Sivagnanagovindasamy Nambi vs The Registrar Of Companies, Chennai

[Per: Shreesha Merla, Member (Technical)]

Aggrieved by the Impugned Order dated 12.01.2022, passed in MA/06/CHE/2021 in CA/558/2020 and in MA/1034/2020 in CA/558/2020, whereby and whereunder, the National Company Law Tribunal, Division Bench – I, Chennai (`NCLT’) has dismissed the Application filed by the Appellant herein namely Manasanthi Mental Health Care Private Limited, seeking to restore the name of the Company in the Register of the Respondent / Registrar of Companies (`RoC’), Chennai.

It is the case of the Appellant represented by Mr. K. Gaurav Kumar, Company Secretary that the Appellant Company has been active since its Incorporation and has identified during the period 2011 - 2012 certain future Projects and also pumped in additional Capital to the tune of Rs.19 Lakhs and that the Annual Returns and the Balance Sheets of the Company could not be filed with the Respondent / RoC, due to inadvertence and lack of Professional expertise and therefore the name of the Company was Struck Off and resultantly Form STK-7 was issued on 05.07.2017. MA/06/CHE/2021 was filed by the Appellant / Applicant that the DIN No. of the Appellant Company has also been Struck Off. The Learned Company Secretary for the Appellant submitted that a Writ Petition was filed before the Hon’ble Madras High Court in WP No. 8590 / 2018 and WMP No. 10520 / 2018, in which, the Hon’ble Madras High Court, passed an Order of Stay on disqualification of Directors referring to the Common Order, passed in WP No. 6896 / 2018 and WMP No. 8544 / 2018.

The Learned Company Secretary for the Appellant drew our attention to the relevant Paragraphs in WP No. 6896 /2018 and in WMP No. 8544 / 2018, which read as hereunder:

Mr. K. Gaurav Kumar, Learned Company Secretary also relied upon the following observations of the Hon’ble Madras High Court in the Writ Petition filed by the Appellant in WP No. 8590 / 2018 and WMP No. 10520 / 2018, which is reproduced as hereunder:

(Emphasis Supplied)

It is the case of the Appellant that a conjoint reading of both the Orders passed by the Hon’ble High Court states that the Appellant herein was allowed to use the CODS Scheme 2018 as an alternative to Section 252 of the Companies Act, 2013 to revive the Company by filing the relevant Annual Documents. It is submitted that as per the CODS Scheme 2018 a defaulting Company is permitted to file its overdue documents which were due for filing till 30.06.2017 in accordance with the provisions of the Scheme. It is the Appellant’s case that the Scheme was initially introduced, it was only meant for those Companies which were `not Struck Off’, however, subsequent to the Orders of the Hon’ble Madras High Court, the CODS Scheme, 2018 was extended and may be made applicable, such benefits given to those Companies which were Struck Off and whose Directors preferred these Writ Petitions, and therefore asking the Appellant herein to pay the due penalties under the CODS Scheme and simultaneously filed a Section 252 Company Petition and further make payments under Penalties would construe `Doctrine of Double Jeopardy’.

The Learned Company Secretary placed reliance on the following Judgments in support of his case that `Concept of Justness’, must be ascertained and determined, based on the facts of each case and that the case of the Appellant which provides Mental Healthcare to the Society and also has several Creditors mentioned in the Balance Sheet, ought to be considered, based on the ratio of these Judgments.

Mr. Avinash Krishnan Ravi, the Learned Counsel for the Respondent / RoC vehemently argued that the Appellant Company has not filed the Annual Returns and Financial Statements as per the provisions of the Companies Act, 2013, for the Financial Years 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 & 2016-17 and thereby failed to follow the statutory compliance as provided under Section 92 (4) and Section 137 of the Companies Act, 2013 and additionally the Appellant Company also did not make any Application under Section 45 for obtaining the `Dominant Status’. Such action of the Appellant gave a reason for the Respondent to believe that the Company was in-operative. It is submitted that the Company was finally Struck Off under Section 248(5) of the Act on 29.06.2017 and its name was published in the Gazette of India dated 15-21^st July 2017 under S.No.1516.

