Subham Construction Pvt Ltd vs Registrar of Companies, Odisha

06.12.2022: Heard Mr. Dhananjay Bhaskar Ray, learned counsel for the appellant and Mr. Kamal Kant Jha, learned senior panel counsel appearing on behalf of the Sole Respondent i.e. Registrar of Companies, Odisha.

The present appeal under Section 421 of the Companies Act, 2013 has been preferred against an order dated 28.12.2020 passed by the National Company Law Tribunal (hereinafter referred to as the ‘NCLT’), Division Bench, Cuttack in CP (Appeal) No.251/CB/2020. By the said order learned NCLT has rejected the appeal filed by the appellant against an order dated 7.7.2017 passed by the Ministry of Corporate Affairs, Govt of India, Office of the Registrar of Companies cum Official Liquidator, Odisha.

The learned counsel assailing the order submits that the order impugned is fit to be quashed only on the ground that the learned NCLT contrary to the materials available on record has passed the order as if the appellant company was non-operational nor generating any funds. He has referred to number of documents brought on record, mainly copy of the Chartered Accountant Report for the year 2019-20 and the Balance Sheets since 2010-2011 till 2019-20. He submits that besides bank statement, sale deed etc were available on record, however, the learned NCLT ignoring those facts has passed the impugned order. It was further submitted that the functioning of the company was obstructed due to some litigation with the Development Authority and as such due to inadvertence as well as non conversant with the new Companies Act, 2013 the statutory statements and returns were not filed before the ROC for some period. It has further been argued that the striking off order was also passed without any notice to the appellant and as such it was a fit case of interference by the learned NCLT, however, contrary to record the learned NCLT has passed the impugned order holding as if the company was non-operational and generating no funds. Learned counsel for the appellant has drawn our attention to the copy of the balance sheet, audit report by the Chartered Accountant to show that the appellant was going concern and as such learned NCLT was not required to refuse the prayer of the appellant for restoration of the name of the company on the register of ROC.

He further submits that even ignoring the bank statements brought on record in the appeal, the learned NCLT has passed the impugned order which is fit to be interfered with.

Mr. Kamal Kant Jha, learned counsel appearing on behalf of the ROC opposing the appeal submits that the order is passed in accordance with law. He submits that before striking off the name of the company, due notice was issued, even paper publication was also done, however, the appellant did not give any response and as such ROC was having no alternative but to pass an order striking off the name of the appellant company from the record of the ROC. Accordingly ROC has rightly struck off the name of the appellant. Accordingly to Mr. Jha, exercising jurisdiction as per provisions contained in Section 248 of the Companies Act, 2013, the steps were taken to call for explanation from the appellant and notice were issued which were even published in the newspaper i.e. substituted service of notice. He submits that after publication of newspaper it was deemed to be served on the appellant, however, the appellant did not bother to file any response. Accordingly, the Registrar of Companies was having no remedy than to pass an order striking of the appellant company. Mr Jha further submits that of course during hearing a plea has been taken that learned NCLT has passed the order which is contrary to record, but no specific statement has been made in the Memo of Appeal. This was controverted by the learned counsel for the appellant by way of referring to grounds in the Memo of Appeal. Learned counsel for the appellant has specifically drawn our attention to para 9.1, 9.2 and 9.4 at running page 31, 33 and 34 of the Memo of Appeal to substantiate that even in the Memo of Appeal it was indicated that the appellant company was going concern and financial statements and annual returns from 2010-11 onwards were before the NCLT. However, learned NCLT ignoring those facts proceeded to pass an order as if the appellant company was non functional or not generating any funds.

Mr Jha, learned counsel for the Respondent submits that considering the fact that number of shell companies were continuing, a decision was taken by the Govt of India for taking steps for striking off name of the such companies who were not filing proper information/returns to the ROC. He submits that this is not only the appellant company but number of other companies on same footings were considered by the ROC and their name were directed to be struck off. Accordingly it has been argued that there is no need for interfering in the matter.

Besides hearing the learned counsel for the parties we have perused the record minutely. Of course in the Memo of Appeal learned counsel for the Appellant has produced certain bank statements and balance sheets approved by the Chartered Accountant to substantiate that the appellant company was involved in business and generating funds, however, on examination of the impugned order it is evident that the Learned NCLT has noticed that no specific material was brought on to show that the appellant company was going concern.

It is true that in Memo of Appeal grounds have been taken as enumerated in para 9 of the appeal. In para 9.1, 9.2 and 9.4 certain grounds have been taken to show that the order impugned is contrary to record. We propose to reproduce paras 9.1, 9.2 and 9.4 which is at running page 31, 33 and 34 as follows:

Save and except ground mentioned hereinabove there is no specific statement in the Memo of Appeal. It goes without saying that if in Appeal, a ground is being taken that Court below has passed order contrary to record, it is considered as a serious allegation against the concerned court. If in a case such a stand is taken, it must be made specifically in the petition. In the Memo of Appeal the appellant has not made such statement, however, in grounds for appeal some unclear fact has been disclosed. Moreover, even on perusal of para 9.1, 9.2 and 9.4 it is not specifically clear that what record was exactly placed and ignored by the NCLT and how the impugned order is contrary to record. In such a situation we are not in a position to accept the submission of learned counsel for the appellant that learned NCLT has passed order contrary to record. We are of the considered opinion that if in an appeal appellant takes a stand that Court below has passed order contrary to record, in such situation it is mandatory to make specific statement in pleading with referring to record/document which was/were not noticed and order was passed contrary to the same record/document. Only indicating something in grounds of appeal may not serve the purpose.

Besides this it is admitted position that in the present case the appellant company was incorporated some time in the year 1998 and thereafter till 2011 statements and returns were filed before the ROC. However, thereafter no step was taken to intimate the ROC as to whether the company was running or not. In the year 2017 appropriate notices were issued to rectify the error by way of filing return or apprise the Registrar as to whether the company was continuing or not. Two notices issued by the ROC remained unreplied. On perusal of striking off order dated 7.7.2017 it appears that paper publication was also made. Since it was not replied the ROC finally by order dated 7.7.2017 directed to strike off the name of the company. It is not an isolated case in respect of the appellant company but on perusal of Annexure A-10 running page 202-203 of the Memo of Appeal it is evident that names of other similarly situated companies were also struck off. It is true that under Section 252(3) of the Companies Act, 2013 the Tribunal is empowered to restore a company within a period of twenty years if the company was struck off under Section 248(5) of the Act but there is rider that there must be satisfaction to the Adjudicating Authority that the struck off company at the relevant time i.e. at the time of striking off was carrying on business or in operation or otherwise it was just for the company to restore the name. On examination of the impugned order, it is evident that the NCLT was satisfied that the company was not going concern or doing business and as such the NCLT did not interfere with the order of the ROC. Moreover, jurisdiction under Section 252(3) may not be exercised in casual manner otherwise it may be considered that the power of Registrar to strike off company under Section 248 is redundant. In absence of any specific statement made in the Memo of Appeal except vague allegations taken in the ground of appeal we are unable to record a finding that the NCLT has passed order contrary to record which were available before it. As such we are unable to pass any favourable order.

The appeal accordingly stands dismissed.