M Kumar Syntex Pvt Ltd vs Registrar Of Companies

[Arising out of order dated 31.08.2021 passed by the National Company Law Tribunal (New Delhi Bench, Court-II) in Appeal No. 491/252/ND/2020]

IN THE MATTER OF: M Kumar Syntex Private Limited Registered office situated 904/2 Kucha Kabal Attar 2nd Floor Chandni Chowk, New Delhi 110006 Represented though its Member Mr. Mahendra Kumar ....... Appellant. Versus 1. Registrar of Companies, At NCT of Delhi & Haryana 4th Floor, IFCI Tower, 61, Nehru Place, New Delhi-110019. ...... Respondent No. 1. 2. Income Tax Department, DCIT 428-429, Lawyer Chambers, Block-1 Delhi High Court, Shershah Suri Marg, New delhi-110003. ...... Respondent No. 2.

Present: For Appellant: CS Bharti Kashyap. For Respondent:- Ms. Mitika Raja, AROC. JUDGMENT

(09th February, 2023)

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 2

31.08.2021 passed by the National Company Law Tribunal (New Delhi Bench,

Court-II) in Appeal No. 491/252/ND/2020 whereby and whereunder appeal filed

by the Appellant for restoration of the name of the Company in the Register

maintained by the Registrar of Companies (RoC), NCT of Delhi & Haryana was

dismissed by the Tribunal.

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

i) The Appellant company - M/s M Kumar Syntex Private Limited ("Company'

or "the Company") was incorporated under the Companies Act, 1956 on

10.04.1987 as a Private Company as Limited by Shares with the Registrar of

Companies, NCT of Delhi and Haryana, for the purposes of activities related to

textile having weaving work. The Company diligently filed its returns till the year

ended 31st March 1999. The Company is owned by Mr. Mahendra Kumar, Mr.

Jai Kumar (Son) and Mrs. Madhu Rani (Wife). Mr. Mahendra Kumar, Mr. Jai

Kumar and Mrs. Madhu Rani are also the Directors of the Company. Mr.

Mahendra Kumar was involved in the day-to-day operational activities of the

Company.

ii) All key managerial decisions of the company is taken by Mr. Mahendra

Kumar however, due to his old age and suffered from various ailments and was

not aware about the compliances that were required to be undertaken under the

Companies Act, 1956 and hence the compliances required to be undertaken by

the company were not followed/adhered to (only for relating to filling of Annual

returns and Balance Sheets otherwise auditor appointments etc. were done on

regular basis and board meetings and AGM were done on time) including

obtaining the status of a dormant company U/s 455 of the Act. Company Appeal (AT) No. 141 of 2021 3

iii) Mrs. Madhu Rani, wife of Mr. Mahendra Kumar has been a homemaker

all her life and was not involved in the operations of the Company. She being the

Shareholder of the Company with 33% of total shares. The Company could not

file its Financial Statements for the Financial Years ended 31st March 2002 till

31st March 2020 with the Registrar of Companies, NCT of Delhi and Haryana as

no one director was aware about the Compliances to be done and due to ill health

and old age of Mr. Mahendra Kumar. The audited financial statements for the

year 2001-2002 to 2003-2004 were ready but could be filed with the Registrar of

Companies.

iv) The Company has been in active operation only with the security of that

lease hold property and intends to start the textile business again with his son

Mr. Jai Kumar and proposed investors and continue to carry out its business

objectives and that the Company holds lease hold property the motive of

restoration is not only to get property as lease hold property cannot be sold.

However, if the use of this assets starts again in the textile business, it will be a

huge possibility to generate employment and grow business on profit basis. Mr.

Mahendra Kumar and Mr. Jai Kumar also having a suit shop in the area of

Chandni Chowk hence both the current directors have experience in textile

business. Further, the lease hold property is issued by the UPSIDC for 90 years

since 02.05.1987. Thus, non-restoration of the company would result in

irreparable loss and prejudice to the appellants, its contributories and creditors.

