R Narayanasamy vs The Registrar Of Companies Tamil Nadu

In view of the divergent judgements delivered by the Hon'ble Members,

on 26th November, 2020, Registrar of 'NCLAT' is to place the record in Company

Appeal (AT) No. 171 of 2020 together with the copies of the said judgements

before the Hon'ble Acting Chairperson of 'NCLAT' for constituting appropriate

Bench / nominating Hon'ble 3rd Member for rendering his opinion / decision in

Appeal.

[Justice Venugopal. M] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

26th November, 2020 NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) No. 171 of 2020

(Arising out of Impugned Order dated 5TH May, 2020 passed by the Adjudicating Authority/National Company Law Tribunal, Chennai Bench in Company Petition No. CA/06/2020)

IN THE MATTER OF:

R Narayanasamy 55 G, Ramasamy Naidu Nagar, Villankuruchi Post, Coimbatore 641085. ... Appellant

Versus

The Registrar of the Companies, Tamil Nadu AGT Business Park, Avinashi Road, Civil Aerodrome Post Coimbatore 641014. Tamil Nadu ... Respondent

Present:

For Appellant: Mr. B. Karunakaran and Mr. Anoop Prakash Awasthi, Advocates

For Respondent: Notice delivered - no appearance

JUDGEMENT

(Through virtual mode) (Date: 26.11.2020)

{Per: Dr. Alok Srivastava, Member(T)}

1. This appeal has been preferred under Section 421 of the

Companies Act, 2013 (hereinafter called the Act) against the order

of the National Company Law Tribunal, Chennai Bench (called

Company Appeal (AT) No. 171 of 2020 Page 1 of 16 NCLT, Chennai Bench hereafter) in case CA/06/2020 delivered on

05.05.2020.

2. The case relates to the order of the Registrar of Companies,

Tamil Nadu, Coimbatore striking off the name of the company M/S

Shri Laxmi Spinners Private Limited from the Register of

Companies vide order dated 29.8.2018, which was published for

public notice under Section 248 (5) of the Act and Rule 9 of the

Companies (Removal of names of companies from the Register of

the Companies) Rules, 2016 on 31.8.2018. The appellant

company thereafter filed an appeal against the said order before

the National Company Law Tribunal, Chennai Bench which was

duly heard and disposed off vide the aforesaid order of the NCLT,

Chennai Bench on 05.05.2020.

3. The brief facts of the case are as under:-

(i) M/s. Shri Laxmi Spinners Private Limited was

incorporated as a Company under the Companies Act,

1956 on 27.9.1978 and was carrying on business from its

Registered Office at No. 55G, Ramasamy Naidu Nagar,

Vilankuruchi Post, Coimbatore 641035 with CIN

No.U17111TZ1978PTC011945. The Company

manufactures and deals in textile including ginning,

Company Appeal (AT) No. 171 of 2020 Page 2 of 16 spinning and related activities and cultivating, selling,

buying fibre, yarn, cotton etc. as well as its trade, import

and export.

(ii) The Appellant purchased the company in the year 2006

and is a Director on the Board of Directors of the

Company. The Appellant has stated in the appeal memo

that due to irregular power supply and manpower issues,

enormous man hour and production possibility was lost

resulting in huge losses for the Company and thus the

production was stopped due to uncontrollable reasons.

(iii) The Appellant has further stated that the in view of

availabilityof regularelectric power supply, it is now viable

to run the yarn mill of the company and given the assets

and infrastructure, restart of production is very much

possible.

(iv) The Appellant has further stated that due to inadvertence

and deficient professional advice, the Company has not

filed the balance sheets and annual returns for some time

and also missed the opportunity of getting the status of a

dormant company under Section 455 of the Companies

Act, 2013.

Company Appeal (AT) No. 171 of 2020 Page 3 of 16

(v) The Registrar of Companies Tamil Nadu, Coimbatore

issued a show cause notice No. 248(1)0055322018 under

Section 248 of the Act on 11.5.2018, proposing to strike

off the name of the Company from the Register of

Companies unless reasonable cause is shown within 30

days of the receipt of the show cause notice by the

Appellant Company. According to the averment made by

the appellant this notice was received by the company on

16.07.2018. The Company filed its reply dated

24.07.2018 to the Registrar of Companies Tamil Nadu,

Coimbatore wherein it accepted that the Company was

not functioning and the required balance sheets and

annual reports were also not filed by the Company for the

previous four years. The Company's name was struck off

from the Register of Companies on 29.8.2018 and a

Public Notice No.STK-7/ROCCBE/2018/2 in Form STK-7

was published on 31.8.2018 wherein the name of the

Company appears at serial No. 31 in the list. This

striking off the name of the Company from the Register of

Companies was done pursuant to Section 248(5) of the

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

Company Appeal (AT) No. 171 of 2020 Page 4 of 16 Companies from the Register of the Companies) Rules,

2016.

