Kanodia Knits Pvt. Ltd vs Registrar Of Companies, Delhi & ...

IN THE MATTER OF: Before NCLT Before NCLAT Kanodia Knits Pvt Ltd 35, North Basti Harphool Singh, Sadar Thana Road, Delhi. Petitioner Appellant

Vs

Registrar of Companies Delhi & Haryana 4th Floor, IFCI Tower 61, Nehru Place, New Delhi Respondent Respondent

For Appellant:- Sh Abhishek Anand, Advocate.

For Respondents: - Mr. P.S. Singh, Advocate for Ministry of Corporate Affairs.

JUDGEMENT

(28.01.2019) A.I.S. CHEEMA, J:

This appeal has been filed against the impugned order dated 23rd April,

2018 passed by the Learned National Company Law Tribunal, New Delhi

Bench, (Court No.IV) (NCLT in short) in Appeal No.116/252/ND/2018.

2. The name of the appellant company was struck off by the Registrar of

Companies, after STK 5 Notice dated 13.6.2017 (Page 92) as the company had

not been carrying on business or nor in operations for two immediately

preceding financial years and the company had not obtained the status of

Company Appeal (AT) No.216/2018 2

dormant company under Section 455 of the Companies Act, 2013 (Act in

brief).

3. The appellant filed the appeal before NCLT (Page 201) claiming that the

company had two directors who were also the shareholders. The only

shareholders and directors are stated to be Mr. Ajay Kanodia and his wife Ms

Anjana Kanodia and they held 100% shareholding. The appellant before

NCLT claimed that the appellant had not been served with Notice under

Section 248(1) of the Act and the Registrar of Companies (ROC) had proceeded

to issue notice under Section 248(5) of the Act and the name of the appellant

company was then struck off. The appellant claimed that the company had

been doing business and was in operation and audited financial statements

for the year financial year 2012-13 to FY 2016-17 were filed.

4. The NCLT heard the appellant and received the reply filed by ROC. The

NCLT considered the material placed before it which included the above stated

balance sheet, bank statement for the period March 2013 to December, 2013

which had been filed. The appellant placed before the NCLT purchase orders

relating to April, 2016 to March, 2017 and sale invoices for similar period.

Copies of Income Tax Returns for financial year 2016-18 and 2017-18 were

also placed before the NCLT. The NCLT considered the case put up before it

as well as the documents and came to the conclusion that the appellant

company failed to prove that it was carrying on business or was in operation

when its name was struck off and dismissed the appeal which was filed before

it. Against the dismissal the present appeal has been filed and the same claim

is put up by the appellant referring to the documents which were filed before

NCLT.

Company Appeal (AT) No.216/2018 3

5. The ROC filed reply before us and affidavit of ROC claims that the

appellant company had not filed financial statements from the financial year

ending 31.3.2004 till 31.3.2011. The balance sheet and annual return was

filed for the year ending 31.3.2012 and thereafter again there was no filing

and according to ROC, STK-1 notice was duly issued to company on 21.3.

2017 and the copy of the same has been filed. According to the ROC the

appellant did not respond to the notice and further steps to strike off the

company were taken. According to ROC, later on public notice as per Section

248(5) was issued.

6. Learned counsel for appellant claims that in the reply filed before NCLT,

copy of which has been filed with Diary No.8597, a copy of STK-1 Notice was

not produced. Thus he wants the copy of the notice now filed to be ignored.

According to him no proof of service has been filed. He relied on the reply of

ROC in NCLT where the ROC stated that appellant may be directed to prove

that the company was carrying on business or in operation and that it is just

that the name of the company should be restored.

