Mukesh Kumar Gupta vs Registrar Of Companies

[Arising out of order dated 08.11.2021 passed by the National Company Law Tribunal (New Delhi Bench, Court-II) in Appeal 106/252(ND)/2021]

IN THE MATTER OF: Mukesh Kumar Gupta A-105, Vivek Vihar Phase-II, Delhi-110095. ....... Appellant. Versus The Registrar of Companies NCT of Delhi & Haryana, 4th Floor, IFCI Tower, 61, Nehru Place, New Delhi-110019. ....... Respondent.

Present: For Appellant: Mr. Arvind Kumar Gupta, Ms. Purti Gupta, Ms. Henna George and Ms. Shivani Sharma, Advocates. For Respondent:- Mr. Kamal Kant Jha, Sr. Panel Counsel for GOI and Ms. Mitika Raja, AROC.

JUDGMENT

(20th 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

08.11.2021 passed by the National Company Law Tribunal (New Delhi Bench,

Court-II) in Appeal 106/252(ND)/2021 whereby and whereunder appeal filed by

the Appellant Company for restoration of the name of the Company in the 2

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 Company- Balajee Developwell Private Limited was incorporated as a

Private Limited Company in the name and style of "M/s Anjani Infra Private

Limited" on 13.12.2007. The Appellant herein was a Director on the Board of the

Company prior to striking off its name from Register maintained by the Registrar

of Companies. The Company is primarily engaged in real estate sector. During

the years 2008-2011, various housing projects were set up by the Company at

Bhubaneshwar, Dehradun and Mumbai and it started working towards the

development of the said project. The company tried to develop the housing

projects but these could not be commissioned due to the global financial crisis

which caused melt down of the construction sector in India. However, the

company kept complying with all the statutory liabilities including Income Tax

Returns and filing with the Registrar of Companies regularly till 2011.

ii) In the year 2013, the name of the company was changed from "M/s Anjani

Infra Private Limited to M/s Balajee Developwell Private Limited vide fresh

Certificate of incorporation dated 23.02.2013. In the year 2014, the company

purchased five land plots worth around Rs. 6 crores (book value) in Noida

adjacent to Delhi vide registered Sale Agreements. The company had also made

an advance payment of approximately Rs. 1.90 crores towards the purchase of

the said assets. Subsequent to acquisition of the said plots, the company started

working towards their development but all efforts went in vain due to sluggish

Company Appeal (AT) No. 164 of 2021 3

demand for the properties and lack of funds to build structures thereon

(Annexure-A/4 Colly of the Appeal).

iii) The Company duly maintained its books of accounts, however, the

necessary compliances could not be done with the Registrar of Companies since

2012 due to inadvertence. The maintenance of the books of accounts and the

audited financial statements makes it apparent that the company is a functional

entity and maintained its assets through the intervening years which is evident

at Annexures A/5 Colly and A/6 Colly of the Appeal. However, vide notification

dated 27.04.2017, the Registrar of Companies under provisions of Section

24891) wherein the name of the company was included at Sr. No. 3128. However,

no personal notice was received by the Company and its directors as mandated

under law. Subsequently, the name of the company was struck off by the

Registrar of Company from its Register vide STK-7 dated 30.06.2017.

iv) The Directors of the company came to know about the action taken against

the company only when the operation of the bank accounts of the company was

suspended. In absence of any personal notice, the Directors of the company

remained unaware about the proposed action against the company and were not

able to file any representation against striking off the name of the company. The

company is a solvent entity having substantial assets. The company has many

creditors which have to be settled after the restoration of the name of the

company in Registrar of Companies records and the bank account of the

company becoming operational.

Company Appeal (AT) No. 164 of 2021 4

v) The company herein is a functional entity earning income as commission

agent, interest, getting its tax deducted, holding assets and having liabilities in

the form of creditors which is evident from the copies of the AS 26 for the

assessment years 2015-16 to 2019-20. The taxed business transactions and

other activities reflected in the financial statements of the company clearly show

that on the date of the notifications dated 27.04.2017 and 30.06.2017, the

company was functional and operational.

vi) Being aggrieved by the notice of the Respondent of "Striking Off", the

Appellant Company approached the Tribunal under Section 252 of the

Companies Act, 2013 for restoration of the name of the Company in the Register

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

after hearing both the parties, the Tribunal 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, submitted that the impugned order

is contrary to both law and facts. Section 248 of the Act, the name of the

company can be struck off on the ground that it has done no business or

operation for two immediately preceding financial years from the date of notice.

In the present matter, the date of notice is 30.06.2017 and the two preceding

years are 2014-15 and 2015-16. The impugned order erroneously records that

no substantial activity has been done in the financial year 2014-16 (within the

preceding two years) however, brushed aside the vital fact that during the said

time period, properties worth around Rs. 6 crores were purchased by the

Company Appeal (AT) No. 164 of 2021 5

company vide registered Sale Agreements which clearly shows that the company

was/is in operation when the name was struck off. The company had also made

an advance payment of approximately Rs. 1.90 crores towards the purchase of

the said assets through Bank Accounts. As on 31.03.2016, the company had

Financial Creditors of Rs. 17,12,12,450/- and Debtors of Rs. 10,73,88,000/-

4. It is further submitted that the Tribunal while passing the impugned order

failed to appreciate that due to market recession, the development of the land

was struck and only when the demand emerged, the company could have further

developed the projects. Further also failed to appreciate the numerous

Judgments of this Tribunal wherein if the company has substantial assets on

record, then the name of the company cannot be struck off.

