Mammohan Singh Anand vs Registrar Of Companies & Anr

[Arising out of order dated 11.03.2020 passed by the National Company Law Tribunal (New Delhi Bench-IV) in Appeal No. 471/252/ND/2019]

IN THE MATTER OF: 1. Manmohan Singh Anand S/o Hira Singh Anand, Residing at J-12/33, Rajouri Garden, West Delhi-110027 ....... Appellant. Versus 1. The 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, Commissioner of Income Tax, ITO Ward 1(1), Room No. 380A, C.R. Building, New Delhi-110002. ......... Respondent No. 2.

Present: For Appellant: Mr. Raghunath Sethupathy & Ms. Priya R, Advocate. For Respondent:- None.

JUDGMENT

(17th February,2023)

Justice Anant Bijay Singh;

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

been filed by the Appellants being aggrieved and dissatisfied by the order dated 2

11.03.2020 passed by the National Company Law Tribunal (New Delhi Bench-

IV) in Appeal No. 471/252/ND/2019 whereby and whereunder appeal filed by

the Appellant being Director of M/s Anand Synthetic Private Limited for

restoration of the name of the Appellant Company in the register maintained by

the Registrar of Companies (RoC), NCT of Delhi and Haryana was dismissed by

the Tribunal.

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

i) The Anand Synthetics Private Limited (hereinafter referred to as

"Company") was incorporated in New Delhi under the provisions of the

Companies Act, 1956 on 21.03.1972, under its present name vide Certificate of

Incorporation issued by the Registrar of Companies, Delhi & Haryana. The

present Appellant owns shareholdings of 16.67% in the said Company and the

present Appellant is one of the Directors of the company. The share capital

structure of the company as on 21.03.1972 is as hereunder:

Share Capital Amount in Rupees

Authorized Capital

1,00,000 equity shares of Rs. 10/- each 10,00,000/-

Total 10,00,000/-

Issued, Subscribed and fully paid up

10040 equity shares of Rs. 10/- each 1,00400

Total 1,00400

Company Appeal (AT) No. 88 of 2020 3

ii) The land in which the factory of the Company is currently located, has

been obtained through sale from the Vendor vide Sale Deeds dated 20.09.1972,

20.12.1972 and 21.03.1975 (Annexures- A/5, 6 &7 of the Appeal). The company

was into manufacturing and dealing in all types of synthetics fibres, fibre

Intermediates of all types, Grades and formulation and including polyster

fibres, nylon, rayon, natural and synthetics textiles and textile materials of all

kinds and for all purposes.

iii) On 16.05.1981, Reliance Chemotex Industries Limited filed an Winding

Up Petition bearing O.P. No. 41 of 1981, under Section 428 and 434 of the

Companies Act, 1956 against the company, before the Hon'ble High Court of

Delhi, seeking for Winding Up of the Company. Vide order dated 11.05.1993,

passed an order of Winding Up against the Company. Further, vide order dated

21.09.2007 was pleased to revoke the Winding Up order dated 11.05.1993.

iv) In the year 2008, when the company was about to prepare the Book of

Accounts, the Managing Director of the company Mr. Harbhajan Singh Anand,

expired on December, 2008. Thereafter, dispute arose regarding the

transmission of shares and thereby financial statements could not be prepared

as there was a deadlock between the Shareholders. Subsequently, on

09.11.2010, one Mr. Thaminder Singh Anand, who was the Son of Mr.

Harbhajan Singh Anand, filed a Petition under 397, 398 read with Section 402

and 203 and 235 of the Companies Act, bearing Company Petition No.

78(ND)/2010 before the Company Law Board, alleging acts of oppression and

mismanagement by the Company. During the pendency of the said

Company Appeal (AT) No. 88 of 2020 4

proceedings, the financial statements could not be made. On 20.09.2013, a

compromise/settlement was arrived at between the minority shareholders in

the aforesaid Petition and vide order dated 15.04.2014, the Company Law

Board was pleased to dismiss the aforesaid Petition filed by minority

shareholders as withdrawn, in light of the settlement arrived between the

parties. The settlement was sought to be implemented by the family members.

However, due to ill health of some of the family members, no clear instructions

could be given by the Directors.

v) The Respondent No. 1, Circulated vide Notice dated 01.09.2017

(Annexure-A/13 of the Appeal) under Section 248(5) of the Companies Act,

struck off the name of the company from the Register maintained by the

Registrar of Companies, without issuing any notice and without giving an

opportunity of hearing heard, in gross violation of the Principles of natural

justice.

vi) On January, 2018, the Director of the company Mr. Joginder, who was

the brother of the present Appellant, had expired and the Appellant and his

family members were not in a suitable or stable condition to look into the

affairs of the company. On June, 2018, the Company tried to upload the

financial statements of their company, the dire was not able to upload the

financial statements in the website of the Respondent No. 1. Thereafter,

completely checking the website of the Respondent No. 1, the Company were

shocked to find out that name of the company has been struck off from the

Register of Companies. Being aggrieved by the notice of the Respondent No. 1

Company Appeal (AT) No. 88 of 2020 5

of "Striking Off", the Appellant approached the Tribunal under Section 252 of

the Companies Act, 2013 seeking to restore the name of the company in the

Register of the Companies, maintained by the Respondent No. 1 and after

hearing the parties, the Tribunal dismissed the Appeal against struck off notice

and passed the order impugned which led to filing of this Appeal.

