R. Manavazhagan vs Registrar Of Companies, Puducherry

20.09.2018 This appeal has been preferred by Mr. R. Manavazhagan,

Director and shareholder of 'Educare Network Consultant Private Limited'

against the order dated 4th April, 2018 passed by the National Company law

Tribunal, Chennai Bench, Chennai whereby and whereunder the application

preferred by the appellant under Section 252(3) of the Companies Act, 2013 has

been rejected with the following observations :

"Counsel for Applicant present. Counsel for RoC

present and he has filed the objections. The same

is taken on record. The Applicant Company has

been incorporated during 2012. Thereafter, Annual

Returns and Balance Sheets have not been filed till

date.

2

The RoC has struck off the name of the Company

under section 248(5) of the Companies Act, 2013

from the Register of companies for non-compliance

with the provisions of the Companies Act, 2013 vide

Notification dated 15th - 21st July, 2017.

Counsel for the Applicant has submitted that the

Company is a small Company. But, there is no

proof that the Company is carrying on any

business. No Income Tax has been paid for all

these years. The Income Tax Returns were filed,

but the payment of the tax is shown as 'Nil'. There

is nothing on record to suggest that the Applicant

Company is a going concern. It is a shell Company.

Therefore, not deserving the restoration of its name

in the Register of the Companies.

Therefore, the Application stands rejected."

2. Learned counsel appearing on behalf of the appellant submitted that the

impugned order has been passed by the Tribunal without any specific reason to

hold that the company is a shell company. According to the learned counsel for

the appellant 'Educare Network Consultant Pvt. Ltd.' was not afforded any

hearing when action was taken by the Registrar of Companies under Section

248 (5) of the Companies Act, 2013. He further submitted that the Tribunal

failed to take into consideration that the application for restoration filed under

Section 252(3) of the Companies Act, 2013 and the company is still functioning

Company Appeal (AT) No. 228 of 2018 3

and carrying on the business. Even the Registrar of Companies has not objected

restoration of the company in its affidavit before the Tribunal filed on 27th

February, 2018. This fact has also not been taken care of by the Tribunal while

passing the impugned order.

3. In spite of the notice, the Registrar of Companies, Puducherry has not

appeared and the aforesaid facts having not been disputed.

4. We have heard learned counsel for the appellant and perused the record.

It is not in dispute that the Registrar of Companies has power to remove the

name of a company from the Register of the Companies for the reasons

mentioned in Section 248 of the Companies Act, 2013, which reads as follows :

"248. (1) Where the Registrar has reasonable cause to believe

that--

(a) a company has failed to commence its business within

one year of its incorporation [or];

(b) *******

(c) a company is not carrying on any business or operation

for a period of two immediately preceding financial

years and has not made any application within such

period for obtaining the status of a dormant company

under section 455,

he shall send a notice to the company and all the

directors of the company, of his intention to remove the

name of the company from the register of companies

and requesting them to send their representations

along with copies of the relevant documents, if any,

Company Appeal (AT) No. 228 of 2018 4

within a period of thirty days from the date of the

notice.

(2) Without prejudice to the provisions of sub-section (1), a

company may, after extinguishing all its liabilities, by a

special resolution or consent of seventy-five per cent.

members in terms of paid-up share capital, file an

application in the prescribed manner to the Registrar for

removing the name of the company from the register of

companies on all or any of the grounds specified in sub-

section (1) and the Registrar shall, on receipt of such

application, cause a public notice to be issued in the

prescribed manner:

Provided that in the case of a company regulated under

a special Act, approval of the regulatory body

constituted or established under that Act shall also be

obtained and enclosed with the application.

(3) Nothing in sub-section (2) shall apply to a company

registered under section 8.

(4) A notice issued under sub-section (1) or sub-section (2)

shall be published in the prescribed manner and also

in the Official Gazette for the information of the general

public.

(5) At the expiry of the time mentioned in the notice, the

Registrar may, unless cause to the contrary is shown

by the company, strike off its name from the register of

Company Appeal (AT) No. 228 of 2018 5

companies, and shall publish notice thereof in the

Official Gazette, and on the publication in the Official

Gazette of this notice, the company shall stand

dissolved.

(6) The Registrar, before passing an order under sub-

section (5), shall satisfy himself that sufficient provision

has been made for the realisation of all amount due to

the company and for the payment or discharge of its

liabilities and obligations by the company within a

reasonable time and, if necessary, obtain necessary

undertakings from the managing director, director or

other persons in charge of the management of the

company:

Provided that notwithstanding the undertakings

referred to in this sub-section, the assets of the

company shall be made available for the payment or

discharge of all its liabilities and obligations even after

the date of the order removing the name of the company

from the register of companies.

(7) The liability, if any, of every director, manager or other

officer who was exercising any power of management,

and of every member of the company dissolved under

sub-section (5), shall continue and may be enforced as

if the company had not been dissolved.

Company Appeal (AT) No. 228 of 2018 6

(8) Nothing in this section shall affect the power of the

Tribunal to wind up a company the name of which has

been struck off from the register of companies."

5. It is not a case of respondent that within one year from its operation the

company was not carrying on any business or not in operation from two

immediate preceding financial years. It is also not the case of the respondent

that the company or its member made application for obtaining the status of

dormant company under Section 455 of the Companies Act, 2013.

As per sub-section (1) of Section 248 before removal the name of the

company from Register of Companies the Registrar of the Companies was

required to issue notice to the company and all the Directors of the Company,

its intention to remove the name of the company from the Register of Companies

and to request them to send the representative along with the copies of the

relevant documents within thirty days from the date of notice.

6. According to the appellant, notice was given by the Registrar of Companies

and in its reply it was informed that the company was functioning. Though all

these facts were brought to the notice of the Tribunal, it has not discussed the

same while passing the impugned order.

7. On hearing the learned counsel for the appellant and on perusal of the

record and going through the relevant provisions of Section 252 and 248, we are

of the view that the Tribunal has failed to decide as to what is the specific

violation committed by the company for removing its name from the Register in

terms of Section 248 of the Companies Act. For the reasons aforesaid, we have

no other option but to set aside the order. The impugned order is accordingly

Company Appeal (AT) No. 228 of 2018 7

set aside. The matter is remitted to the Tribunal to reconsider the case taking

into consideration of the provisions of Section 248 and sub-section (3) of Section

252 of the Companies Act as also all the relevant evidence filed by the appellant

in its support. The Tribunal is required to discuss all the evidences produced

by the appellant including the Income-tax returns, bank statements and

balance-sheets, profit and loss account etc., if filed, uninfluenced by the

impugned order dated 4th April, 2018 preferably within three months. The

appeal is allowed with the aforesaid observations. With this I.A. No. 1012 of

2018 and I.A. No. 1013 of 2018 stand disposed of. However, in the facts and

circumstances there shall be no order as to costs.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/gc/

Company Appeal (AT) No. 228 of 2018