Aggrieved by this Order, the Appellant filed a Petition under Section 252(3) of the Companies Act, 2013, which was dismissed by the NCLT. As regarding the averment of the Appellant that the Company has physically filed all pending Returns until the Financial Year ending 2017 under CODS Scheme 2018 and paid the Challan Fees by way of Deposit in the Registry of the Hon’ble Madras High Court, it is stated that the Receipt of Fee is not yet confirmed by the Registry. It is submitted that the Respondent in his Report to the NCLT dated 16.12.2020 has clearly stated the reason for Striking Off under Section 248(1)(c) of the Act was solely on account of failure to file Statutory Returns as per Sections 92 & 137 of the Act. It is submitted that the Appellant had wrongly interpreted the Orders of the Hon’ble Madras High Court dated 12.04.2018 and 26.03.2018 in WP No. 6896 / 2018 and in WMP No. 8544 / 2018. In fact, the Orders clearly direct the Appellant Company to file Compliances under the CODS Scheme 2018 as hard copies with the Respondents, but does not confer any specific privilege for restoration of the Companies which are `Struck Off’. It is submitted that while passing the Order dated 12.01.2022, NCLT has also delved upon the fact that the Appellant Company was not carrying on any business or any operation at the time of Strike Off and now the Appellant has furnished proof of filing of documents and payment of Fees under the CODS Scheme 2018. It is submitted in the Written Submissions by the Appellant that the Appeal may be considered on merits.

Simply put, the failure to file Returns by a Company under the Companies Act, 2013 (hereinafter referred to as `The Act’), has broadly two consequences namely, `disqualification of the Directors of the subject Companies’, if there is a 3 year failure of filing of the Returns and the Company can be Struck Off from the Register of the RoC, if there is a two year period of default of filing of the Returns. Succinctly put, the disqualification of Directors of a Company is distinctly different from the removal of the Company from the Register of the RoC. At this juncture, it is relevant to reproduce the reliefs sought for by the Appellant Company in this Appeal.

(Emphasis Supplied)

From the aforenoted reliefs prayed for in this Appeal, it can be clearly seen that the Appellant herein is seeking a direction to be allowed to file the remaining Financial Returns without being saddled with additional Fees and also to be allowed to Scan and Upload all the physically filed Returns of the Company till 2017.

The Learned Counsel Mr. Avinash Krishnan Ravi, appearing for the RoC drew our attention to the General Circular No.16 / 2017, issued by the Ministry of Corporate Affairs on 29.12.2017 with respect to the Condonation of Delay Scheme (CODS), 2018. A bare perusal of this Scheme shows that the Scheme is for defaulting Companies and their Directors, seeking an opportunity for the defaulting Companies to become compliant and normalise the Operations and it is specifically meant for an opportunity to be provided for the `Directors who are disqualified’. The relevant portion is extracted as hereunder:

From the aforenoted extract, it is crystal clear that the CODS Scheme 2018 is meant for providing an opportunity for the disqualified Director who has defaulted by not filing the Annual Return or Financial Statement for a continuous period of three years. Therefore, this Tribunal is of the considered view the CODS Scheme 2018 is not applicable to the facts of this case, where due to the non-filing of Returns, the Company was `Struck Off’ from the Register of RoC. It is also interesting to note that the Hon’ble Madras High Court Order dated 26.03.2018, relied upon by the Learned Company Secretary is only an Interim Order whereunder, the Hon’ble Madras High Court has directed the matter to be posted after a period of 8 weeks.

We find force in the contention of the Learned Counsel for the Respondent that in the Final Order of WP No. 6896 / 2018 dated 05.11.2019, it is held by the Hon’ble High Court, that a Director can be appointed in any other Company without hindrance, once the CODS Scheme has been complied with and therefore the direction given by the Hon’ble High Court in the Section 164 (2) (a) is distinctly different from any Notice / Direction issued under Section 248 of the Companies Act, 2013.

On a pointed query from the Bench, as to whether, the Appellant Company is ready and willing to comply all the provisions contemplated under Law and pay the Requisite Charges / Fee as well as Late Charges / Fee, the Learned Company Secretary Mr. K. Gaurav Kumar has consented to comply with the same. Having regard to the nature of the business of the Appellant Company which provides Mental Healthcare & Services to the Members of the Society apart from the fact that a bare perusal of the Financial Statements shows that the Company has Creditors and Loans and was in the process of setting up a Hospital, this `Tribunal’ is of the considered view that the ratio of the Three Judge Bench Judgment of the NCLAT, Principal Bench in CA (AT) No. 101 / 2021 can be made applicable to the facts of this case and therefore, this Appeal is Allowed and the Impugned Order is set aside with the following directions:

The Office of the Registry is directed to upload this Judgment on the Website of this `Appellate Tribunal’, without delay.