(vi) As the striking off the name of the Company was not in

the interest of the Appellant Company, the Appellant filed

an appeal before the NCLT, Chennai Bench under Section

252(3) of the Act on 6.5.2019. A report was obtained by

the NCLT, Chennai Bench from the Registrar of

Companies Tamil Nadu, Coimbatore and based on the

averments made in the appeal and report of the Registrar

of Companies Tamil Nadu, Coimbatore, the NCLT,

Chennai bench dismissed the appeal no. CA/06/2020 on

the ground that no business was being carried on at the

time thenotice was issued to the company and its name

was struck off from the Register of Companies because no

cogent reasons or documents were produced by the

appellant before the NCLT, Chennai Bench to supportthe

proposition that the company was carrying on its

business. Aggrieved by this order of the NCLT, Chennai

bench, the Appellant has preferred this appeal before the

NCLAT.

4. The appellant has claimed in the appeal memo that the

notice was actually issued on 22.06.2018 by the Registrar of

Company Appeal (AT) No. 171 of 2020 Page 5 of 16 Companies Tamil Nadu, Coimbatore, which was antedated to

11.05.2018. He has also stated that he submitted his reply to the

Registrar of Companies Tamil Nadu on 24.7.2018, whereas the

name of the Appellant Company was actually struck off from the

Register of Companies on 6.7.2018, much before the Company's

reply was submitted and could be considered by the Registrar of

Companies Tamil Nadu, Coimbatore.

5. The Appellant Company's appeal filed before NCLT, Chennai

Bench was perused to see whether the appellant had raised the

issue of antedating of the notice and issuing of order to strike off

the name of the Company before expiry of 30 days from the date of

receipt of notice before the NCLT, Chennai bench. It is clear from a

perusal of the appeal memo filedbefore the NCLT, Chennai Bench

that the Appellant has nowhere raised the issue of the show cause

notice actually being issued on 22.6.2018 and being antedated to

11.5.2018. Even before this Tribunal the Appellant has not

brought any material to support his contention that the show

cause notice was antedated to 11.5.2018. Therefore, it is now

uncontroverted that the show cause notice under Section 248 of

Act was issued by Registrar of Companies Tamil Nadu on

11.5.2018. As is clear from report submitted by the Registrar of

Companies Tamil Nadu a further notice was issued on 6.7.2018

Company Appeal (AT) No. 171 of 2020 Page 6 of 16 stating that no reply had been received from the Company and

hence, it was proposed to strike off the name of the Company from

the Register of the Companies. Thus, there is a gap of almost two

months from the date of issue of notice and the date of the

publication of notice on 6.7.2018 proposing to strike off the name

of the Company. Thereafter, the final decision about striking off

the name of the Company was taken on 29.8.2018, which was

published as a public notice in Form No.STK-7 (Public Notice

No.STK-7/ROCCBE/2018/2 dated 31.8.2018).

6. I have perused and considered averments of the appellant, the

grounds stated in the appeal, order dated 05.05.2020 of NCLT,

Chennai Bench in CA/06/2020, appeal memo filed before the

NCLT dated 6.5.2019, the show cause notice issued by Registrar of

Companies Tamil Nadu, Coimbatore and the reply thereon dated

24.7.2018. It is useful to reproduce the relevant Section 248 (1) of

the Act to aid our analysis of case -

"248. Power of Registrar to remove name of company

from register of companies - (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]

Company Appeal (AT) No. 171 of 2020 Page 7 of 16 [***]

(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; or

(d) the subscribers to the memorandum have not paid

the subscription which they had undertaken to pay at the time

of incorporation of a company and a declaration to this effect

has not been filed within one hundred and eighty days of its

incorporation under sub-section (1) of section 10-A; or

(e) the company is not carrying on any business or

operations, as revealed after the physical verification carried

out under sub-section (9) of section 12,

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, within a period of thirty days from the date

of the notice."

Company Appeal (AT) No. 171 of 2020 Page 8 of 16

7. The Registrar of the Companies Tamil Nadu, Coimbatore

has, on the basis of the fact that the Company was not

carrying on any business or operation for the period of two

financial years immediately preceding the year in which

notice was issued and that it had not made any application

within such period for obtaining the status of the dormant

company under Section 455 of the Act, sent a notice to the

Company as well as the Directors of the Company of the

intention to remove the name of the Company from the

Register of Companies. The notice was issued under Section

248(1) (c) and necessary action regarding issue of notice,

obtaining representation along with copies of relevant

documents within 30 days from the date of notice was done

in accordance with provision in law.

8. Therefore, there appears to be no illegality or legal deficiency

regarding following of the scheme and time frame as stipulated in

Section 248 of the Act by the Registrar of Companies.

9. Regarding the matter whether the company was in business

or operating on the date of issue of notice and two years

immediately preceding the date of notice, it is seen that the

Appellant has accepted in his reply dated 24.7.2018 submitted on

behalf of the company before the Registrar of Companies Tamil

Company Appeal (AT) No. 171 of 2020 Page 9 of 16 Nadu that it was not functioning on the date the notice was issued

and was also not functioning for two Financial Years immediately

preceding the date of notice. He has very unequivocally admitted

that due to unfavourable market conditions and technical

difficulties in the recent years, they have faced some issues leading

to a lot of financial issues for the company. This resulted in a

phase where the company had no operations and all the activities

of the company were put to a halt and therefore, the company did

not have any significant business activities in the past few years.

He has also admitted that he was facing personal health issues

which inhibited him from fulfilling the activities of the company

involving corporate compliances. The appellant has filed Income

Tax Returns of the company for the Assessment Years 2014-15,

2015-16, 2016-17 and 2017-18, where the gross total income in

each of the four Assessment Years mentioned has been disclosed

as 'Nil' and the tax paid also is alsoshown as 'Nil' respectively.

