M/S Subham Construction Pvt. Ltd vs Registrar Of Companies Orissa

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI COMPANY APPEAL (AT) NO.25 OF 2021 In the matter of: Subham Construction Pvt Ltd Appellant Vs Registrar of Companies, Odisha Respondent For Appellant:Mr. Dhananjay Bhaskar Ray, Advocate. For Respondent: Mr. Kamal Kant Jha, Mr Avinash Singh, Ms Priyanka, Advocates. ORDER

06.12.2022: Heard Mr. Dhananjay Bhaskar Ray, learned counsel for the

appellant and Mr. Kamal Kant Jha, learned senior panel counsel appearing

on behalf of the Sole Respondent i.e. Registrar of Companies, Odisha.

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

been preferred against an order dated 28.12.2020 passed by the National

Company Law Tribunal (hereinafter referred to as the 'NCLT'), Division Bench,

Cuttack in CP (Appeal) No.251/CB/2020. By the said order learned NCLT

has rejected the appeal filed by the appellant against an order dated 7.7.2017

passed by the Ministry of Corporate Affairs, Govt of India, Office of the

Registrar of Companies cum Official Liquidator, Odisha.

The learned counsel assailing the order submits that the order

impugned is fit to be quashed only on the ground that the learned NCLT

contrary to the materials available on record has passed the order as if the

appellant company was non-operational nor generating any funds. He has

referred to number of documents brought on record, mainly copy of the 2

Chartered Accountant Report for the year 2019-20 and the Balance Sheets

since 2010-2011 till 2019-20. He submits that besides bank statement, sale

deed etc were available on record, however, the learned NCLT ignoring those

facts has passed the impugned order. It was further submitted that the

functioning of the company was obstructed due to some litigation with the

Development Authority and as such due to inadvertence as well as non

conversant with the new Companies Act, 2013 the statutory statements and

returns were not filed before the ROC for some period. It has further been

argued that the striking off order was also passed without any notice to the

appellant and as such it was a fit case of interference by the learned NCLT,

however, contrary to record the learned NCLT has passed the impugned order

holding as if the company was non-operational and generating no funds.

Learned counsel for the appellant has drawn our attention to the copy of the

balance sheet, audit report by the Chartered Accountant to show that the

appellant was going concern and as such learned NCLT was not required to

refuse the prayer of the appellant for restoration of the name of the company

on the register of ROC.

He further submits that even ignoring the bank statements brought on

record in the appeal, the learned NCLT has passed the impugned order which

is fit to be interfered with.

Mr. Kamal Kant Jha, learned counsel appearing on behalf of the ROC

opposing the appeal submits that the order is passed in accordance with law.

He submits that before striking off the name of the company, due notice was

issued, even paper publication was also done, however, the appellant did not 3

give any response and as such ROC was having no alternative but to pass an

order striking off the name of the appellant company from the record of the

ROC. Accordingly ROC has rightly struck off the name of the appellant.

Accordingly to Mr. Jha, exercising jurisdiction as per provisions contained in

Section 248 of the Companies Act, 2013, the steps were taken to call for

explanation from the appellant and notice were issued which were even

published in the newspaper i.e. substituted service of notice. He submits that

after publication of newspaper it was deemed to be served on the appellant,

however, the appellant did not bother to file any response. Accordingly, the

Registrar of Companies was having no remedy than to pass an order striking

of the appellant company. Mr Jha further submits that of course during

hearing a plea has been taken that learned NCLT has passed the order which

is contrary to record, but no specific statement has been made in the Memo

of Appeal. This was controverted by the learned counsel for the appellant by

way of referring to grounds in the Memo of Appeal. Learned counsel for the

appellant has specifically drawn our attention to para 9.1, 9.2 and 9.4 at

running page 31, 33 and 34 of the Memo of Appeal to substantiate that even

in the Memo of Appeal it was indicated that the appellant company was going

concern and financial statements and annual returns from 2010-11 onwards

were before the NCLT. However, learned NCLT ignoring those facts proceeded

to pass an order as if the appellant company was non functional or not

generating any funds.

Mr Jha, learned counsel for the Respondent submits that considering

the fact that number of shell companies were continuing, a decision was taken 4

by the Govt of India for taking steps for striking off name of the such

companies who were not filing proper information/returns to the ROC. He

submits that this is not only the appellant company but number of other

companies on same footings were considered by the ROC and their name were

directed to be struck off. Accordingly it has been argued that there is no need

for interfering in the matter.

Besides hearing the learned counsel for the parties we have perused the

record minutely. Of course in the Memo of Appeal learned counsel for the

Appellant has produced certain bank statements and balance sheets

approved by the Chartered Accountant to substantiate that the appellant

company was involved in business and generating funds, however, on

examination of the impugned order it is evident that the Learned NCLT has

noticed that no specific material was brought on to show that the appellant

company was going concern.

