Bipin Kumar Patnaik vs Registrar Of Companies, Orissa & Anr

[Arising out of Order dated 10th December, 2019 passed by the Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) in CP (Appeal) No. 21/CTB/2019]

IN THE MATTER OF:

Bipin Kumar Patnaik S/o Late Joginath Patnaik At-Flat No-01, Rani Arnapurna Apartment, Tankapani Road, PO: BJB Nagar, PS: Baragad, Town - Bhubaneswar-751014 ....Appellant Dist- Khurdha, Odisha

Versus

Registrar of Companies, Orissa at Plot No. 9(P), Sector-1, CDA, Cuttak-753 014, Orissa ...Respondent No. 1

O. M. Builders and Developers Pvt. Ltd.

Registered office at: 4323/C, Ravi Talkies Square, Lewis Road, Bhubaneswar-751002, ...Respondent No. 2 Odisha

Present:

Appellant: Mr. Ajay Garg, Mr. Surabhi Katyal, Advocates. Respondents: Mr. Kamal Kant Jha, Sr. Panel Counsel, Govt. of India/RoC.

(J U D G E M E N T) [Per; Shreesha Merla, Member (T)]

1. Challenged in this Appeal is to the Impugned Order dated 10.12.2019

passed by the Adjudicating Authority (National Company Law Tribunal,

Cuttack Bench) in CP (Appeal) No. 21/CTB/2019, by which Order National -2-

Company Law Tribunal (NCLT) has dismissed the Appeal preferred by the

Company M/s O.M. Builders and Developers Pvt. Ltd., consequent to which

Order the name of the Company was struck off from the Register.

2. Submissions of the Ld. Counsel appearing on behalf of the Appellant.

• It is submitted by the Learned Counsel for the Appellant that Register of

Company/Orissa has struck off the Company's name from the Register

due to defaults in statutory compliances, namely, failure to file financial

statements and annual returns, which were due from the financial year

ending 31.03.2014 onwards, on account of which, the Registrar of

Companies (ROC) has initiated action under Section 248 (5) of the

Companies Act, 2013 for the purpose of striking off the name of the

Company from its Register.

• Learned Counsel for the Appellant drew our attention to the copy of

Certificate of Incorporation, Memorandum of Article of Association, copy

of the Company Master Data, the Financial Statements, the Banks

Statements and the Board Resolutions.

• The NCLT has observed that the Company has not filed any Income Tax

Returns; that the details of the bank transactions with Odisha Gramya

Bank indicates that there were no business transactions in the account;

that the Company was not a going concern; that the Company was not

carrying any business or was on operation and that the documents

submitted by the Appellant in compliance of their order shows that the

Company Appeal (AT) No. 56 of 2020 -3-

Company has performed some business transactions in the year 2018

after its name was struck off by the ROC in 2017.

• Learned Counsel for the Appellant submitted that the Company is

engaged in the Business of Real Estate Development and Construction

and is holding valuable Leasehold Rights for a piece of land situated at

IDCO, Plot No. 39 & 40, admeasuring 2.05 acres, Industrial Estate,

Bhagabanpur, Dist. Khurda, Odisha during the period 1st April 2013 to

31st March, 2016 and the said Plot No. 39 has been leased out by Orissa

Industrial Infrastructure Development Corporation (IDCO) for a period of

90 years effective from 11.05.1983 up to 10.05.2073 and Plot No. 40 for

a period of 90 years effective from 31.05.1983 up to 30.05.2073 for

establishment of stone crusher. It is further submitted that a Tripartite

Agreement for transfer of Plot No. 39 on 29.04.1997 with IDCO was and

drew our attention to the Tripartite Agreement filed before us with

respect to both the Plot Nos. 39 & 40.