Thus it is amply clear that the Company was not doing any

business from the Assessment Year 2014-15 till Assessment Year

2017-18and also on the date of issue of notice by the ROC Tamil

Nadu. In addition, it is also noted that the Company did not file

any balance sheets or annual returns as required under the

Company Appeal (AT) No. 171 of 2020 Page 10 of 16 Companies Act, 2013 for the above mentioned periods as is

required under law.

10. In view of the fact that the appellant has made categorical

admission in reply submitted to the ROC and also before the NCLT

Chennai Bench in the appeal memo that the company was not

functioning and operational on the date the first notice was issued

by the ROC Tamil Nadu, and also in the four assessment years

preceding the date of notice it stands to reason that the company

was a non-functional company when the notice was issued under

Section 248(1) (c) of the Companies Act, 2016.

11. Now let us examine the requirement of Section 252 (3) of the

Companies Act, 2016 insofar as grant of relief to the appellant is

concerned. The Section 252 (3) of the Act is reproduced below for

better appreciation:

"252. Appeal to Tribunal. -

............................................................

(3) If a company, or any member or creditor or workmen

thereof feels aggrieved by the company having its name

struck off from the register of companies, the Tribunal on an

application made by the company, member, creditor or

workman before the expiry of twenty years from the

Company Appeal (AT) No. 171 of 2020 Page 11 of 16 publication in the Official Gazette of the notice under sub-

section (5) of Section 248 may, if satisfied that the company

was, at the time of its name being struck off, carrying on

business or in operation or otherwise it is just that the name of

the company be restored to the register of companies, order

the name of the company to be restored to the register of

companies, and the Tribunal may, by the order, give such

other directions and make such provisions as deemed just for

placing the company and all other persons in the same

position as nearly as may be as if the name of the company

had not been struck off from the register of companies."

12. I will pause here for a moment to examine whether any of the

conditions given in Section 252 (3) can provide a lease of life to the

company in appeal. It is an admitted and undisputed fact that the

said company was neither in business or in operation or

functioning on the date the first notice was issued by the ROC, and

also for two Assessment Years immediately preceding the date of

issue of notice. Now let me see whether any case could be made

out for the reason 'it is otherwise just' for restoring the name of the

company in the register of companies. Fairness and Justice go

hand in hand and so we must weigh the requirement of being just

from the lens of fairness and justice based on the reasons put forth

Company Appeal (AT) No. 171 of 2020 Page 12 of 16 by the appellant. I find that the appellant has not given any cogent

or convincing reason as to why the company was not in operation

and the reasons provided by him about lack of electric supply and

available manpower and poor market conditions are not convincing

when we know that many other companies having similar

businesses and production were functioning in the said time

period. Moreover, the appellant failed to take any action to acquire

the status of 'Dormant Company' by resorting to action under

Section 455 of the Act. In addition, the company did not even care

to file necessary balance sheets and annual returns for any of the

financial years in question. The entire conduct of the directors of

the company point to a situation that the company was not

operational and the directors were not interested in running the

company and take action as required under law. Thus I do not

find any cogent reason preferred by the appellant that could be

considered as providing 'just' ground for restoring the name of the

company in the register of companies.

13. It is also worth noting that the ROC Tamil Nadu has taken

action for striking off the names of non-functional and non-

operational companies from the register of companies and keep it

free of the names of defunct companies as part of his

administrative functions. This action, it should be underlined, has

Company Appeal (AT) No. 171 of 2020 Page 13 of 16 been taken by following the stipulated legal procedure and by

application of relevant provisions of the Companies Act, 2016 and

not in any arbitrary manner.

14. From the report of the Registrar of Companies Tamil Nadu,

Coimbatore submitted to NCLT, Chennai Bench, it is seen that a

submission has been made in paragraph 11.8 that Registrar of

Companies Tamil Nadu, Coimbatore has no objection in restoring

the name of the Company back to the Register of Companies, if the

NCLT, Chennai Bench were to so order and the Company shall file

pending financial statements and annual returns for the Financial

years 2014-15 to 2019-20 with fees and additional fees as

prescribed in the Act. The NCLT, Chennai Bench has considered

the report of the Registrar of the Companies and the averments

made by the Appellant before giving decision on the appeal. What

can be made out of such a mention by the ROC is that he has

merely stated a provision of law without giving any cogent or

satisfactory reason for restoration of the name of the company in

the register of companies. Hence we do not see much substance

and reason in the mention of the Para 11.8 in the ROC's report.

15. In view of the legal provision in Section 248 of the Act (supra),

the Registrar of the Companies has taken the step of striking off

the name of the Company from the Register of the Companies as

Company Appeal (AT) No. 171 of 2020 Page 14 of 16 the Company does not comply with the requirements of Section

248 of the Act by following the procedure as laid down in law.

Moreover, the appellant has not raised any issue about lack of

legality in issue of notice and providing stipulated time for filing his

reply by the ROC Tamil Nadu. The point about antedating of the

notice to 11.05.2018 was neither raised before the NCLT Chennai

nor any document or evidence was put forward in support of the

appellant's contention. Hence the issue of antedating of the first

notice and the legality of following the stipulated procedure by the

ROC before striking off the name of the company does not hold

water and no relief can be granted to the appellant on this

account.

