Durga Builders Pvt. Ltd vs Registrar Of Companies & Anr

[Arising out of order dated 08.10.2021 passed by the National Company Law Tribunal (Court-V, New Delhi) in Appeal 146/252/ND/2019 A/W CA/192/2021]

IN THE MATTER OF: M/s Durga Builders Private Limited

A Company incorporated under the

Companies Act, 1956 and having its

Office presently situated at: No. 37,

Green Meadow Farms, Satbari,

Chattarpur, New Delhi-110074. ....... Appellant.

Versus 1. Registrar of Companies

NCT of Delhi and Haryana

4th Floor, IFCI Tower,

61, Nehru Place, New Delhi-110019. ....... Respondent No. 1.

2. Income Tax Department

Income Tax Building, ITO Building,

IP Estate, New Delhi 110002. ....... Respondent No. 2.

Present: For Appellant: Mr. Rudreshwar Singh, Mr. Adarsh Tripathi, Mr. Vikram S. Baid and Mr. Gaurav Kumar, Advocates. 2

For Respondent:- None. JUDGMENT

(15th December, 2022)

Justice Anant Bijay Singh;

The present Appeal under Section 421 of the Companies Act, 2013, has

been filed by the Appellant being aggrieved and dissatisfied by the order dated

08.10.2021 passed by the National Company Law Tribunal (Court-V, New Delhi)

in Appeal 146/252/ND/2019 A/W CA/192/2021 whereby Appeal

(146/252/ND/2019) filed by Directors of the Company named 'Durga Builders

Pvt. Ltd.' (the Company) invoking the provisions of Section 252 of the Companies

Act, 2013 (the Act) for restoration of the name of the Company in the Register

maintained by the Registrar of Companies (the RoC) has been rejected with

following observations:

"5. From the above paras, we observe that the Company seems to be a defunct Company as it had not filed any Financial Statement and has not attached any copy of IT Return filed with IT Deptt during the last one decade. Therefore, in view of the aforementioned conclusion, the prayer is rejected and appeal is dismissed.

6. The appellant has filed CA/192/2021 with the prayer to permit the Applicant Company to file the correct company records available with the current management without imposition of cost or penalty, in lieu of the fraudulent annual returns filed by the Nanda's after the year 1997. In view of the rejection of Appeal 146/252/ND/2019 as above, the imposition of cost of penalty does not arise. Thus, CA/192/2021 stands disposed of."

Company Appeal (AT) No. 154 of 2021 3

2. The facts giving rise to this Appeal are as follows:

i) The Appellant Company i.e. M/s Durga Builders Private Limited was

incorporated on 22nd February 1985 having its registered office at Plot No - 9

Shop No- 4 Duggal Colony Devli Road New Delhi-110064 and is primarily

involved in real estate business. At the time of its incorporation its authorized

share capital was Rs. 10,000,000 and its paid-up capital is Rs. 2,85,000. Mr.

Divij Mehra (DIN: 03066933) and Mr. Saurabh Kapoor (DIN: 01579042) are the

only directors of Appellant Company and they are the persons responsible for

running the day to day affairs of the Appellant company. In the month of

December, 2018 the official of the Appellant company, while ascertaining some

information about the company through the web portal of Ministry of Corporate

Affairs (MCA) came to know that the Registrar of Companies (i.e. Respondent No-

1 herein), has struck off the Appellant Company's name from the Register

maintained by him, due to reasons best known to the Respondent No.1, the said

action was without ever giving any opportunity of hearing or any prior notice to

the Appellant or its all Directors.