• It is seen from the record that the Company continues to pay the lease

rent and has paid lease rent of Rs. 49,839/- for land leased out by IDCO

for Plot Nos. 39 & 40 as seen from the payment slip dated 07.11.2016

issued by Axis Bank and money receipt dated 14.11.2016 issued by

IDCO. The said payments include arrears of Rs. 33,979/-. It is seen

from the record that the Company has convened its Board meetings and

audited its financial statements after the year 2016. On a query from the

Bench, Learned Counsel for the Appellant submitted that the Balance

Company Appeal (AT) No. 56 of 2020 -4-

Sheet for the Financial Years 2013 to 2016 could not be filed before the

ROC on account of lack of knowledge and lack of funds but, the said

financial statements were filed as a part of the Company Petition before

the NCLT. The Company had not applied under Section 455 of the

Companies Act, 2013 to take benefit of being a Dormant Company. It is

seen from the record that the Audited Balance Sheet for the Financial

year 2018-2019 were filed before the NCLT. A secured loan of

Rs. 10,79,988/- from LIC Housing Finance Ltd. and sundry creditors of

Rs. 5,88,907/- is seen from the financial statements. It is an admitted

fact that the Company had developed 'Jhunjhunwala Complex' in the

year 1994 but could not execute the sale deeds in favour of the

buyers/customers due to pendency of litigation between the

Jhunjhunwala family members over the said land. The project could not

be completed which resulted in huge financial loss. The family members

of the Jhunjhunwala family have been embroiled in the long drawn

litigation for partition of family properties which at this stage is pending

before the Hon'ble Supreme Court.

3. Submissions of the Ld. Counsel appearing on behalf of the Respondent

• Learned Counsel for the Respondent Mr. Kamal Kant Jha submits that a

show cause notice was issued under Section 248 (1) (c) of the Companies

Act, 2013 to the Company, enquiring whether the said Company was

carrying on any business or was in operation, but no reply was received.

Company Appeal (AT) No. 56 of 2020 -5-

• It was published in the Official Gazzette and Newspaper for information

of the general public regarding striking off the name of the Company in

Form No. STK-5/5A. After the expiry of the time line mentioned in the

above notice, the name of the Company was struck off on 22.07.2017

and the Company stood dissolved from 21.06.2017 onwards.

• It is submitted by the Learned Counsel for the Respondent that having

regard to the facts of this case, if the Tribunal is inclined to give an

opportunity to the Appellant herein a fine ought to be paid in accordance

with law.

• In Re Priceland Ltd. Waltham Foresh London Borough Council v

Registrar of Companies and Ors. (1997) 1 BCLC 467, 476, 477 (Ch. D)

(Companies Court), it is observed and held as under:

".....In other words, the exercise of discretion only arises after the court has been satisfied that (a) the Company was at the time of striking off carrying on business or in operation, or (b) otherwise that it is just that the Company be restored. The first of these amounts to the court being satisfied that the registrars reasonable beliefs which were the basis for the original order striking the Company off, were not in fact correct. The second means that, prima facie, the court has been persuaded that it is just to restore. In either case it seems to me that, absent special circumstances, restoration should follow. Exercising the discretion against restoration should be the exception, not the rule," (Page 476) Once the court has acquired jurisdiction on the basis that the new applicants interests make restoration just it would be harsh indeed to refuse the relief sought because some other third party may be inconvenienced by it. These considerations lead me to the view that the court should be very wary of refusing restoration so as to penalize a particular applicant or in a possibly futile attempt to safeguard the special interests of a single

Company Appeal (AT) No. 56 of 2020 -6-

or limited class of affected persons. It would need a strong case to justify a refusal on these grounds....... (Page 477) (emphasis supplied)."

Assessment:

4. The material on record shows that Lease Hold Rights of the

aforementioned property is still prevalent, the financial statements upto 2018-

19 has been filed along with the Petition before the NCLT, the loan taken from

LIC Housing Finance Ltd. and the amount of the sundry creditors.

5. We are of the considered view that the Company being in the Real Estate

Development and Construction and having regard to the fact that the Company

in this Appeal has come out with the plea that in the event of revival of the

Company and the restoration of name of the Company in the Register

maintained by the ROC, it shall file all outstanding statutory documents

namely, the financial statements for the financial years and also the annual

returns along with the file fees and the additional fees as applicable on the date

of the actual filing, on a careful consideration of the contentions advanced by

both sides, this Tribunal by exercising of sound discretion, deems it just and

proper to restore the name of the Appellant Company, however, on payment of

cost of Rs. 50,000/- for the laches and omissions on part of the Appellant

Company's management.

6. Before parting of the case this Tribunal observes that the restoration of

the name of the Company is subject to filing of all the outstanding documents

required by law and completion of all statutory formalities including payment

of any late fee for the outstanding period and any other charges leviable by

Company Appeal (AT) No. 56 of 2020 -7-

ROC and also payment of cost of Rs. 50,000/- to be paid to the 'Prime

Minister's Relief Fund' within two weeks from today and produce the said

receipt for verification before the Respondent.

7. Resultantly, the name of the Company shall stand restored on the

Register of 'Registrar of the Companies' as if the name of the Company was not

struck off in accordance with Section 248 (5) of the Companies Act, 2013.

8. Hence, this Appeal is allowed with the aforenoted observations.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

Principal Bench, New Delhi 10th January, 2023

Swati

Company Appeal (AT) No. 56 of 2020