16. On the basis of the detailed analysis and discussion in the

aforesaid paragraphs, it is succinctly clear that Registrar of

Companies Tamil Nadu, Coimbatore has acted in pursuance of the

provisions of Section 248 of the Companies Act, 2013. He has

complied with the procedural requirements as outlined in Section

248(1) of the Act and therefore his action of striking off the name of

the Company M/s. Shri Laxmi Spinners Private Limited from the

Register of Companies has full force of law. Moreover the appellant

has not been able to make out a case in his favour as to why it

would be 'just' to restore the name of his company in the register of

Company Appeal (AT) No. 171 of 2020 Page 15 of 16 companies in accordance with the provision of Section 252 (3) of

the Companies Act, 2013. The decision of NCLT, Chennai Bench

in dismissing the appeal is, therefore, correct. I, therefore, find no

reason to interfere with the order of the NCLT, Chennai Bench and

the appeal is consequently dismissed. There is no order as to

costs.

(Dr. Alok Srivastava) Member (Technical) New Delhi 26th November, 2020

/aks/

Company Appeal (AT) No. 171 of 2020 Page 16 of 16 NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeal (AT) No. 171 of 2020 [Arising out of Order dated 05.05.2020 passed by the National Company Law Tribunal, Division Bench-I, Chennai in CA/6/2020]

IN THE MATTER OF:

R Narayanasamy 55 G, Ramasamy Naidu Nagar, Vilankuruchi Post, Coimbatore 641085. ...Appellant

Versus The Registrar of the Companies, Tamil Nadu AGT Business Park, Avinashi Road Civil Aerodrome Post Coimbatore Tamilnadu 641014 ...Respondent

Present:

For Appellant: Ms. Hema Sampath, Sr. Advocate along with Mr. B. Karunakaran & Mr. Ashok Kumar, Advocates

For Respondent: Notice delivered - no appearance

Venugopal M. J

I have gone through the detailed judgement authored by my Learned

Brother Dr. Alok Srivastava, Member (Technical). However, with great

Company Appeal (AT) No. 171 of 2020

1 respect, I differ with the views expressed therein. Hence, I pen my thoughts

and render my findings separately.

2. According to the Appellant he is a shareholder and Managing Director

of the Company viz. 'Shri Laxmi Spinners Private Limited' incorporated under

the Companies Act, 2013 with certificate of incorporation No. 7607 of 1978

dated 27.09.1978 with the Respondent / 'Registrar of Companies',

Tamilnadu. In fact, the said Company is a Private Limited Company limited

by shares doing business from its registered office at No. 55G, Ramasamy

Naidu Nagar, Vilankuruchipost, Coimbatore, 641035.

3. The main objective for which the Company was incorporated are to

manufacture and deal in textile including ginning, spinning and related

activities and cultivating, selling, buying fiber, yarn, cotton etc. as well as its

trade, export and import. The authorised Share Capital of the Company has

been Rs. 10,00,00,000/- (Rupees ten crores only) divided into 156,000 /-

equity shares and that the issued, subscribed and paid up capital of the

Company is Rs. 2,78,10,000/-(Rupees Two Crores Seventy-Eight Lakhs and

Ten Thousand only) divided into 7,80,100 equity shares of Rs. 10/- only. The

Appellant purchased the Company in the year 2006.

4. It is the stand of the Appellant that they are interested to run the

Company business and a sum of Rs. ten crores were invested in the Company

and that the factory is situated at a piece of land of 5.6 acres and built up

area is about 17,000 sq. ft. which is a valuable asset. In fact, the Company's Company Appeal (AT) No. 171 of 2020

2 operations were stopped due to abnormal frequent power cuts in the State of

Tamilnadu at the relevant time. Due to power issues, enormous man power

and production possibility was lost resulting in huge losses for the Company

and thus the production was stopped due to uncontrollable reasons.

5. It is the version of the Appellant that given the improvement of the

position of electric power supply, now it is viable to run the yarn mill of the

Company and given the assets and infrastructure and restart of production

is much possible. The intention of the Directors is in continuing the

operations and they have taken steps to that effect and during the period

since the Company's name is struck off from the register of the 'Registrar of

the Companies' they were clearing the EPF Bills, peak hour charges to the

Electricity Board and continuing with proper representation in the Court /

Legal cases by and against the Company. Further, two of the Directors of the

struck off Company who were non-resident Indians had come back and ready

to take up the Company business further.

6. The stand of the Appellant in the present Appeal is that due to

inadvertence and deficient professional advise the Company had not filed the

'Balance Sheet' and 'Annual Returns' for some time and also missed the

opportunity of obtaining the status of a dormant company under section 455

of the Companies Act, 2013. Furthermore, they were made ready in due

course and could not be filed as the name of the Company was struck off.

Company Appeal (AT) No. 171 of 2020

3 The moment Company's name is restored to the register of the 'Registrar of

Companies' appropriate statutory compliances would be done at the earliest.

7. The real grievance of the Appellant is that on 31.08.2018, in form no.

STK-7, a notice of striking off and dissolution 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

was published vide Notice No. STK-7/ROCCBE/2018/2 wherein in the list

enclosed the Appellant's was shown at S.No. 31 and that the strike off date

was shown as 29.08.2018.

