Davender Handa & Anr vs Union Of India & Anr

IN THE MATTER OF: Davender Handa & Anr. ...Appellants

Versus

Union of India Through Ministry of Corporate Affairs, New Delhi & Anr. ...Respondents

Present: For Appellant : Mr. Himanshu Harbola, Mr. Ketan Madan and Mr. Rohit Rafliwal, Advocates.

For Respondent : Ms. Nidhi Raman, Advocate with Mr. Zubin Singh, Advocate for R- 1 & 2/ROC.

ORDER

Per: Justice Rakesh Kumar Jain: (Oral)

10.04.2023 This Appeal is directed against the order dated 21.09.2021

by which an appeal filed under Section 252(3) of the Companies Act, 2013 (in

short 'the Act') for quashing of the order of the Registrar of Companies, NCT

of Delhi and Haryana (for short 'Registrar) dated 31.05.2007 by which name

of the Company has been struck off from the register of the Companies and

its restoration to its register has been dismissed.

2. Brief facts of this case are that H.P. Apparel Private Limited (in short

'Company') was incorporated under the provisions of the Companies Act, 1956

on 23.12.1996 and was allotted Corporate Identity No.

U17299DL1996PTC084010. Since the Company was neither in the business

nor in operation for a long time, therefore, the Registrar struck off the name of the Company from its register vide its order dated 31.05.2007. The said

order is reproduced as under:-

"In the matter of the Companies Act, 1956 and of the following Companies New Delhi - 110 019, the 31st May 2007 No. ROC/Delhi/560(5)/SM/260. - Notice is hereby given pursuant to Sub section (5) of Section 560 of the Companies Act, 1956 that the names of the under-mentioned companies from Serial Number 1 to 11426 have this day been struck off from the Register of the Registrar of Companies, Delhi and Haryana and are dissolved:- "

3. The Order dated 31.05.2007 was challenged by way of an appeal before

the Tribunal after a long delay in which the Registrar filed the reply and made

the following averments: -

"Sr. Particulars Remarks No.

1. Revenue from As per Profit & Loss A/c attached:

Operations and F.Y. 2006-07 Showing 'Zero' total revenue of F.Y. 2007-08 Showing 'Zero' last two F.Y. F.Y. 2008-09 Showing 'Zero' F.Y. 2009-10 Showing 'Zero' F.Y. 2010-11 Showing 'Zero' F.Y. 2016-17 Showing 'Zero' F.Y. 2017-18 Showing 'Zero' F.Y. 2018-19 Showing 'Zero'

Note: On perusal of petition received, it has been found in the enclosed Financial Statements for the F.Y. 2006-07, 2007-08, 2008- 09 and 2009-10 there was no

Company Appeal (AT) No. 146 of 2021 2 of 7 auditor report attached with the financials. Further as alleged in index of petition, no financial found to be attached for the f.y.

2019-20 in the petition.

2. Audited Financial Submitted with Petition for the Statement Financial Year 2006-07, 2007-08, 2008-09, 2009-10, 2010-11, 2016-17, 2017-18 and 2018-19.

3. Detail of property Copy of Transfer cum sale deed submitted with Petition @ page no. 54-73 executed 27.06.2009.

8. On perusal of petition received, it was observed in the enclosed Financial Statements there was 'Zero' revenue from operations in financial year 2006-07 to 2010-11 and 2016-17 to 2018-19 which clearly fails to support the claim of the Company that it was carrying on any business for past few years, especially at the time of strike off.

9. That the company was struck off on 31.05.2007 and it has come before this Hon'ble Tribunal after more than 13 years for seeking restoration."

4. The only argument raised by the Appellant before this Tribunal is that

though the Company had not generated any revenue from the financial year

2006-07 to 2018-19 but it has land which fact is sufficient for restoration of

the name of the Company to the register of the Companies. He has relied upon

the decisions in the case of M/s Insulflex and Private Limited Vs. Registrar of

Companies, Pune & Ors., Company Appal (AT) No. 203 of 2019 decided on

Company Appeal (AT) No. 146 of 2021 3 of 7 12.12.2019, Khetan Granite Private Limited Vs. Office of Registrar of

Companies, Jharkhand, Company Appeal (AT) No. 290 of 2019 decided on

20.01.2020 and Shri Madan Lal Food Products Private Limited Vs. Union of

India, though Ministry of Corporate Affairs, New Delhi & Anr., Company

Appeal (AT) No. 414 of 2018 decided on 13.01.2020.

5. On the other hand, Counsel for the Respondent has submitted that the

Appellant has acquired the land by virtue of Transfer-cum-Sale Deed dated

27.06.2009, much after the date i.e. 31.05.2007 when the name of the

Company was struck off from the register of the Companies and in view of

Section 250 of the Act the Company could not have purchased the aforesaid

land, therefore, it cannot be taken into consideration. He has further relied

upon a decision of this Tribunal in the case of M/s Alliance Commodities Pvt.