ii) The Appellant Company had filed the Appeal (146/252/ND/20 19) under

Section 252 of the Companies Act, 2013, seeking restoration of the name of the

company on the Register of Companies maintained by the Registrar of

Companies, Delhi with other consequential reliefs along with the

Application(CA/192/2021) seeking permission to file Correct Annual Company

Records with ROC from the year 1997 Such need arose owing to various factors

related to the change in company management, wherein particularly, it is

Company Appeal (AT) No. 154 of 2021 4

pertinent to draw the attention of this Hon'ble Appellate Tribunal to all previous

company record updates done by the Appellant company through its erstwhile

management Sh. R.K. Nanda and Smt. Promila Nanda- all of them are being

fictitious, unauthorized, and done with the intention to confuse the Hon'ble

Courts and the Registrar of Companies. The Appellant having felt for the bonafide

reason that it would be germane to present before the Tribunal an accurate and

true picture of the company workings and comparable records, it is necessary

that any confusion with respect to previous filings in frivolous litigations and

otherwise is clarified and substituted by the actual and original records

submitted/filed by the authorised and current management of the Appellant/

Applicant company.

iii) The Tribunal, after hearing the case of the Appellant and in the interest of

justice and equity, had been graciously pleased to grant the interim protection

to the Appellant by rendering the stay order dated 21.01.2019 directing inter-

alia to the Respondent No- 1 (ROC) as under:

"ROC is directed to keep the striking off the name of M/s Durga Builders Private Limited in abeyance from the MCA Portal till the final order is passed in this Appeal as the Company needs to be represented before the Hon'ble Supreme Court and various other Courts I Forums for appropriate adjudication. In the interest of the shareholders and the employees the name of the Company should not be considered as struck off to enable them to proceed with the litigations pending before the various Courts."

Company Appeal (AT) No. 154 of 2021 5

iv) Further case is that Mr. Arun Mehra and Mrs. Seema Mehra (management

preceding the aforementioned current management of Durga Builders Pvt. Ltd.)

entered into an agreement dated 19.05.1997 with erstwhile management of the

Appellant/ Applicant Company purchasing 100% equity shares of Company by

way of which entire shareholding held by Nanda Group was transferred to Mehra

Group. Accordingly, Mr. R K Nanda and Mrs. Promila Nanda resigned from the

Board of Directors and relinquished all rights, titles pertaining to the ownership

and management of Durga Builders. Despite exiting out from Applicant

Company, the erstwhile management continued to deceive the public at large by

making various bookings of plot in the name of the Company as well as engaging

in other unauthorized activities including and not limited to furtively alienating

company properties. As a result of the same, there were various litigations which

took place pertaining to the Applicant Company. By virtue of being 100%

shareholders of Applicant Company, a petition was filed by Mr. Arun Mehra and

his wife Mrs. Seema Mehra before the Hon'ble Company Law Board being

Company Petition No. 112/(ND)/2013 under Sections 397, 398 and 399 read

with Sections 111,235,237,402 and 403 of the Companies Act, 1956 for the

alleged acts of oppression and mis-management on the part of Mr. R K Nanda

and Mrs. Promila Nanda to handover all the documents and render all accounts

of Durga Builders Pvt. Ltd. and to pass appropriate orders for rectification of the

Register of Members. The aforesaid Company Petition was disposed vide

judgment dated 11.03.2014 (Annexure A/5 at page 110 to 123 of the Appeal),

wherein the Hon'ble CLB was pleased to pass following directions:-

Company Appeal (AT) No. 154 of 2021 6

"Therefore, in the interest of justice for smooth functioning of the Respondent No.1 Company, I am of the considered view that the Appellants are the shareholders as stated in the Agreement dated 19.05.1997 and the appointment of Directors is required for the proper working of the Company. As such, it held that: i. The names of the Appellant No.1 and 2 be entered in the register of members showing their respective shareholding within 2 weeks; ii. The shareholders meeting be convened immediately to consider the appointment of Directors for proper functioning of the Company."

Accordingly, Mr. Divij Mehra and Mr. Saurabh Kapoor were appointed as

Directors of Durga Builders Pvt. Ltd thereafter. Due to these litigations between

the management of the Appellant Company, and nonavailability of the original

record and documents with the present management, there was unintentional

and inadvertent default in filing of annual returns during the intervening

periods.

v) In the absence of the documents and record of the Appellant/ Applicant

Company, the directors of the Company could not do necessary filings.