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

grounds mentioned in the memo of appeal along with written submissions,

submitted that the Tribunal did not consider the facts that the present

company could not be operative due to the reasons underlying and that the

company has fixed assets but due to the disputes and death of Managing

Director, the company could not file its Annual Returns. The land in which the

factory of the Company is currently located, has been obtained through sale

from the Vendor vide Sale Deeds dated 20.09.1972, 20.12.1972 & 21.03.1975

and the Municipal Corporation of Faridabad, has issued an Encumbrance

Certificate dated 04.09.2019, it is clear that the land in which the factory of the

Company is located, is currently the name of the Company. The Appellant's

Company is having huge assets to fulfil its commitment and is capable to

restart the functioning of the company to fulfil its object.

4. It is further submitted that the Tribunal failed to consider the fact that

the company has been fulfilling its other statutory obligations in respect of

payment of Taxes and owns valuable immovable assets and other assets, which

circumstances warrants the restoration of the company on just and reasonable

grounds. This Appellate Tribunal in the case of "Ashwini Kumar Consultants

Company Appeal (AT) No. 88 of 2020 6

Private Limited Vs. Registrar of Companies, decided on 13.04.2018",

wherein the company failed to file its Annual Returns and Balance

Sheets/Profit and Loss Statement after financial year ending 31.03.2000,

thereby giving rise to the surmise that the business of the company was

inoperative, the company was restored on the ground that company was

inoperative due to the death of the director in 2005 and that they have been

regularly paying property taxes. The Court observed as hereunder:

"......

In view of the fact that there is an outstanding Income Tax

liability and the company has been fulfilling its other statutory

obligations in respect of payment, of Taxes, it would be just

and expedient to afford a chance to the appellant to file their

Returns with the ROC. The company owns valuable

immovable assets which are generating income on account of

which also it should not be struck off. The non-adherence to

the statutory provision on time can be rectified by imposing

cost. Merely to disallow the restoration on this grounds would

neither be just nor equitable. Under such circumstances, the

appeal merits consideration. It should only be in exceptional

circumstances that courts should refuse restoration when the

company had been struck off for its failure to file annual

returns as that would be excessive or inappropriate penalty

for the oversight."

Company Appeal (AT) No. 88 of 2020 7

5. It is further submitted that a statutory period of 20 years limitation has

also been provided in Sections for a party to seek restoration. If such a party

succeeds, the company would be deemed to have continued in its existence.

These observations were quoted with approval by LADDIE J Re Priceland Ltd.

(1997) 1 BCLC 468.

6. It is further submitted that the change in environment of business and

new opportunities that are coming up post Coronavirus period, it would be in

benefit of the company, workers and the country to restart by restoration of the

company. In the case of "Intech Corporation Private Ltd. Vs. Registrar of

Companies, CO. Pet. No. 191/2016", where the Appellant had applied to the

court for restoration of the company due to the change of business

environment and growing opportunities in the air conditioning business in the

country, the court held that it would be appropriate to restore the company.

The Hon'ble Delhi High Court observed as hereunder:

"It would be just and proper to order restoration of the name

of the Appellant Company in the Register of Companies

maintained by the Respondent."

Further, in the case of "Biswas Nirman Pvt. Ltd. V Registrar of

Companies, Appeal No. 507/ND/2018", it was held as under:

"........

In view of the land (immovable assets) which the company

has evidences from the sale deeds furnished before this

Tribunal even though not under 'Fixed Assets' but under

Company Appeal (AT) No. 88 of 2020 8

'Inventories' as the company is engaged in real estate

business, we are of the view that Section 252(3) of the

Companies Act in relation to the 'just' cause can be invoked

and will also be appropriate under the facts and

circumstances of the present case and restoration of the

company will not prejudice any of the stakeholders including

the Income Tax which has not even considered filing its

objection. Under these circumstances the Company stands

restored."

7. It is further submitted that the Company is ready to pay all statutory

dues and penalty and want to restart the company at the earliest. In light of

the above-mentioned facts and circumstances, the restoration of the Appellant

Company ought to be allowed and the name of the Appellant Company ought to

be restored in the Register of the Registrar of Companies.

8. On the other hand, the Respondent/Registrar of Companies in his reply

stated that as per available records on MCA-21 Portal, the last Directors of the

Appellant Company were found namely Joginder Singh Anand, Jasbir Kaur

and Manmohan Singh Anand. The Appellant Company has not filed its

Financial Statements since its incorporation, due to which the Respondent No.

1 reasonable cause to believe that the 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 by invoking the provisions of Section 20 of the

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

Company Appeal (AT) No. 88 of 2020 9

March, 2017. Thereafter, in pursuant to sub-section (5) of Section 248 of the

Companies Act, 2013 and Rule 9 of the Companies (Removal of Names of

Companies from the Register of Companies) Rules, 2016, 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 21.08.2017

was published on the website of Ministry of Corporate Affairs on 01.09.2017.

9. It is further stated 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 for revival before the

Tribunal. In view of the foregoing facts and circumstances, the present appeal

deserves dismissal with exemplary cost.

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

the parties and in view of the fact that the Appellant Company was in some

disputes and death of the Managing Director, the company could not file its

Annual Returns. Further, the Appellant Company has regularly paid payment

of Taxes and having valid Sale Deeds dated 20.09.1972, 20.12.1972 &

21.03.1975 and the Municipal Corporation of Faridabad has issued an

Encumbrance Certificate dated 04.09.2019, it shows that the land in which the

factory of the Company is located, is currently the name of the Company and

also having huge assets of the Company. 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.

Company Appeal (AT) No. 88 of 2020 10

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

11.03.2020 passed by the National Company Law Tribunal (New Delhi Bench-

IV) in Appeal No. 471/252/ND/2019. 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 &

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 Registrar of Companies, 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.

iii) Inspite of present orders, Registrar of Companies 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.

Company Appeal (AT) No. 88 of 2020 11

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 (New Delhi Bench-IV), forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi 17th February, 2023 R. Nath.

Company Appeal (AT) No. 88 of 2020