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Judgment
Ashutosh Chandra, Member (T)
C.P. No. 95/BB/2020 is filed by Ms. Vallabhaneni Bhanumathi ('Applicant/Petitioner') Shareholder of M/s. Balabhanu Enterprises Private Limited U/s 252(3) of the Companies Act, 2013 R/w Rule 87A of the NCLT Rules, 2016, by inter alia seeking to restore the name of the Petitioner Company namely M/s. Balabhanu Enterprises Private Limited, on the Register maintained by the Registrar of Companies, Karnataka; to direct the ROC to place the Company, Directors and all other persons in the same position as nearly as may be as if the name of the Company had not been struck off from the register of Companies, 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. Balabhanu Enterprises Private Limited (referred to as the 'Company') is a private limited Company incorporated under the provisions of the Companies Act, 1956, on 24.03.2003, vide CIN: U01010KA2003PTC031732. Its Authorized share capital is Rs. 2,00,00,000/- (Rupees Two Crore only) divided into 20,00,000 (Twenty Lakh) equity shares of Rs. 10/- (Rupees Ten) each and the Issued, Subscribed and Paid up Capital is Rs. 1,96,00,000/- (Rupees One Crore Ninety-Six Lakhs only) divided into 19,60,000 (Nineteen Lakhs Sixty Thousand) equity shares of Rs. 10/- (Rupees Ten) each. The main objects of the Company inter alia are to carry on the business in India and abroad by purchasing or to take on lease or job work or otherwise acquire, sell, dispose off, mines and mining rights and property etc.
(2) Ms. Vallabhaneni Bhanumathi (the Applicant/Petitioner herein) is a Shareholder of the Company, holding 9,80,000 equity shares of Rs. 10/- each amounting to 50% of the total paid-up of the Company.
(3) It is stated that the Company has filed its Annual Returns and the Financial Statements till the Financial Year ended on 31.03.2014. Subsequently, the Company has failed to file its Annual Returns and Financial Statements for the Financial Years 2014-15, 2015-16 & 2016-17 with the ROC, Telangana within the time prescribed under Sections 92 & 137, R/w Section 403 of the Companies Act, 2013.
(4) It is also stated that as the Company could not file the Annual Returns and the Financial Statements for the F.Y. 2014-15 to 2016-17, the ROC invoking the provisions of Section 248 of the Companies Act, 2013, had struck off the name of the Company from the Register of ROC. Further, the Directors of the Company have not received any notice vide Form STK-1. The Company has not filed the Income tax returns Tax.
(5) It is stated that the Company was incorporated in the year 2003 and was actively carrying on its business operations since then. The Company is engaged in the business of purchasing iron ore materials in bulk, process and sell the same to the end customers. As on 31.03.2019 the Company had stock in trade for an amount of Rs. 14,29,31,478/- and has also advanced an amount of Rs. 17,04,15,138/- to the various vendors for the supply of the Iron ore. Further, the Company has trade receivable for an amount of Rs. 21,35,89,747/- as on 31.03.2019. Due to adverse market conditions the management of the Company was concentrating on the marketing and development of the Company and in the process the Company has failed to file its Annual Returns and Balance Sheet for the F.Y. 2014-15 to 2016-17.
(6) It is further stated that the Company has prepared the audited financial statements as per the applicable provisions and by the time the Company was about to file all the statutory returns with the ROC, the name of the Company was struck of by the ROC. The failure on the part of the Company in filing the Financial Statements and Annual Returns and not responding to the notices of the ROC is purely due to oversight and unintentional. The Company is willing to file the returns and comply with the applicable laws for which the name of the Company needs to be restored.
(7) It is stated that no prejudice will be caused if the name of the Company is restored, on the other hand if the name of the Company is not restored it will cause irreparable loss to the Stakeholders and will affect the very initiative of the Government which is encouraging ease of doing business and thereby effect the rights of the Petitioner and other Stakeholders of doing business.
(8) The Petitioner undertakes to ensure to file all the returns, statements and documents that are required under the Companies Act, 2013 within the prescribed time. The Company has not received any cash nor paid any cash in violation of law during the period of demonetization. The Petitioner urged the Tribunal to consider the restoration of the name of the Company in the register of ROC and direct the ROC to address a letter to the banker of the Company to unfreeze the bank account.
The Registrar of Companies, Karnataka, has filed a Counter by way of Affidavit dated 14.07.2020, wherein he has not opposed the Company Petition. Apart from stating the facts of the case, as mentioned in the Petition, he has inter alia further stated as follows:
(1) Due to non-filing of the Balance Sheets and the Annual Returns for the Financial Year 2014-2015 to 2016-2017 the ROC issued a notice in Form STK-1 dated 16.03.2017 which was sent to the Company. Further, notice in Form STK-1 dated 22.03.2017 was sent to its Directors.
(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, the Respondent proceeded to strike off the name of the Company from the ROC and published a Notice in STK-7 in the Official Gazette on 29.07.2017 stating that from 17.07.2017 names of the Companies mentioned therein including the Petitioner Company have been struck off from the ROC as per Section 248(5) of the Companies Act, 2013.
(3) It is declared that there is no inquiry, investigation and Complaints against this Company. He has expressed no objection to restore the name of Company, as prayed for, however, subject to payment of cost and complying with pending statutory returns.
Heard Mr. M.B. Suneel, learned PCS for the Applicant/Petitioner through Video Conference. We have carefully perused the pleadings of the Parties and extant provisions of the Companies Act, 2013, and the Rules made thereunder.
Reiterating the facts as submitted with the Petition, Mr. M.B. Suneel, learned PCS for the Applicant/Petitioner submitted that the Company is active and non-filing of Annual Returns/Financial Statements in question was neither intentional nor deliberate but it was due to adverse market conditions, the Management of the Company was concentrating on the marketing and development of the Company and in the process the Company has failed to file its Annual Returns and Balance Sheets for the F.Y. 2014-15 to 2016-17. It is also confirmed that the Company has already prepared the audited financial statements as per the applicable provisions and they could not file them due to striking off the Company. Therefore, the Tribunal may consider the matter sympathetically to restore the name of the Company as prayed for, 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 order striking off the Company was in accordance with law, the Tribunal has to take into consideration the bona fide contentions of Petitioner seeking to restore the 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 the Tribunal to consider the case subject to terms and conditions. The Company is a going concern, and as on 31.03.2019 it had stock in trade of Rs. 14,29,31,478/- and had also advanced an amount of Rs. 17,04,15,138/- to the various vendors for the supply of the Iron ore. Further, the Company has trade receivable for an amount of Rs. 21,35,89,747/-. We are of the view that striking of its name would adversely affect the business as well as various stakeholders and employees. No prejudice would be caused to any party if the Company's name is restored, as prayed. The Shareholder of the Company has undertaken to file all the returns, statements and documents that are required under the Companies Act, 2013 within the prescribed time. Therefore, we are of the considered view that the 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. 95/BB/2020 is hereby disposed of with the following directions:
(a) 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, with restoration of all consequential action taken by Registrar of Companies, which includes restoration of DINs of its Directors.
(b) 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;
(c) The Company's representative, who has filed the Company Petition, is directed to personally ensure compliance of this Order;
(d) 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;
(e) The Petitioner is permitted to deliver a certified copy of this Order to the Registrar of Companies;
(f) 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;
(g) 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.
(h) The Company is directed to resume its business operations, as expeditiously as possible, after the name of Company is restored, in terms of this order.