Raj Narain Singh & Anr vs Roc, Uttar Pradesh & Anr

[Arising out of Order dated 10.09.2018 passed by National Company Law Tribunal, Allahabad Bench (in Company Application No.211/2018) in Company Appeal No.124/ALD/2018]

IN THE MATTER OF: Before NCLT Before NCLAT

1. Mr. Raj Narain Singh Original Applicant No.1 Appellant No.1 D-63/6B-38, Shivaji Nagar Colony, Mahmoorganj, Varanasi, Uttar Pradesh

2. Mr. Durgesh Kumar Original Applicant No.2 Appellant No.2 Singh L-3/27B, Gautam Budha Colony, Pahariya, Varanasi, Uttar Pradesh

Versus

1. The Registrar of Original Respondent No.1 Respondent No.1 Companies, Uttar Pradesh, 37/17, West Cott Building, The Mall, Kanpur-208001, Uttar Pradesh

2. Mr. Rajiv Kumar Original Respondent No.2 Respondent No.2 Singh, 141, Jawahar Nagar Extension, Varanasi, Uttar Pradesh 2

3. Mrs. Ratna Singh Original Respondent No.3 Respondent No.3 R/o 141, Jawahar Nagar Extension, Varanasi, Uttar Pradesh

For Appellants: Shri P.K. Mittal and Shri Vaibhav Tayal, Advocates

For Respondents: Ms. Prema Priyadarshini, Advocate (Respondent No.1) Shri Rohit Chaudhary, Advocate and Shri Nesar Ahmad, PCS (Respondents 2 and 3)

JUDGEMENT

(31st May, 2019) A.I.S. Cheema, J. :

1. The Appellants have filed this Appeal against Impugned Order dated

10th September, 2018 passed by National Company Law Tribunal,

Allahabad Bench (NCLT - in short) in Company Application No.211 of 2018

in Company Appeal No.124/ALD/2018 vide which Order, the NCLT

declined to extend period for compliance of filing Returns.

2. The Appellants had filed Company Appeal 124/ALD/2017 before the

NCLT under Section 252(3) of the Companies Act, 2013 (Act - in short) for

restoration of the name of the Company - Shree Narayan Developers Pvt.

Ltd. which had been struck off by the Registrar of Companies, Uttar

Pradesh under Section 248 of the Act. The Appellants pointed out to the

NCLT in their petition that the Company had been incorporated with the

object of being builder, etc. and the Appellants had 50% shareholding. The

Appellants claimed that the present Respondents 2 and 3 and other

Directors of the Company had been managing the Company for 15 years

Company Appeal (AT) No.373 of 2018 3

and the books of accounts and other documents were in their control.

Respondent No.2 had filed CP 25/2004 claiming oppression and

mismanagement which was disposed of by CLB on 22.06.2009 and

thereafter by Order dated 26.02.2010, a Chartered Accountant had been

appointed as Investigating Auditor who submitted Report on 25th

February, 2015 reporting that Respondent No.2 - Rajiv Kumar Singh had

siphoned money. The Appellants claimed before NCLT that the original

Respondents 2 and 3 who were managing the affairs, had not filed any

Returns with ROC during the pendency of the Company Petition in CLB.

According to the Appellants, the ROC had sent Notice dated 31st March,

2017 which was replied by the Company that litigation was pending but

still the ROC stuck off the name of the Company on 6th June, 2017.

3. Against such claims made by the Appellants before NCLT, the

contesting Respondents 2 and 3 claimed that the original Respondent No.2

had been illegally removed as Director on 17th January, 2004 and his

shares had been diluted. They denied wrong doing on their part.

4. It appears that the ROC claimed before NCLT that it had followed

due procedure and when Notice was not replied, the name of the Company

was struck off for not filing of financial Returns since 31st March, 2003.