8. The Appellant in Appeal has taken a ground that the impugned order

of the 'National Company Law Tribunal', Division Bench-I, Chennai in

CA/6/2020 dated 05.05.2020 is prejudicial to the business of the Company.

9. The other ground of the Appellant is that the action of the 'Registrar of

Companies' while striking out the name of the Company from the register was

not compliant to the Section 248(6) of the Companies Act, 2013. Moreover,

the first Appeal for restoration of Company's name in the register of the

'Registrar of Companies' was filed within three years period as per Section

252 of the Companies Act.

10. The Appellant in the instant Appeal filed before this Tribunal has

averred that the position of power supply has improved and that the Company

is optimistic of carrying out operations and that the Company has Assets and

Company Appeal (AT) No. 171 of 2020

4 ready infrastructure to start its operations. Besides these, the plea of the

Appellant is that the present case on hand falls in the category where it would

be 'just that the name of the Company be restored to the register of

companies' as per section 252(3) of the Companies Act, 2013.

11. The Appellant in Appeal has comes out with a plea that great prejudice

would be caused to the Appellant if the name of the Company of the Appellant

is not restored to the register of the Registrar of Companies and on the other

hand no prejudice would be caused to anyone if the restoration of the name

of the Company is ordered by this Tribunal, in the interest of justice.

12. It transpires that the Respondent / Registrar of Companies, Tamilnadu,

Coimbatore had issued a notice dated 11.05.2018 for removal of name of

'Shri Laxmi Spinners Private Ltd.' from the register of companies under

Section 248(1)&(2) of the Companies Act, 2013 to the Company, on the

ground that the Company was not carrying on any business or operation for

a period of two immediately preceding financial years and had not made any

application within such period for obtaining the status of a dormant company

under Section 455 of the Companies Act, 2013. In fact, the Respondent /

Registrar of Companies, Tamilnadu, Coimbatore had sought the

representation of the Company along with copies of relevant documents, if

any, within 30 days from the date of receipt of the said notice and that a copy

of the notice was marked to four Directors of the Company mentioned in the

notice.

Company Appeal (AT) No. 171 of 2020

5

13. In the Appeal paper book of the Appellant the reply of the Appellant

dated 24.07.2018 representing as Managing Director of the 'Shri Laxmi

Spinners Private Ltd.', Coimbatore addressed to the Respondent / Registrar

of Companies, Tamilnadu, Coimbatore is shown as Annexure A-9 wherein it

was mentioned that the notice of the Respondent was received by the

Appellant on 16.07.2018 and that due to unfavourable market condition and

technical difficulties in the recent years, they had faced some issues leading

to a lot of financial losses for the Company which had resulted in a phase

where the Company had no operations and all the activities of the Company

were put to a halt and added further the Company was not having any

significant business activities in the past few years etc.

14. It comes to be known that the Respondent / Registrar of Companies,

Tamilnadu, Coimbatore on 31.08.2018 in notice no. STK-

7/ROCCBE/2018/2 had published pursuant 7/ROCCBE/2018/2 had

published pursuant to sub-section (5) of Section 248 of the Companies Act,

2013 the names of 962 Companies as per annexure-A which were struck off

from the register of companies and the said companies were dissolved.

Indeed, in the annexure A to the notice of striking off and dissolution dated

31.08.2018 at S.No. 31 the name of the Company 'Shri Laxmi Spinners

Private Ltd.' is seen.

Company Appeal (AT) No. 171 of 2020

6

15. The 'National Company Law Tribunal', Division Bench-I, Chennai in

CA/6/2020 while passing the impugned order dated 05.05.2020 at

paragraph 9 to 10 had observed the following: -

"9. As to the

submissions made by the Ld. Counsel

for the Applicant Company, it is seen

from the records, that the company is

not carrying on business, as on the

date of striking off the company from

the register maintained by the

Respondent. Further, it may be seen

from the records that the company was

incorporated on 27.09.1978 and it is

also brought to the notice of this

Tribunal that the Applicant company

has failed to file its balance sheet since

its incorporation.

10. Upon perusal of

the income tax acknowledgement

which is filed along with the petition,

would prove the fact that even though

the company has been active during

Company Appeal (AT) No. 171 of 2020

7 the period under scrutiny filing

returns with income tax, however,

had failed to file the same with the

Respondent of any statutory returns

from the documents submitted by the

Appellant, it is evident upon its bare

perusal which would prove that the

company was not doing any business

and remains to be dormant. Further

at para 4.16 of the application, the

applicant company has listed out the

details of the Income Tax and the

amount of Tax Paid from the

assessment year 2013-14 and the

details of which are as follows: -

S.No. Assessment Gross Total Tax Year Income Paid

1 2013-14 Nil Nil

2 2014-15 Nil Nil

3 2015-16 Nil Nil

4 2016-17 Nil Nil

5 2017-18 Nil Nil

Company Appeal (AT) No. 171 of 2020

8

11. Thus, after conscientious perusal

of the documents filed by the Applicant

company, this Tribunal is satisfied that

the Applicant company is not carrying on

its business during the time when the

company was struck off from the Register

maintained by the Respondent and also

no cogent reasons or any documents are

produced before this Tribunal in order to

substantiate that the company was

carrying on its business or it is just to

revive / restore the name of the company

to the Register as maintained by the

Respondent."

and ultimately was constrained to dismiss the application without costs.