Ltd. Vs. Office of Registrar of Companies in WA, CA (AT) No. 20 of 2016 which

is stated to have been confirmed by the Hon'ble Supreme Court in the case of

Alliance Commodities Pvt. Ltd. Vs. Office of Registrar of Companies in WB, CA

No. 7258 of 2019 vide order dated 23.09.2019. He has further submitted that

the decisions relied upon by the Appellant are also not applicable because in

all these cases it has been found that the Company is in operation and as

such one chance has been given to the Company by restoring its name to the

register.

6. We have heard Counsel for the parties and perused the record with their

able assistance.

7. A Company is incorporated under Section 7 of the Act and pursuant to

its registration its effect is provided in Section 9 of the Act which says that

"from the date of incorporation mentioned in the certificate of incorporation, Company Appeal (AT) No. 146 of 2021 4 of 7 such subscribers to the memorandum and all other persons, as may, from

time to time, become members of the company, shall be a body corporate by

the name contained in the memorandum, capable of exercising all the

functions of an incorporated company under this Act and having perpetual

succession 1 *** with power to acquire, hold and dispose of property, both

movable and immovable, tangible and intangible, to contract and to sue and

be sued, by the said name."

8. However, 'Chapter XVIII' deals with removal of names of companies

from the register of Companies in which four grounds are providing in Section

248 of the Act for removal of name if the Registrar has reasonable cause to

believe that "(a) a company has failed to commence its business within one

year of its incorporation 1[or]; (b) 2[***] (c) 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 under [section 455; or] [(d) the subscribers to

the memorandum have not paid the subscription which they had undertaken

to pay at the time of incorporation of a company and a declaration to this

effect has not been filed within one hundred and eighty days of its

incorporation under sub-section (1) of section 10A; or (e) the company is not

carrying on any business or operations, as revealed after the physical

verification carried out under sub-section (9) of section 12.]".

9. Section 250 provides the effect of dissolution of the Company in terms

of Section 248 which provides that "where a company stands dissolved under

section 248, it shall on and from the date mentioned in the notice under sub-

section (5) of that section cease to operate as a company and the Certificate

Company Appeal (AT) No. 146 of 2021 5 of 7 of Incorporation issued to it shall be deemed to have been cancelled from such

date except for the purpose of realising the amount due to the company and

for the payment or discharge of the liabilities or obligations of the company."

10. Section 252(3) further provides that the name of the Company can be

restored if the Tribunal is satisfied that it was carrying on business or in

operation or otherwise it is just that the name of the Company be restored to

the register of the Companies.

11. In the present case, the sole ground of the Appellant is that the

Company was in possession of a piece of land in Nodia, therefore, it falls

within the ambit of the discretion of the Tribunal, within the parameters of

'otherwise it is just' to restore the name of the company. In this respect, regard

may be had to the decision rendered by this Tribunal in the case of M/s

Alliance Commodities Pvt. Ltd. (Supra) which has been upheld by the Hon'ble

Supreme Court. Para 9 of the said judgment, noticed by the Tribunal is

reproduced as under: -

"9. The exercise of such power is properly regulated and depends upon satisfaction of the Tribunal that the Company at the time of its name being struck off was carrying on business Company Appeal (AT) No. 20 of 2019 or in operation or otherwise it is 'just' that the name of company be restored. We do not find ourselves persuaded to agree with the proposition canvassed by learned counsel for the Appellant that inspite of Appellant's inability to demonstrate that the Company was at the relevant time carrying on business or in operation, the Tribunal had vast powers to order restoration of Company on the ground "or otherwise". This term "or otherwise" has been judiciously used by the legislature to arm the Tribunal to order restoration of a struck off company within the permissible time limit to take care of situations where it would be just and fair to restore company in the interest of company and other stakeholders. Such instances can be innumerable. However, this term "or otherwise" cannot be interpreted in a manner that makes room for arbitrary exercise of power by the Tribunal when Company Appeal (AT) No. 146 of 2021 6 of 7 there is specific finding that the Company has not been in operation or has not been carrying on business in consonance with the objects of the Company."

12. Moreover, we have also found that the judgments relied upon by the

Appellant, on the issue of the Company having the land, are not applicable

because it has been found in these cases that the Company was in operation.

13. Furthermore, in this case, the land has been acquired by the Company

by way of purchase on 27.06.2009 much after the order dated 31.05.2007

was passed by the Registrar of striking off the name of the Company from the

register, therefore, the Company stood dissolved in view of Section 248 and

had no competence to transact business in view of Section 250 of the Act.

14. Thus, in view thereof, since every case has to be decided on shown facts,

we are of the considered opinion that the present case does not fall within the

ambit of the provision of 'otherwise it is just'. The appeal is thus found without

any merit and the same is dismissed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) pks/kam

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