The result in the fixed assets of the Appellant company going into a

limbo/deadlock resulting in wastage of property, which is also contrary to the

public policy. Some pictures showing some activities still going on in Chandni Company Appeal (AT) No. 141 of 2021 4

Chowk shop and also the picture of outside the factory, temple located in the

factory on lease hold land located in Kosi.

v) The Company did not receive any show cause notice, nor was it afforded

any opportunity of being heard before the aforesaid action was taken by the

Respondent. The company is also holding a plot of leased hold land Plot No B-3,

industrial area Kosi, Distt. Mathura. The area of plot is 6000 sq. Mtrs. The

allotment of this plot is made by U.P. SIDC to M KUMAR SYNTEX PVT LTD for

90 years through an allotment letter dated 02.05.1987.

vi) The Annual General Meeting of the Company were held by the company

on time as this is the closely held company and all the income tax returns has

been filed by Mr. Mahendra Kumar on or after the due dates.

vii) The Registrar of Companies in utter disregard of the statutory requirement

of serving notice under form STK1 in terms of Section 248, struck off the

Company's name of the Register due to defaults in statutory compliances,

mainly, failure to file Financial Statements & Annual Returns. Consequently, the

Registrar of Companies initiated proceedings under Section 248 of the

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

the Register maintained by the Registrar of Companies. Aggrieved by the order

of the RoC, the Appellant company approached before the Tribunal against the

struck off order passed by the Respondent No. 1 /RoC and after hearing the

parties, the Tribunal passed the order impugned dated 31.08.2021 which led to

filing of this Appeal.

3. CS Bharti Kashyap appeared on behalf of the Appellant company and

during the course of argument and also grounds mentioned in memo of Appeal Company Appeal (AT) No. 141 of 2021 5

submitted that Mr. Mahendra Kumar, main director of the company were in ill

health and not able to handle the continuous business. The Company bearing

losses, and they stop the manufacturing unit at Kosi industrial area and

continue their trading of suit through Chandni chowk shop. Both Mr. Mahendra

Kumar and his Son Jai Kumar conveniently carry on their business through sale

of suit etc. The Company was filling all necessary documents with NCLT with

ROC till 1999. The Company is also holding a plot of land bearing Plot No. B-3,

industrial area Kosi, Distt. Mathura. The area of plot is 6000 sq. Mtrs. The

allotment of this plot is made by U.P. SIDC to M KUMAR SYNTEX PVT LTD for

90 years through an allotment letter dated 02.05.1987.

4. It is further submitted that the directors of the company going to starts its

business of manufacturing of textiles and want to generate employment. Both

the directors Mr. Mahendra Kumar and Mr. Jai Kumar agree to file all its pending

Annual returns with additional fees as per section 92 of the Companies Act,

2013. The Tribunal as well as the Registrar grossly erred in law by coming to the

conclusion that the company was not a going concern.

5. It is further submitted that the Act seeks to achieve by making service of

notice mandatory on the part of the Registrar is twofold i.e., in consonance with

principles of natural justice and to give an opportunity to the Company/its

directors to substantiate that the company in question is a going concern and is

carrying out its business operations. However, in the present case no notice was

served upon the company at its registered address or at the addresses of the

directors of the company and hence the Appellant never got an opportunity to

substantiate if the company is a going concern. Further, in the present case Company Appeal (AT) No. 141 of 2021 6

while passing an impugned order U/s 248(5) the Registrar has failed to take note

of the requirements enumerated under sub-clause (6) of Section 248 which

specifically states that before passing an impugned order to strike-off the name

of the Company, the Registrar should first 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 within a reasonable time. In the

present case the company has various liabilities and assets.

6. It is further submitted that the Company also holds plot of land bearing

Plot No. B-3, industrial area Kosi, Distt. Mathura. The area of plot is 6000 sq.

Mtrs. The allotment of this plot is made by U.P. SIDC to M KUMAR SYNTEX PVT

LTD for 90 years through an allotment letter dated 02.05.1987. Thus, non-

restoration of the company would result in irreparable loss and prejudice to the

appellant company its contributories and creditors. It would also result in the

fixed assets of the appellant company going into a limbo/deadlock resulting in

wastage of property, which is also contrary to the public policy. This Hon'ble

Appellate Tribunal can revive/restore the name of the company in light of the

undertaking given that the company shall file all the statutory documents i.e

financial statements and annual returns for the financial years ending 31st

March 2002 till 31st March 2020 along with filing fee and additional fee in terms

of Section 92 of the Act. Further, a lenient view may be granted by this Appellant

Tribunal in view of the purpose that the Appellant seeks to achieve subsequent

to revival of the company i.e to make more investment and generate employment.