16. Be it noted that a mere running of the eye of Section 252(1) of the

Companies Act, 2013 shows that any person aggrieved by the order of the

Registrar, notifying a company as dissolved under section 248 is competent to

file an 'Appeal' to the 'National Company Law Tribunal'. If a company or any

member or creditor feels aggrieved, they would also be competent to file an

'Appeal' against the order of the Registrar of Companies before the expiry of

twenty years from the date of publication of order in the Official Gazette as per

Company Appeal (AT) No. 171 of 2020

9 Section 252(3) of the Companies Act, 2013. In short, Section 252(3) of the

Companies Act, 2013 visualises that one of the three conditions are required to

be fulfilled before exercising jurisdiction to restore a company to the register of

companies on the file of the Registrar of Companies. (i) That the company at the

time of its name was struck off was carrying on business (ii) or it was in operation

(iii) or it is otherwise just that the name of the company be restored on the

register.

17. Section 248(6) of the Companies Act, 2013 provides that the Registrar,

before passing an order under sub-Section (5), shall satisfy himself that

sufficient provision has been made for realisation of all amount due to the

Company and for the payment or discharge of its liabilities and obligations by

the Company and for the payment or discharge of its liabilities and obligations

of the Company within a reasonable time and if necessary obtain undertakings

from the managing director, director or other persons in charge of the

management of the Company. This provision is subject to the proviso that

notwithstanding the undertakings referred to in this Section, the assets of the

Company shall be made available for the payment or discharge of all its liabilities

etc. even after the date of order removing the name of the Company from the

register of Companies.

18. At this juncture, it is pointed out that in the decision of Hon'ble High

Court of Madras 'M.A. Rahim and Anr.' V. 'Sayari Bai' (DB) reported in

(MANU/TN/0218/1973) it is held that the word 'just' connotes 'reasonableness'

Company Appeal (AT) No. 171 of 2020

10 and something conforming to 'rectitude' and justice, something equitable and

fair.

19. Moreover, in the decision of Hon'ble Supreme Court 'Helen C. Rebella'

V. 'Maharashtra S.R.T.C.' reported in (1999) 1 SCC at page 90 it is observed

that the word "just" denotes equitability, fairness and reasonableness having a

large peripheral field. In understanding its scope, one must take into account

all the facts and circumstances of the case and then decide what would be just

and equitable.

20. In the decision 'Sidhant Garg and Anr.' V. 'Registrar of Companies and

Ors.' reported in (2012) 171 Comp.Cas. 326 it is held that the word "just"

would mean that it is fair and prudent from a commercial point of view to restore

the Company and that the Court has to examine the concept of 'justness' not

exclusively from the perspective of a creditor or a member or a debtor but from

the perspective of the society as a whole.

21. In the decision of Hon'ble High Court of Delhi 'M.A. Panjwani' V.

'Registrar of Companies and Ors.' reported in (2015) 124 CLA 109(Delhi) in

paragraph 16 it is observed as under:-

"16. It was submitted on

behalf of the Registrar of

Companies that in striking off the

name of the Company, the

Company Appeal (AT) No. 171 of 2020

11 procedure prescribed in Section

560 of the Act was followed. That

may be so. Sub-section 6 of

Section 560 gives power to the

company court to order restoration

of the name of the company if it

finds that such of course was

'just'. The fact that the ROC did

follow the due procedure

prescribed by law while striking

off the name cannot, therefore, be

an answer to a petition filed on the

ground that it would be 'just' to

restore the name of the company."

22. In the decision 'Purushottam Dass' V. 'Registrar of Companies',

Maharashtra, (1986) 60 CompCas 154 (Bom) it is observed as under:-

"The object of Section

560(6) of the Companies Act is

to give a chance to the

company, its members and

creditors to revive the company

which has been struck off by

Company Appeal (AT) No. 171 of 2020

12 the Registrar of Companies,

within period of 20 years, and

give them an opportunity of

carrying on the business only

after the company judge is

satisfied that such restoration

is necessary in the interest of

justice."

23. In the decision Hon'ble High Court of Delhi 'Ascot Shoes Private

Limited' V. 'Registrar of Companies' reported in (2017) 2

CompLJ118(Del) wherein at paragraph 12 it is interalia observed as follows:

"12.........Looking to the fact that

the petitioner is stated to be a

running company; and that it has

filed this petition within the

stipulated limitation period, and

to the decision of the Bombay

High Court in Purushottamdass

and Anr.(Bulakidas Mohta Co. P.

Ltd.) v. Registrar of Companies,

Maharashta & Ors. (supra); it is

only proper that the impugned Company Appeal (AT) No. 171 of 2020

13 order of the respondent dated

23.06.2007 which struck off the

name of the petitioner from the

Register of Companies, be set

aside. At the same time, however,

there is no gainsaying the fact

that a greater degree of care was

certainly required from the

petitioner Company in ensuring

statutory compliances. Looking to

the fact that annual returns and

balance sheet were not filed for

almost fourteen years, the

primary responsibility for

ensuring that proper returns and

other statutory documents are

filed in terms of the statute and

the rules, remains that of the

management."