Reference:-

• Khetan Granite private Limited V. Registrar of Companies, Company Appeal

(AT) No. 290 of 2019, judgment dated 20.01.2020.

• Priya Fabricator V. Registrar of Companies, Company Appeal (AT) No. 264

of 2019, judgment dated 11.12.2019.

• Insuflex India Pvt. Ltd. V. Registrar of Companies, Company Appeal (AT) No.

203 of 2019, judgment dated 12.12.2019.

5. It is further submitted that Section 248(1) of the Act, specifically provides

that statutory notice has to be issued to all the Directors of the company as well

as the company, to ensure that no solvent/functional company be struck off.

However, in the instant case, the said procedure has not been followed and

accordingly, the name of the company has been struck off in violation of the law

Company Appeal (AT) No. 164 of 2021 6

of the land and in gross violation of the principles of natural justice. In absence

of personal notice, the company/its directors could not submit a representation

and place on record the relevant facts which clearly prove that striking off the

name from Registrar of Companies records is not warranted in the present case.

It is accordingly gross violation of Act.

6. It is further submitted that the impugned order runs contrary to the law

laid down by the court wherein the name of the company was restored in view of

the fact that due to non-compliance of Section 248(1) of the Act, the Directors

could not send their representations along with relevant documents before the

Registrar of Companies and further, before passing the order Registrar of

Companies had not recorded its satisfaction as per Section 248(6) of the Act.

Reference:-

• Calcutta Rubber Factory (P) Ltd. V. Registrar of Companies, Company

Appeal (AT) No. 177 of 2019, judgment dated 16.12.2019 passed by this

Tribunal.

• S. Automobiles Specialities V. V. Registrar of Companies, Co. Pet. 263 f

2014, Judgment dated 20.01.2016 passed by the Hon'ble Delhi High Court.

7. It is further submitted that the company has many creditors which have

to be settled after the restoration of the name of the company in Registrar of

Companies records and the Bank Account of the company becoming operational.

The non-compliance is inadvertent, non-deliberate and unintentional and the

Appellant has been/is ready to comply with all the statutory provisions in the

further, if the name of the company is restored by the Registrar of Companies.

Company Appeal (AT) No. 164 of 2021 7

In view of the above submissions, the impugned order is fit to be set aside

and the instant Appeal may be allowed.

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 Jitender Kharbanda and Mukesh

Kumar. The Company was incorporated on 13.12.2007 and the last Annual

Return and Balance Sheet submitted by the company to this Office, before it was

considered to be struck off, pertain to the financial years ended on 31.03.2011.

Moreover, no subsequent documents had been filed by the company with this

office to obtain the status of a "Dormant Company" under Section 455 of the

Companies Act, 1956. 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 Register of Companies. Thereafter, the

Registrar of Companies issued the notice in the form of STK-1 in March, 2017

intimating the company and the directors of the company at their registered

office about the aforesaid defaults, providing them a fair opportunity to respond.

Subsequently, this office also issued public notice for the same in the form of

STK-5 in May, 2017. Thereafter, the name of the company was struck off as per

the provisions of section 248(1)(c) of the Companies Act, 2013 read with Rule 9

of the Companies (Removal of Names of Companies from the register of

Companies) Rule, 2016 vide notice in the form of STK-7 dated 07.06.2017.

9. It is further stated that the Appellant Company was not carrying out any

operation for a period of 2 immediately preceding financial years. The Company

Company Appeal (AT) No. 164 of 2021 8

was unable to produce before the Tribunal any just and equitable grounds for

restoration, therefore, their petition was dismissed. Since the company was

neither able to prove that it was carrying any business before it was struck off

nor produced any just and equitable grounds for restoration before the Tribunal.

In view of the above, the Appeal may be dismissed.

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

of the parties, we observed that the Audited Financial Statements for the

Financial Years from 2014-15 to 2015-16 shows that the Appellant Company is

having substantial movable as well as immovable assets and the Company

was/is in operation when the name was struck off. 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.

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

08.11.2021 passed by the National Company Law Tribunal (New Delhi Bench,

Court-II) in Appeal 106/252(ND)/2021. 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. 2,00,000/- (Rupees

Two Lakhs) to the Registrar of Companies, NCT of Delhi &

Haryana within eight (8) weeks from the passing of this

Judgment.

Company Appeal (AT) No. 164 of 2021 9

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.

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, Court-II), forthwith.

[Justice Anant Bijay Singh] Member (Judicial)

[Mr. Kanthi Narahari] Member (Technical)

New Delhi 20th February, 2023 R. Nath.

Company Appeal (AT) No. 164 of 2021