Shila Builders And Developers Private Limited vs Registrar Of Companies Nct Of Delhi And Haryana And Ors

Hemant Kumar Sarangi, Member (T)

The present appeal is filed by the M/s. Shila Builders And Developers Private Limited and its Directors (for brevity the 'Company'), under Section 252(3) of the Companies Act, 1956 (for brevity 'the Act') against the order of striking off the name of the company, passed by the Respondent under section 248 (1) of the Act, issued vide notification No. ROC/DELHI/248(5)/STK-7/4865 and published on 08.08.2018 by Registrar of Companies, the respondent herein.

The Appellant states that, the company was incorporated as a Private Limited Company with the Registrar of Companies, NCT of Delhi and Haryana under the Companies Act, 1956 on 18.03.2004 with CIN U45201 DL2004 PTC125260, having its registered office at 427, Bhera Enclave, Paschim Vihar, New Delhi - 110087.

The Authorized Share Capital of the company is Rs. 10,00,000/- divided into 1,00,000/- equity shares of Rs. 10/- each. The issued, subscribed and paid up share capital of the Company is Rs. 5,00,000/- divided into 50,000/- equity shares of Rs. 10/- each, as per the Master Data Annexed.

The main objects of the company are:

(i) To undertake and to carry on the business of purchasing, selling and developing and type of land or plot whether residential, commercial, industrial, rural or urban that may belong to company or to any other person of whatever nature and to deal in and or immovable properties of any description or nature on commission basis and for that purpose to make agreements to sell the land of the company or of anybody else and to deal in building material electrical and civil materials.

(ii) To consolidate or subdivide develop maintain purchase sell and letting on hire all houses and sheds and to let out same on rental or license basis and/or to sell the same on hire purchase or installment system or other basis dispose of the same and to acquire land for the construction of multi-storied buildings and to license the flats therein on suitable terms and condition and to carry on the business of buy, sell, trade, import, export, contract, suppliers and dealers in all kinds of buildings materials and other materials used in construction activities.

(iii) And the other main object.

The appellant further states that, a sweeping action was initiated by the ROC, at the instance of MCA, in striking off the names of several Companies who had failed to file their Statutory Returns. The Appellant Company has not filed its Annual Returns and Balance Sheet for F. Y. 2013-14 to 2017-18, thereby giving rise to the surmise that the company was not in operation. Consequently, its name was struck off vide notice STK-7 dated 08.08.2018 by the Respondent from the Register of Companies under Section 248 of the Companies Act, 2013, upon taking steps in accordance with law and issuing a notification in the Official Gazette. The names of the affected companies were posted on its website.

The Respondent herein had issued purported Public Notice bearing No. ROC/DELHI/248/STK-5/2018/2912 dated 18.06.2018 and had sought explanation from the company as to why its name should not be struck off from the register of companies, on account of not carrying on any business or operation for a period of two immediately preceding financial years and having not made any application, within such period, for obtaining the status of a dormant company under section 455 of the Companies Act, 2013 (Act). Consequently, its name was struck off vide notice bearing No. ROC/DELHI/248(5)/STK-7/4865 dated 08.08.2018 (name of the company is reflected at SI. No. 19193), whereby names of 24280 companies have been struck off from the Registrar of Companies and the Company has been dissolved.

As per the notice of non-compliance of provision of the Companies Act, 2013, the said company has not filed its Annual Returns and Balance Sheet for F. Y. 2013-14 to 2017-18, 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 financial statement upto the year ending 31.03.2013, alongwith other statutory documents, were duly filed by the Company with the Respondent (duly reflecting in the Master Data of the Company). The company was active and was carrying out its business during the period of striking off but the reporting of such activities through Annual Returns and Financial Statement had not been filed with the Registrar of Companies due to inadvertence on part of the management. The said facts are evident from the Bank Account statement of the Company for the relevant period.

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

i. Copy of General Power of Attorney & Agreement to Sell executed on 17.03.2009, Plot No. 4, Area Measuring 242.75 Sq. Mtrs. situated in Sector - 20, Situated at service Centre, Marble Market, Dwarka, New Delhi.

ii. Copy of General Power of Attorney & Agreement to Sell executed on 17.03.2009, Plot No. 5, Area Measuring 242.75 Sq. Mtrs. situated in Sector - 20, Situated at service Centre, Marble Market, Dwarka, New Delhi.

iii. The copies of Audited Financial Statements of the company for the F. Y. ended 31st March 2014 to 31st March 2018. The Financial Statement for F. Y. ended 31st March 2018 reflects Non-Current Investment of Rs. 86,60,720/-. Current Assets in form of Cash and Cash Equivalents of Rs. 12,249/-.

iv. The copies of Income Tax Returns for the Assessment Years 2010-11 to 2013-14 The tax paid by the company for A.Y. 2013-14 is Rs. NIL.

The ROC has filed its reply on 28.03.2019 in which it has been submitted that the Company had not filed its Financial Statement since Financial Year ended on 31.03.2014. However, the ROC further submits that the company was struck off by the office of Respondent because neither the company was carrying on any operation for a period of two immediately preceding financial years, nor obtained the status of a Dormant Company under Section 455 of the Companies Act, 2013.

The Income Tax Department has filed its reply on 13.09.2019 in which it has been submitted that the Company has filed its Income Tax Return since F. Y. ended on 2014.

The Income Tax Department further submitted that Information received from Investigation Wing that the assesse is a beneficiary of taking accommodation of taking accommodation entry in the grab of share application money / share capital amounting of Rs. 40 lacs from the concerns operated by S. K. Jain a well-known entry operator. It is further stated that the assessment was completed on 28.12.2016 under Section 147/143 of the Income Tax Act, 1961 whereby addition of Rs. 40,00,000/- was made and a demand of Rs. 23,72,329/- was created along with appropriate penalty under Section 271(1)(c) of the Income Tax Act, 1961.

In its reply the Income Tax Department also prays for the following:

a. That the directors of the Appellant Company may be directed to attend the recovery proceedings / penalty proceedings before the office of the answering Respondent and to provide details of all the movable / immovable assets of the company.

b. That the Appellant company may be directed to file un undertaking that no assets will be sold out before paying the demand of the department.

c. Pass appropriate orders for protecting the interest of the Revenue;

d. Pass any orders in favour of the Revenue;

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 Appellant has submitted sufficient evidence that it has been in operation since incorporation and during the period preceding strike off, therefore it could not be termed as a 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.

Further, taking into consideration the prayers of the Income Tax Department, this Tribunal orders that the appellant company is directed to attend the recovery proceedings / penalty proceedings before the office of the answering Respondent and to provide details of all the movable / immovable assets of the company. The appellant company is also directed to file an undertaking that no assets will be sold out before paying the demand of the department.

Accordingly, this appeal is allowed. The Public Notice of Registrar of Companies, striking off 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 along with additional fees required under law and completion of all formalities, including payment of any late fee or any other charges which are leviable by the respondent for the late filing of statutory returns, and also subject to payment of cost of Rs. 25,000/- to be paid to Prime Minister's Relief Fund. The name of the Appellant Company shall then, as a consequence, stand restored to the Register of the Registrar of Companies, as if the name of the company had not been st ruck 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.