5. The parties were heard before NCLT and by its initial Order dated 3rd

August, 2018, NCLT found that the Company had not filed Statutory

Returns including Balance Sheet and Annual Returns, etc. after 2003. It

Company Appeal (AT) No.373 of 2018 4

found that the original Respondent No.2 had been removed from

Directorship on 17th January, 2004. The original Order shows that NCLT

found that the Company Petition was still pending and it was observed in

para - 6.2 of the original Order as follows:-

"6.2 The books and records for the Investigation Auditor, directed by CLB were made available by the respondents making it clear that the records of the company till the removal of R-1 from Directorship were with respondents. The books & records may be obtained by the appellants from the respondents to make statutory compliances after 2003 to date.

Respondents are also directed to hand over the books and records of the company available with them to the appellant to enable them to make all statutory compliances."

NCLT was of the view that as there were serious allegations of

financial mismanagement and fraud and that, the merits required that the

Company should be revived. NCLT passed following Orders:-

"7. In view of the CP No.25/2004 pending against the company, wherein interalia serious allegations of financial mismanagement, fraud have been alleged, company merits revival.

Accordingly, the respondent ROC is directed to restore the name of the company subject to the condition that the company will file all statutory returns within 30 days and with requisite charges/fees as well as additional fees/late charges.

7.1 Respondents are directed to hand over the books & records of the company in their possession to appellants to make good statutory compliances.

7.2 Further, appellant is directed to deposit a sum of Rs.50,000/- (Rupees Fifty Thousand Only) as a cost with ROC to defray the cost & expenses Company Appeal (AT) No.373 of 2018 5

along with late filing fees and additional fees as applicable under the Law within a period of 30 days from the date of receipt of this order, failing which this order will stand vacated automatically.

7.3 The appeal is disposed of accordingly."

6. Thus, the Appellants required co-operation of the Respondents. Now,

it is the grievance of the Appellants that although in the above initial Order,

the NCLT had directed the original Respondents to handover the books

and records of the Company to the Appellants, the Respondents 2 and 3

did not comply and went on playing tricks on them to ensure that the

Annual Accounts and Annual Returns could not be finalized for filing with

ROC. The Appellants claimed that they did deposit Rs.50,000/- with the

ROC in August, 2018. According to them, they requested the Respondents

for the books, records, registers and other documents but the Respondents

2 and 3 did not oblige. Consequently, according to the Appellants, they

moved the NCLT again with an application on 5th September, 2018 to

extend the time for finalization of the accounts and to file the same with

ROC. The NCLT, however, passed following Order:-

"C Appeal No.124/ALD/2018, CA No.211/2018

Sh. S.K. Gupta along with Sh. Ankit Kumar Singh, PCS(s) for applicants and Sh. Pradeep Singh Sisodia, CGSC for the ROC, Kanpur is present.

This CA No.211/2018 has been filed by the applicant seeking extension of the period for filing of pending Financial Statements and Statutory Returns by a further period of 90 days.

Company Appeal (AT) No.373 of 2018 6

Applicant has filed this application under Rule 11 of the National Company Law Tribunal Rules, 2016 seeking directions from this Tribunal for extension of time for making compliance with the directions issued by this Tribunal vide order dated 3rd August, 2018, while disposing of Company Petition No.124/2017 filed by the appellant under Section 252 of the Companies Act, 2013 for restoration of the name of Shree Narayan Developers Pvt. Ltd. It appears that this Company Petition was decided by this Tribunal vide order dated 3rd August 2018, whereby Company Petition was allowed on cost of Rs.50,000/- with a further direction to the respondent to handover the Books and Records of the company in their possession to appellants to make good statutory compliances. Further, 30 days time was granted for statutory compliances, but applicant has not done the compliances and moved this application for extending further period of 90 days for doing compliances of the order. This amount to modification of our earlier order passed on 3rd August 2018. We have decided this appeal by our order dated 3rd August 2018, after that we do not have any jurisdiction to modify that order. Applicant wants extension of time, this amount to modification of our earlier order, which is not in our jurisdiction. The CA is not maintainable. Hence rejected."