24. In the decision 'Mace Platronics Pvt. Ltd. V. ROC, reported in (2010)

104 SCL 277(Del), wherein it is observed as under:-

"When the name

of the company was struck off after Company Appeal (AT) No. 171 of 2020

14 following the prescribed procedure for

non-filing of statutory records, even

though the contentions of the company

that the officials entrusted with

responsibility of filing documents had

failed to do so cannot be accepted, yet

since the company was a running

company and the application had been

filed in time, the court had power to

restore the name of the company."

25. It is to be remembered that the right to seek restoration of a name of a

company to the register of companies maintained by the 'Registrar of

Companies' is not lost as long as 20 years have not expired. A 'Creditor' in

Section 252 of the Companies Act ought to be construed widely so as to include

a 'creditor' whose debt was contingent or prospective. In restoring a company

to the register of companies, the court has no jurisdiction to impose any

penalty for the defaults under the Act, but may order costs as a term of

restoration as per decision 'Re Moses and Cohens Ltd. reported in (1957) 3

All ER p.425.

26. It is pointed out that instead of resorting to prosecution of Directors and

Officers of the Company, many times striking off the names of Companies are

seen based on the reason that the Company had not filed the 'Returns and

Accounts'.

Company Appeal (AT) No. 171 of 2020

15

27. Section 455 of the Companies Act, 2013 speaks of 'Dormant Company'.

As a matter of fact, the word dormant is not defined in the Act. The term

'dormant' in business vernacular means inactive, passive, an entity the

identity which is unknown to others. A company may apply for obtaining the

status of a dormant company by passing a special resolution at the general

meeting of the company or by obtaining consent of the shareholders holding

atleast three-fourth of the Shares in value.

28. A dissolved company has no legal existence and, therefore, it cannot

carry on business operations in accordance with the objects clause or

Memorandum of Articles of Association. The effect of dissolution is that the

certificate of incorporation issued to the Company is deemed to be cancelled

from the date of dissolution.

29. In Law, the dissolution of a Company will not culminate in removing the

'Debtors' liability of the Company for the purpose of discharging the dissolved

Company's obligations / payments / liabilities it can carry on its operations.

30. Even though the Company at the time of striking off its name from the

register of Companies was not carrying on business or not in operation yet, if

the claim is bonafide / genuine or fair one, the Tribunal can restore the

striking off the name of the Company. Although, when the name of the

Company was struck off at the instance of Applicants itself, yet the Company

can seek restoration of name under Section 560 of the Companies Act, 1956

(corresponding to Section 248 of the Companies Act) as per decision of Hon'ble

Company Appeal (AT) No. 171 of 2020

16 High Court of Delhi in 'Intec Corporation P. Ltd.' V. 'Registrar of

Companies' (2017) 201 Comp cases 18 (Delhi).

31. The 'Striking off' is an alternative to 'winding up'. Further, the order of

restoration of the name of a Company to the register of Companies can also

be passed by the Tribunal if it is that, it is just and proper to restore the name

of the Company, then refusal to grant relief because some third party might

be inconvenienced by it, will not be a proper, in my considered opinion.

32. It is to be borne in mind that the presence of the words 'or otherwise'

signifies that even if the Company was not carrying on any business or was

not in operation at the time of striking off, it is still open to the Tribunal to

order restoration if it appears to it to be 'otherwise' 'just'.

33. In case of an order being passed by the Tribunal restoring the Company

to the register of 'Registrar of Companies' as regards the claims of creditors

which were not barred on the date of dissolution that period between the date

of dissolution and the date of restoration is not to be counted for the purpose

of limitation Act.

34. In the instant case on hand, the reasons assigned by the Appellant that

due to inadvertence and deficient professional advice the Company had not

filed the 'Balance Sheets' and 'Annual Returns' for some time, the Consultant

who was entrusted with the filing of 'Returns', had no knowledge of Company

Law requirements and that there was no proper superintendence to ensure

that the statutory filings were completed within the time period are not

acceded to by this Tribunal.

Company Appeal (AT) No. 171 of 2020

17

35. The Appellant in his application filed in the form of an affidavit before

the Tribunal (under Section 252(3) of the Companies Act and Rule 87A of

'National Company Law Tribunal Rules, 2016) for restoration of 'Shri Laxmi

Spinners Private Limited' to the register of Companies at paragraph 4.21 had

averred that there are some legal cases and furnished the pending cases

details as under:-

"4.21 (i) W.P.(MD) No.

14790 of 2017 and subsequent

W.A.(MD)No. 1161 & 1162 of 2018

Domestic Enquiries were conducted

against a worker P.Solaiyapan for his

having deliberately omitted to tie the

yarn and caused production loss to

the mill and against another worker

M.Sankarapandian for his having

attacked a co worker causing severe

injury to deter him from attending the

work of the mill regarding which the

said Sankarapandian was also

arrested by the police on registration

of a criminal case. The charges

against the said workers were held

Company Appeal (AT) No. 171 of 2020

18 proved and hence they were

dismissed from service. They had

approached the Hon'ble Labour Court

Madurai wherein the findings arrived

at in the Domestic Enquiry was

upheld but orders were passed

directing the Mill to reinstate them

without back wages. Later the

Hon'ble Labour Court allowed the

claim petitioners filed by the said 2

workers alleging that they were not

reinstated. Challenging the same

the Mill unsuccessfully filed W.P. (MD)

Nos. 14790 and 14791 of 2017 and

then WA (MD) Nos. 1161 and 1162 of

2018 on the file of the Hon'ble

Madurai Bench of Madras High Court.