Additionally, the filing of returns undertaken by the Nandas were all illegal and

void thereby requiring the current management to file returns from the year

1997. Therefore, the directors took appropriate step by filing Co. Application No.

372/2015 in Co. A. No. (SB) No. 27/2014 for production and hand over of all the

documents and records of the Company. The Hon'ble High Court vide order dated

07.07.2015 was pleased to issue notice on the application as well directed the

erstwhile management to file the record before the Hon'ble High Court in a sealed

Company Appeal (AT) No. 154 of 2021 7

cover with proper index and pagination. Thereafter, the Application has

remained pending and despite best efforts of the Directors, the application could

not be decided due to hindrances created by the erstwhile management. The

Bank account statement of the Appellant Company from 2015-2018 is evident

that the company is operational and there have been day to day transactions

including such payments. After taking over the control of the Appellant Company

by the present management, who is continuously making the full effort for the

revival of the Company and recovering the assets of the company which has been

fraudulently transferred by the erstwhile management (Nanda's Group) in

collusion and connivance with the criminal syndicates either within their

relatives or to third party. In this regard it is stated that some valuable and prime

properties of the Appellant Company are namely:- 235 Acres of Land in

Faridabad (near Delhi Border); S-23 Panchsheel Park, New Delhi (Area 800 Sq

Yards Approximately); Plot No- 11 Lajpat Nagar IV, New Delhi (Area 725 Sq Yards

Approximately); Plot No- -12 Lajpat Nagar IV, New Delhi ( Area 725 Sq Yards

Approximately); Lands in Loni, Ghaziabad , etc. In this juncture, it is pertinent

to mention that for the revival, the Appellant Company is contesting various

cases in various Courts including before the Hon'ble Supreme Court.

vi) Further case is that in the month of December, 2018 the official of the

Appellant company, while ascertaining some information about the company

through the web portal of Ministry of Corporate Affairs (MCA) has come to know

that the Registrar of Companies (i.e. Respondent No-1 herein), has struck off the

Appellant company's name from the Register maintained by him, due to reasons

Company Appeal (AT) No. 154 of 2021 8

best known to the Respondent No.1, the said action was without ever giving any

opportunity of hearing or any prior notice to the Appellant or its all Directors.

Aggrieved by the striking of the name, the Appellate Company had filed the

Appeal (146/252/ND/20 19) under Section 252 of the Companies Act, 2013,

seeking restoration of the name of the company on the Register of Companies

maintained by the Registrar of Companies, Delhi with other consequential reliefs

and the same has been erroneously dismissed by the Tribunal vide order dated

08.10.2021. Hence this Appeal.

3. The Ld. Counsel for the Appellant during the course of argument and in

his memo of Appeal along with written submissions submitted that striking off

the name of the Appellant Company done by the Respondent No. 1 is completely

contrary to the intent of Section 248(1) of the Act. The sole purpose of striking

off the name is to weed out the defunct companies who were not carrying on any

business. However, the procedure adopted by the Respondent No. 1 while doing

the same is against the provisions of Section 248(1) because of which a fully

functional company has been struck off against the very intent and purpose of

the Act. The Respondent No. 1 did not issue any notice under Section 248(1) of

the Act which is mandatory in nature and a condition precedent before exercising

the power of striking off under Section 248(5) of the Act. Therefore, no

opportunity had been granted by the Respondent No. 1 to the Appellant thereby

being in dire violation of the fundamental principles of natural justice. The

Tribunal completely failed to take into consideration the fact that the Appellant

herein is a functional entity and is carrying on business since the date of its

Company Appeal (AT) No. 154 of 2021 9

incorporation. The Appellant has maintained its books of accounts and has filed

its Income Tax Returns and balance sheets regularly till the preceding period

which goes on to show that the Appellant was carrying out its regular business.

4. It is further submitted that the Appellant Company was being run by the

erstwhile management i.e. the Nanda Group since date of its incorporation.

Therefore, vide agreement dated 19.05.1997, 100% equity shares of the company

were transferred by the erstwhile management to the current Management i.e.