7. We have heard the Counsel for both sides. The Counsel for

Appellants has pointed out the above facts from the records to argue that

the NCLT should have extended time for filing of the Returns. The

Respondents 2 and 3 have filed Reply and they are arguing to put the

blame on the Appellants and claimed that it is the Appellants who failed to

discharge their statutory duties as Directors and they claimed that there

was no default on their part. In the Reply, the Respondents are trying to

answer the various allegations made by the Appellants with regard to the

disputes between the parties (with which we are not concerned here). The

Company Appeal (AT) No.373 of 2018 7

learned Counsel for the contesting Respondents 2 and 3 has submitted

before us that it is the Appellants who are in management and thus, wants

the Appeal to be dismissed.

8. At the time of arguments, the learned Counsel for the Appellants

submitted that they may be given opportunity so that the Appellants can

take necessary steps for filing the Returns, may be by reconstructing the

records or may be by filing Returns on provisional basis if permissible. The

Counsel went on insisting that the original records are with the

Respondents 2 and 3 and they are not sharing the same with the

Appellants. Respondents on the other hand keep denying that they have

the records.

9. At the time of arguments, the learned Counsel for the Respondents

tried to oppose the Appeal claiming that the NCLT had no right to extend

the time once it had passed Peremptory Order that if the compliance is not

done, the Order passed would stand vacated automatically. It has also

tried to argue that for NCLT to extend time, would be in the nature of review

of the earlier Order which is not permissible once the final Order has been

passed.

10. Going through the material on record, we find that the peremptory

operation of the initial Order dated 3rd August, 2018 was in para - 7.2

reproduced above, which related to deposit of sum of Rs.50,000/-. Before

us, there is no dispute that the Appellant did deposit Rs.50,000/- in

Company Appeal (AT) No.373 of 2018 8

August, 2018 itself with ROC. Apart from this, although NCLT had directed

filing of the Statutory Returns within 30 days in para - 7, in view of

existence of specific provision in the form of Rule 153 of the National

Company Law Tribunal Rules, 2016, the NCLT had sufficient powers to

extend time. Rule 153 of the National Company Law Tribunal Rules, 2016

read as under:-

"153. Enlargement of time.-- Where any period is fixed by or under these rules, or granted by Tribunal for the doing of any act, or filing of any document or representation, the Tribunal may, in its discretion from time to time in the interest of justice and for reasons to be recorded, enlarge such period, even though the period fixed by or under these rules or granted by the Tribunal may have expired."

Apart from this specific provision, Rule 11 of the Rules gives Inherent

Powers to the NCLT to pass such Orders as are required to meet the ends

of justice. Thus we need not burden this Judgement by referring to Rulings

referred to by parties on the subjects of Review, or Peremptory Orders. In

the present matter, where clearly there was litigation going on between the

parties and even Investigating Auditor had been involved and gave Report,

and the Company Petition was pending, it was wrong on the part of ROC

in the first place to have struck off the name of the Company in set of

present facts. Looking to the period from 2003 till 2017, and the fact that

NCLT itself accepted that it was necessary for the Appellants to have the

records from the Respondents, the interest of justice required that NCLT

should have extended the time which power it had under Section 153 of

the Rules. For such reasons, we are proceeding to allow this Appeal. We

Company Appeal (AT) No.373 of 2018 9

are keeping in view the submissions made by the learned Counsel for the

Appellants that the Appellants would take necessary steps so as to

reconstruct records for the purpose of filing and/or filing provisional

Returns, if permissible under the law or resort to alternative modes in a

situation like the present one where the records are claimed to be with the

opposite party who would not cooperate.

11. For the above reasons, we allow this Appeal. We set aside the

Impugned Order dated 10th September, 2018. We direct the Appellants to

do the necessary compliances as were directed by NCLT in its Order dated

3rd August, 2018 for the purpose of filing Statutory Returns. The 30 days,

for the purpose of compliances, would be counted from the date of service

of free copy of the present Order on the Counsel for Appellants, by Registry

of this Tribunal. In case of any further difficulty, we give liberty to the

Appellants to further request NCLT for time for the purposes of filing

Returns and NCLT will be at liberty to extend time as per Rule 153 referred

above in the interest of justice.

No Orders as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical) /rs/nn

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Company Appeal (AT) No.373 of 2018