the Appellant Company was struck off. In this regard, it is submitted that the Appellant was very well in operation when the name of the Appellant Company was struck off which is evidenced by the tripartite collaboration agreement dated 05.07.2008 entered into between the developer company, Karar Ahmed and M/s Upkar Developers because the intent of the said collaboration agreement was to develop the land into a project, named, ‘the Arena’ comprising of a township consisting of a residential layout, residential buildings, commercial complexes alongwith clubhouses, swimming pools, etc and other similar developments and for the said purpose various parcels of lands situated at village, Kengeri Hobli, Bangalore South Taluk, admeasuring 36 Acres and 4 guntas was transferred to the Appellant Company vide an assignment agreement dated 25.01.2010 whereas the developer company had transferred all of its rights, duties and obligations under clause 2.7 of the collaboration agreement to the Appellant Company for operational convenience of implementing and marketing the project, namely, Arena.

It  is  also  submitted  that  in  compliance  with  the  terms  of  the collaboration agreement and for the sake of the project, the Appellant opened a joint locker bearing no. E 410 on 22.09.2010 in the Bank of Maharashtra to store the title deeds of the schedule property upon its release from HUDCO. It is further argued that due to the financial stress of the developer company, the Developer Company was driven into insolvency and the by virtue of the assignment agreement, the existence of the Appellant Company was interlinked with the developer company. It is also argued that information memorandum executed by Respondent No. 3. The details have been given of the project undertakes by the Corporate Debtor in which the Appellant’s land being used under the project, named, ‘Arena’. It is also argued that the Appellant has also placed on record the statement of assessable income for the financial year 2015-16, statement of assessable income for the financial year 2016-17. In both the statements the funds received from Bangalore have been reflected. The salaries of guards and employees have been paid which is evidenced by the balance sheet of the Appellant Company for the year 2015-16. The provident fund and TDS payments have been made which indicates that taxes and mandatory statutory compliances have been made which are also reflected in the balance sheet for the year 2015-17.

Counsel for the Appellant has further argued that Section 252 (3) provides that name of the company can be restored if it is carrying on business or is in operation or otherwise it is just. In this regard, Counsel for the Appellant has relied upon the decisions of this Tribunal in the case of AVS Enterprises Pvt. Ltd. Vs. Registrar of Companies, Delhi and Ors. CA (AT) No. 47 of 2021, Urvashi Infrastructure Limited Vs. Registrar of Companies, Delhi and Haryana CA (AT) No. 28 of 2021 and Sidhant Garg and Anr. Vs. Registrar of Companies and Ors. (2012) 171 Comp. Cas. 326.

In reply, Counsel for the Respondent No. 1 has referred to the observations made and findings recorded by the Tribunal in the impugned order and submitted that the appeal is without merit and the same deserves to be dismissed.

We have heard Counsel for the parties and perused the record.

The Company is a juristic person, it takes birth with its incorporation which takes place in terms of Section 7 of the Act and after incorporation and registration, its effect has been mentioned in Section 9 of the Act. Section 248 of the Act provides the power to the Registrar to remove name of company from register of companies for the reasons mentioned from 248(a)to(e) and effect of the order passed under Section 248 is provided in Section 250 of the Act. However, the remedy to an aggrieved person against the order of the Registrar, passed under Section 248 is provided under Section 252 and in Section 252(3) it is provided that the Tribunal, if satisfied that the company at the time of its name was struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored on the register of Companies it may pass the order that the name of the company be restored to the register of the Companies.

In the present case, the Tribunal has relied upon a decision in the case of ‘Alliance Commodities Pvt. Ltd. (Supra) whereas the Appellant has brought on record that by virtue of tripartite collaboration agreement dated 05.07.2008 between the Developer Company, Karar Ahmad and M/s Upkar Developers to develop a project, namely, Arean the land admeasuring 36 acres and 4 guntas was transferred to the Appellant by way of assignment agreement dated 25.01.2020 by which the developer transferred all of its rights, duties and obligation mentioned in clause 2.7 of the collaboration agreement to the Appellant company for operational convenience of implementing and marketing the project, namely, Arena which was undertaken in pursuance to the joint development agreement dated 08.02.2007 and the memorandum of understanding dated 25.04.2008. It has also been brought on record that the details of the projects undertaken by the Corporate Debtor have been delineated wherein the Appellant’s land being used under the project Arena.

In view of this fact, it would be a hard case if the name of the company is struck off of the Companies and it falls under ‘the just or otherwise’ category even if it is not being called in operation as stated. However, it cannot be lost sight of the fact that the Appellant has been remiss in its statutory obligation which became the basis for striking off the name of the Company from the register of the Registrar of the Companies, therefore, in the peculiar facts and circumstances, the end of the justice would meet with the restoration of the name of the Company to the Register of Registrar of the Companies with imposition of fine/cost.

Thus, in view of the aforesaid facts and circumstances, the present appeal is hereby allowed. However, subject to payment of Rs. 2 lakh as cost which shall be deposited by the Appellant with the RoC within a period of 30 days from the date of passing of this order.