Sh. Arun Mehra and Mrs. Seema Mehra. Despite, existing from the Appellant

Company, the erstwhile management continued to engage into unauthorized and

illegal activities including but not limited to dishonestly alienating company

properties. Consequently, the Appellant company was engaged in various

litigations before different Courts to protect its interest in terms of the various

litigations which were pending as a consequence of the actions of the erstwhile

management. Further, the Tribunal failed to consider the fact that the said

litigations which were pending before the Hon'ble Court's including the Hon'ble

Supreme Court clearly shows that the Appellant Company was not dormant but

rather wholly functional at the time of being struck off. In fact, the Tribunal itself

vide order dated 21.01.2019 had clearly instructed the Respondent No. 1 to keep

the striking off of the Appellant in abeyance so as to enable the Appellant ought

to have considered that in terms of the disputes pending before various Courts

of Law pertaining to the Appellant Company, the name of the Appellant Company

ought to have been restored.

Company Appeal (AT) No. 154 of 2021 10

5. It is further submitted that the said principle has been duly confirmed and

upheld by the Hon'ble High Court of Delhi in Indian Explosives Ltd. Vs. Registrar

of Companies (2010) SCC OnLine Del 1613 wherein the Hon'ble Court after

relying on Umedbhai Jhaverbhai Vs. Moreshwar Keshav & Ors. AIR 1954 Madhya

Bharal 146 has held that when a suit is being pending against a company and

is being contested, it is proper to direct restoration of the name of the company. The same principles have been duly confirmed and followed by this Hon'ble Court

in Adroit Trade (P) Ltd. Vs. Registrar of Companies 2019 SCC OnLine NCLAT 187.

6. It is further submitted that the erstwhile management of the Appellant

Company created all sorts of forged documents and entities and resorted to

initiating all sorts of frivolous litigation to cast a shadow of doubt over the

agreement dated 19.05.1997, so as to give legal sanctity to their criminal acts.

To prevent the various frauds from surfacing and to keep the authorities in dark,

false company records were filed by the Nanda's. Based on these false annual

company filings, frivolous litigations for winding up the company were filed

under the name of fictitious and non-existing persons. The present management

took control of the Appellant company, tremendous efforts have been made for

the revival of the Appellant Company which has been defrauded in various terms

by the erstwhile management in various terms. The several suits are being

contested by the erstwhile management dishonestly to gain undue advantage in

terms of the prime properties owned by the Appellant Company. The one CS(OS)

86/2016, filed by the Appellant is pending before the Hon'ble High Court of Delhi

wherein the Order dated 07.04.2022 clearly records that the Appellant Company

Company Appeal (AT) No. 154 of 2021 11

has duly placed on record the Order dated 24.01.2022 passed by this Hon'ble

Court wherein the interim orders of the Tribunal to keep the name from being

struck off in abeyance.

7. It is further submitted that the Appellant Company makes it clear that

immense efforts were being made for revival which couldn't have been done in

case the Appellant Company did not continue as a going concern. The Present

Management has taken all the necessary steps toward protecting the interest of

the Appellant Company and to place the Appellant Company as well as all the

persons concerned in the same position as it was prior to the striking of the

Appellant Company. Further, relied on a judgment of this Tribunal in the case

of Ramesh Kumar Chitlangia & Ors. Vs. Registrar of Companies, 2020 SCC Online

NCLAT 895 wherein the intent of Section 252(3) of the Act, iterated the conditions

precedent for invoking/exercising its jurisdiction w.r.t restoration (para 6 of the

judgment) under which the case of the Appellant is squarely covered and further

held that the pending litigation involving the company and its management as a

just ground satisfying the conditions of the restoration of the name of a struck

off Company. Based on above submissions, the impugned order is fit to be set

aside and the Appeal be allowed.