Based on above submissions, the impugned order is fit to be set aside and the

Appeal may be allowed.

Company Appeal (AT) No. 141 of 2021 7

7. 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-M Kumar Syntex Private Limited was incorporated on 10.04.1987

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

Appellant Company namely Mahender Kumar, Madhu Rani and Jai Kumar. The

last available Balance Sheet & Annual Return as filed by the Company is shown

for the Financial Year 1999 before it was considered to be struck off. Hence, this

office had reasonable cause to believe that the company was not in operation

and therefore, the name of the company was considered for striking off from the

Registrar of Companies. The name of the company was identified for striking off

under Section 560(1) of the Companies Act, 1956 and company was strike off in

terms of Section 560(5) of the Companies Act, 1956 on 23.06.2007.

8. It is further submitted that the action of striking off of the present company

was legal and justified and was the result of the operation of the law, as the

company was not carrying on any operations for a period of two immediately

preceding financial years (as indicated by non-filing of the financial statement of

the company for two or more years).

9. It is stated in his reply that as per the information provided by the

Appellant, it is observed as under:

1. Revenue from operation In terms of Petition the Petitioner has not enclosed any Balance Sheet and Profit & loss A/c for previous two financial year's viz. 2004- 05 & 2005-06 prior to the date of strike off.

Therefore, this office is unable to comment further on this.

Company Appeal (AT) No. 141 of 2021 8

2 Financial Statements Submitted with the petition for the financial year 2015-16, 2016-17 and 2017-18 at pages, 61-75. (However, the profit & Loss has shown zero revenues from the operation in the above-

mentioned F.Y.) 3 Income Tax Returns Acknowledgement of Income Tax Returns submitted for the Assessment Year 2012-13 to 2019-20 at pages 76-83.

4 Property Details Lease deed executed between the Petitioner/appellant and U.P. State Industrial Development Corporation Limited dated 13.11.1987 attached with petition at pages 46-60.

10. It is further submitted that the Balance Sheets filed for the Financial Years

from 2015-16 to 2017-18 (which too show 'NIL' income from its operations) and

the Income Tax Returns produced for the Assessment years from 2012-13 to

2019-20 has not relevance, since these pertain to the post-striking off period.

Further, the lease deed of the Appellant Company with UPIDCL does snot give

any ownership rights to the Appellant Company. In nutshell, there is nothing

placed on record, which could suggest that the Company was either in operation

or carrying out its business or it is otherwise just to restore the name of the

Company in the register of ROC.

In view of the above, the Appellant Company not having any valid

submissions, therefore, the Appeal may be dismissed as the Respondent No. 1

has duly complied the law and the Tribunal has passed the appropriate order in

public interest.

Company Appeal (AT) No. 141 of 2021 9

11. After hearing the parties, going through the pleadings made on behalf of

the parties and in view of the fact that the Appellant Company having valid

property Lease Deed from UPSIDC and still activities are going on in Chandni

Chowk shop. Further, Balance Sheet filed for the Financial Year 1998-99 and

Acknowledgement of Income Tax Return of the Company filed till the Annual

Year 2019-20 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 (New Delhi

Bench, Court-II) as well as Registrar of Companies, NCT of Delhi & Haryana is

not sustainable in law.

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

31.08.2021 passed by the National Company Law Tribunal (New Delhi Bench,

Court-II) in Appeal No. 491/252/ND/2020. The name of the Appellant Company

be restored to the Register of Companies subject to the following compliances:

i) Appellant Company shall pay costs of Rs. 1,00,000/- (Rupees

One Lakh) to the Registrar of Companies, NCT of Delhi and

Haryana within eight (8) weeks from the 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.

Company Appeal (AT) No. 141 of 2021 10

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.

13. 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 (New

Delhi Bench, Court-II), forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi 09th February, 2023 R. Nath.

Company Appeal (AT) No. 141 of 2021