It is true that in Memo of Appeal grounds have been taken as

enumerated in para 9 of the appeal. In para 9.1, 9.2 and 9.4 certain grounds

have been taken to show that the order impugned is contrary to record. We

propose to reproduce paras 9.1, 9.2 and 9.4 which is at running page 31, 33

and 34 as follows:

"9.1 Because the singular reason given by the Ld. Adjudicating

Authority in the impugned order for dismissing the appeal is that

the Appellant Company was allegedly not a going concern and

was purportedly not doing any business operations during the

period of default in filing Financial Statements and Annual 5

Returns since the financial year 2010-11 onwards. To support

this finding, the Ld. Adjudicating authority has relied upon the

Audited Annual Accounts i.e. the Profit and Loss Accounts of the

Company for the period from 31.03.2013 to 31.03.2020 (actual for

financial years 2010-11 to 2019-20), the bank account statements

of the Appellant Company and the Income Tax Returns of the

Appellant Company.

9.2 Because the Ld. Adjudicating Authority has completely

misread and misinterpreted the aforesaid documents thereby

rendering the impugned order untenable and unsustainable as it

suffers from grave errors on th4e fact of the record, both on law

as also on facts and thus the impugned order is liable to be set

aside.

9.4 Because in so far as the bank account statements of the

Appellant Company for the defaulting years is concerned, it is

abundantly clear that on 3.2.2012, there has been a transaction

of Rs.2,00,000/- with one SK Maniruddin, a flat buyer from the

Appellant company. Further, there have been transactions with

other flat buyers namely Murli on 27.03.2013, Jagan Mohan on

19.06.2013, M.M. Rao on 25.11.2013, Jaganon 7.1.2014,

Parambrahma Mohapatra on 13.12.2014 and Ipsit Mohanty on

15.12.2014 of amounts of Rs.1,10,000/-, Rs. 1,00,000/-,

Rs.1,00,000/-, Rs. 2,00,000/- Rs.3,00,000/- and Rs.19,00,000/-

respectively. Furthermore, on 23.02.2015 there has been a 6

transaction with the aforesaid Parambrahma Mohapatra of

Rs.1,45,000/- and on 25.05.2017 there has been a transaction of

Rs.12,05,366/- with another flat buyer namely Jhimili

Mohapatra. Therefore, the finding in the impugned order at

paragraph 10 that "it is also seen from the available records that

the Company is maintaining bank account with Bank of Baroda

with Account No.25050200000099. The details of Bank

transaction provided with the application are from 05.01.2017 to

7.11.2020. Transactions for the defaulting years do not suggest

business transactions" is wholly erroneous and contrary to the

records. It may also be pertinent to mention here that the

Appellant company had provided details of bank transactions

from the year 2006 onwards till 2020 therefore it is also an error

on the fact of the record that only bank transactions from

05.01.2017 to 7.11.2020 were filed before the Ld. Adjudicating

Authority.

Save and except ground mentioned hereinabove there is no specific statement

in the Memo of Appeal. It goes without saying that if in Appeal, a ground is

being taken that Court below has passed order contrary to record, it is

considered as a serious allegation against the concerned court. If in a case

such a stand is taken, it must be made specifically in the petition. In the

Memo of Appeal the appellant has not made such statement, however, in

grounds for appeal some unclear fact has been disclosed. Moreover, even on

perusal of para 9.1, 9.2 and 9.4 it is not specifically clear that what record 7

was exactly placed and ignored by the NCLT and how the impugned order is

contrary to record. In such a situation we are not in a position to accept the

submission of learned counsel for the appellant that learned NCLT has passed

order contrary to record. We are of the considered opinion that if in an appeal

appellant takes a stand that Court below has passed order contrary to record,

in such situation it is mandatory to make specific statement in pleading with

referring to record/document which was/were not noticed and order was

passed contrary to the same record/document. Only indicating something in

grounds of appeal may not serve the purpose.

Besides this it is admitted position that in the present case the

appellant company was incorporated some time in the year 1998 and

thereafter till 2011 statements and returns were filed before the ROC.

However, thereafter no step was taken to intimate the ROC as to whether the

company was running or not. In the year 2017 appropriate notices were

issued to rectify the error by way of filing return or apprise the Registrar as to

whether the company was continuing or not. Two notices issued by the ROC

remained unreplied. On perusal of striking off order dated 7.7.2017 it

appears that paper publication was also made. Since it was not replied the

ROC finally by order dated 7.7.2017 directed to strike off the name of the

company. It is not an isolated case in respect of the appellant company but

on perusal of Annexure A-10 running page 202-203 of the Memo of Appeal it

is evident that names of other similarly situated companies were also struck

off. It is true that under Section 252(3) of the Companies Act, 2013 the

Tribunal is empowered to restore a company within a period of twenty years 8

if the company was struck off under Section 248(5) of the Act but there is

rider that there must be satisfaction to the Adjudicating Authority that the

struck off company at the relevant time i.e. at the time of striking off was

carrying on business or in operation or otherwise it was just for the company

to restore the name. On examination of the impugned order, it is evident that

the NCLT was satisfied that the company was not going concern or doing

business and as such the NCLT did not interfere with the order of the ROC.

Moreover, jurisdiction under Section 252(3) may not be exercised in casual

manner otherwise it may be considered that the power of Registrar to strike

off company under Section 248 is redundant. In absence of any specific

statement made in the Memo of Appeal except vague allegations taken in the

ground of appeal we are unable to record a finding that the NCLT has passed

order contrary to record which were available before it. As such we are unable

to pass any favourable order.

The appeal accordingly stands dismissed.

(Justice Rakesh Kumar) Member (Judicial)

(Dr. Ashok Kumar Mishra) Member (Technical) Bm/bm