8. On the other hand, the Respondent No. 1 / Registrar of Companies in his

reply stated that as per available records on MCA 21 Portal, the Appellant

Company-Durga Builders Private Limited was incorporated on 22.02.1985 under

the provisions of Companies Act, 1956 and the last Directors of the Company

namely Saurabh Kapoor and Divij Mehra. The Appellant company has not filed

Company Appeal (AT) No. 154 of 2021 12

its Financial Statements till financial year 31.03.2007, due to which the

Respondent due to which the Respondent No. 1/ROC had reasonable cause to

believe that the Appellant company was not in operation and in terms of

provision of Section 248(1) Notice was sent to the Appellant company and also

to its directors in March 2017 by invoking the provisions of Section 20 of the

Companies Act, 2013. The Appellant Company has been issued STK-1 in the

month of March, 2018. After expiry of time as mentioned in notice

published/sent and non-receipt of any objection from the company/directors,

Dissolution in form STK-7 having effect from 08.08.2018 was published on the

website of Ministry of Corporate Affairs on 18.08.2018. Further, it is stated that

the impugned order was passed in due consideration of the relevant facts

including the fact that as per the Records of the answering respondent, neither

the Appellant company was carrying out any operation for a period of 3 preceding

financial years nor have any immovable property in its name. The company was

unable to produce before the Tribunal any just and equitable ground for revival.

Further, submitted that the company was neither able to prove that it was

carrying any business before it was strike off nor have produce any supporting

information for just and equitable ground, therefore, the present Appeal deserves

to be dismissed with exemplary cost.

9. On the other hand, the Respondent No. 2/ Income Tax Department in his

reply stated that the Appellant Company has only filed the Income Tax Returns

for the Assessment Year 2007-08 and thereafter, no returns have been filed by

the Appellant Company. The Appellant Company has violated the mandatory

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provisions of Section 139 of the Income Tax Act, 1961. Further, no information

is found with respect to the Appellant Company depositing any cash during

demonetization period. There is no scrutiny and proceedings pending against the

Appellant Company. The Appellant Company may be directed to file all the

Income Tax Returns.

10. After hearing the parties and going through the pleadings made on behalf

of the parties, we observe that the Appellant Company is in litigation therefore,

the Company has not filed the financial statements and also without giving

opportunity of hearing, the Respondent No. 1/Registrar of Companies struck off

the name of the Appellant Company's from the Register maintained by him, but

in view of the fact and also the Bank Statements of the Appellant Company from

2015 -2018 shows that the Appellant Company is having substantial movable

as well as immovable assets. Therefore, it cannot be said that the Appellant

Company is not carrying on any business or operations. Hence, we are of the

view that the order passed by the National Company Law Tribunal (Court-V, New

Delhi) as well as Registrar of Companies, NCT Delhi & Haryana is not sustainable

in law.

11. In view of the aforenoted, we set aside the impugned order dated

08.10.2021 passed by the National Company Law Tribunal (Court-V, New Delhi)

in Appeal 146/252/ND/2019 A/W CA/192/2021. The name of the Appellant

Company be restored to the Register of Companies subject to the following

compliances.

Company Appeal (AT) No. 154 of 2021 14

i) Appellant shall pay costs of Rs. 50,000/- (Rupees Fifty Thousand)

to the Registrar of Companies, NCT Delhi & Haryana within 08

(Eight) weeks from passing of this Judgment.

ii) After restoration of the Company's name in the Register maintained

by the RoC, the Company shall file all their Annual Returns and

Balances Sheets. The Company shall also pay requisite charges/fee

as well as late fee/charges as applicable within 08 (Eight) weeks

thereafter.

iii) Inspite of present orders, RoC will be free to take any other steps

punitive or otherwise under the Companies Act, 2013 for non-

filing/late filing of statutory returns/documents against the

Company and Directors.

The instant Appeal is allowed to the above extent. I.A, if any, stands

disposed of.

12. Registry to upload the Judgment on the website of this Appellate Tribunal

and send the copy of this Judgment to the National Company Law Tribunal

(Court-V, New Delhi), forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi 15th December, 2022 R. Nath.

Company Appeal (AT) No. 154 of 2021