The company has to pursue the above

said Writ Appeals.

(ii) TANGEDCO(TNEB) is claiming Rs.

7,01,868/- and the case is going on.

Last hearing was on 19.01.19.

Company Appeal (AT) No. 171 of 2020

19 Waiting for further calls from TNEB

Redressal forum. The company has to

pursue the above for the hearings.

(iii) The Regional Provident

Commissioner, / Assistant Provident

Fund Commissioner, Madurai had

filed W.P. (MD)No. 9237 of 2010 and

MP (MD) No. 2 of 2010 in Hon'ble

Madurai Bench of Madras High Court.

The company has to pursue the above

and settle with the EPF."

36. The Respondent / Registrar of Companies, Tamilnadu, Coimbatore in his

report filed before the 'National Company Law Tribunal', Division Bench-I,

Chennai to the application No. CA/06/2020 had among other things mentioned

that the Company had defaulted in filing its statutory returns since 2015 and for

the notice issued u/s 248(1) of the Companies Act, 2013 in STK-5 to the Company

and its Directors on 11.05.2018, no reply was received from the Company and its

Directors and hence that the Company was struck off u/s 248(5) of the

Companies Act.

37. Continuing further, the Respondent / Registrar of Companies, Tamilnadu,

Coimbatore in his Report filed by the 'National Company Law Tribunal', Division

Bench-I, Chennai had submitted that he had no objection in restoring the name

Company Appeal (AT) No. 171 of 2020

20 of the Company back to the register of Companies subject to the conditions

mentioned therein.

38. It is relevantly pointed out that the liability u/s 92 of the Companies Act,

2013 is that even defunct company, like every other Company is under an

obligation to file the statutory 'Annual Return' till it is wound up or till such time

the Company is struck off by the Registrar u/s 248 of the Companies Act, 2013.

39. Be that as it may, on a careful consideration of respective contentions, on

going through the impugned order of the 'National Company Law Tribunal',

Chennai Bench in CA/06/2020 dated 05.05.2020 even though the Appellant /

Applicant's Company 'Shri Laxmi Spinners Private Limited' was not carrying on

its business during the time when the Company was struck off from the register

maintained by the Respondent, taking note of the primordial fact that the

Appellant in his application in CA/06/2020 before the Tribunal at paragraph

4.21 had referred to the pending legal cases, the claim made by TANGEDCO

(TNEB) The Regional Provident Fund Commissioner / Assistant Provident Fund

Commissioner, Madurai (vide paragraph 35 Supra), the same being pursued by

the Company and especially bearing in mind that the right to seek restoration of

name of the Company to be entered in the register of Companies is not lost as

long as 20 years have not expired, I am of the considered opinion that in all

reasonableness, fairness and on equitableness, it is just and proper to restore the

name of the Company and that the lapses / failure on the part of the management

of the company in not filing the 'Annual Returns' and 'Financial Statements' in

Company Appeal (AT) No. 171 of 2020

21 time can be saddled with an imposition of costs. Otherwise, it will cause prejudice

and hardship to the Company. However, the contra view taken by the 'National

Company Law Tribunal', Division Bench-I, Chennai in the impugned order of

CA/06/2020 dated 05.05.2020 is incorrect in the eye of Law. Viewed in that

perspective, the Appeal succeeds.

40. In fine, the instant Appeal is allowed. No Costs. The impugned order

dated 05.05.2020 in CA/06/2020 of the 'National Company Law Tribunal',

Chennai Bench is set aside. The CA/06/2020 filed by the Appellant before the

'National Company Law Tribunal', Division Bench-I, Chennai is allowed. The

notice of striking off and dissolution in form No. STK-7 dated 31.08.2018 issued

by the Respondent / Registrar of Companies, Tamilnadu, Coimbatore striking the

name of 'Shri Laxmi Spinners Private Limited'(Company) at S.No. 31 is set aside.

It is lucidly made clear that the restoration of the name of the Company Shri

Laxmi Spinners Private Limited' is subject to its filing of all outstanding

documents required by Law and completion of all statutory formalities, including

payment of any late fee or any other charges which are leviable by the Respondent

for late filing of statutory returns and also on payment of cost of Rs. 35,000/-

(Rupees thirty-five thousand only) to be paid to the Prime Minister's Relief Fund.

The name of the Appellant / Applicant's Company shall then, as a consequence,

shall stand restored to the Register of the 'Registrar of Companies', as if the name

of the Company had not been struck off in accordance with Section 248(5) of the

Companies Act, 2013.

Company Appeal (AT) No. 171 of 2020

22

41. I.A. No. 2455/2020 is closed with a direction that the Appellant is to file

the certified copy of the order of 'National Company Law Tribunal', Division

Bench-I, Chennai dated 05.05.2020 in CA/06/2020 within two weeks from today.

[Justice Venugopal. M] Member (Judicial)

NEW DELHI

26th November, 2020

ss

Company Appeal (AT) No. 171 of 2020

23