7. We have no reasons to doubt the affidavit filed before us by the ROC

attaching copy of the Notice dated 21.3.2017 as per STK 1 and the affidavit

which claims that such notice was issued to the appellant company as per

the official records of the ROC. Apart from this the appeal filed before NCLT

itself admitted that notice under Section 248 was published in the official

gazette, copy of notice STK 5 at Page 92 also gave opportunity to the appellant

to move the ROC if it was aggrieved by the proposed removal of the company

name. After such notice the appellant made no effort to move the ROC and

put up its case that the appellant was in business or in operation when the

Company Appeal (AT) No.216/2018 4

name was struck off. Thus we are not accepting the contention that

opportunity to the appellant was not given. Regarding the merits of the claim

that the appellant was in business or in operation the documents filed before

us include two income tax returns at Annexure 11 for the assessment years

2016-17 and 2017-18. The return for 2016-17 claims that the gross total

income of the year was Rs.504 and the income tax return for 2017-18 claims

that the gross total income was Rs.1473/-. Counsel for the appellant wanted

to state that the invoices at Pages 177 to 182 relate to purchaser orders. If

these invoices are seen, the seller is shown as Kanodia Hosiery Mills and

buyer is Kanodia Knit(P) Ltd. If the address of the seller is perused in these

invoices it is 35, North Basti Harphool Singh, Sadar Thana Road, Delhi. This

is the same address of the appellant, Kanodia Knits Pvt Ltd, also. How much

weight such documents should be given is a foregone consequence. Some

more purchase orders are shown which are at pages 171 to 176. These

documents claim to be sale invoices between 22nd October, 2015 to 8th March,

2016. The vendors appears to be Shri Hosiery Udyog. These documents are

for the financial year 2015-16 for which the assessment year would be 2016-

17. The income tax returns at page 183 shows gross total income as Rs.504/-

We are not impressed by such documents to claim that the company was in

business or in operation. Perusal of the impugned order shows that the NCLT

considered the documents placed before it and made the following

observations regading these documents;

"11. The Audited Balance Sheets of the Company are on record

for the years March 2013 to March 2017. During the year 2017

at time of being struck off i.e. 13.6.2017 the Company had no

Company Appeal (AT) No.216/2018 5

employees and no salary was paid. The profits after tax

deduction is Rs.963/- only. The audited balance sheet of the

Appellant Company also does not reflect any bank balance for the

said year. The profit earned during the year 2015-16 as per

balance sheet is only Rs.294/- and no salary payment or bank

balance is shown during the years 2015-17. There are no

purchase orders or sale invoices beyond March 2017. Thus during

the period of striking off the name of the Company in June, 2017

there is no record to show the business in operation.

12. However, the company has not put on record the Bank

Statements of the Company for the period when the name of the

company was struck off. The bank statements submitted are for

the period from 1st March, 2013 to 31st December, 2013. There

are no bank statements brought on record to show any

transactions during the said period when the company's name

was struck off and the company claimed that the account was not

functioning from 2013 since transactions were mostly carried out

in cash, for small amounts.

13. The Income Tax returns for the assessment year 2016-17

and 2017-18 put on record reflect the Total Income for the year

2016-17 as Rs.500/- and the Tax with Interest payable as Rs.172/-

Total Income for the assessment year 2017-18 is Rs.1470/- and

the Tax with Interest payable is Rs.439/- respectively.

14. Thus there are no convincing documents on record to

establish that the Company was doing business or in actual

Company Appeal (AT) No.216/2018 6

operation when its name was struck from the Register of the

Registrar of Companies. Therefore, it could be said that the

Company was non-operational at the relevant period of striking

off its name in June, 2017.

15. The Respondent ROC in its report has stated that it has no

objection if the name of the Company is restored in the Register

of Companies on the undertaking that the Company be directed

'to prove' that it was carrying on business or was in operation

with further direction to file financial statements with

appropriate filing fees and additional fees as leviable.

16. Provisions pertaining to restoration of the Company u/s 252

are to be applied. Sub-section 3 of Section 252 contemplates that

one of the three conditions are required to be satisfied before

exercising jurisdiction to restore company to its original name on

the register of the ROC namely

(i) That the company at the time of its name was struck off was

carrying on business.

(ii) or it was in operation.

(iii) or it is otherwise just that the name of the company be

restored on the register.

17. Applying the aforesaid principles to the facts of the present

case, it can be seen from the audited balance sheets, the bank

Statements and all other documents brought on record by the

Appellant Company that it was neither carrying on any business

Company Appeal (AT) No.216/2018 7

nor in operation when its name was struck off by the register of

companies.

18. As a sequel to the aforesaid discussion, it is inferred that

there is no just reason to restore the Company's name on Register

of Companies."

8. Having heard the Learned counsel for the appellant, and seeing the

documents when we have considered the above findings and observations of

the Learned NCLT, we do not find any reason to differ from NCLT. There is

no substance in this appeal.

9. The appeal is rejected. No order as to costs.

(Mr. Balvinder Singh) (Justice A.I.S. Cheema) Member (Technical) Member (Judicial)

New Delhi

BM

Company Appeal (AT) No.216/2018