Sheesh Mahal Inns And Hotels Pvt. Ltd & ... vs Registrar Of Companies, Delhi & Anr

NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI COMPANY APPEAL (AT) No.147 of 2020 (Arising out of Order dated 20.02.2020 passed by the National Company Law Tribunal, Court No.III, New Delhi in CP No.602 of 2018)

IN THE MATTER OF:

1. M/s Sheesh Mahal Inns and Hotels Pvt Ltd, 2119-2121 Bank Street, Karol Bagh, New Delhi-110005.

2. Mr Atul Gupta, S/o Mahavir Gupta, R/o A-2/9, F.F. Model Town-1, Delhi-110009 ...Appellants

Versus

1. Registrar of Companies, NCT of Delhi & Haryana, 4th Floor, IFCI Tower, 61, Nehru Place, Delhi-110019

2. Income Tax Department, Income Tax Office, Ward 7(4), Central Revenue Building, IP Estate, New Delhi-110002. Respondents

Present: Ms.Amrita Sarkar, Advocate for Appellant. Mr Kamal Kant Jha, Sr. Panel Counsel for GOI. Mr. Puneet Rai, Sr. Standing Counsel for Income Tax Deptt, R2. Ms Adeeba Mujahid, Jr. Standing Counsel for Income Tax Deptt, for R2.

JUDGEMENT

Per: Shreesha Merla, Member (T)

1. Aggrieved by the impugned order dated 20.02.2020 passed by the

National Company Law Tribunal, Court No.III, New Delhi in CP No.602 of 2

2018, M/s Sheesh Mahal Inns and Hotels Pvt Ltd/Appellant herein has

preferred this Appeal under Section 252(3) of the Companies Act, 2013

(hereinafter referred to as the 'Act') on the ground that NCLT has erroneously

allowed the striking off the name of the Appellant Company from the Register

of Companies, New Delhi. By the impugned order dated 20.02.2020 the NCLT,

while dismissing the Petition preferred by the Appellant/Applicant herein has

observed as follows:-

"The Counsel for the Applicant is present. The ARoC has filed report. It is deposited in the report that the Applicant Company was incorporated on 27.05.1994 and till ending 31.03.2012, Annual Reports and Balance Sheets were filed. Thereafter for non-filing of the same, the name of the Company was struck off from the Register of the Companies under Section 248(5) of the Companies Act, 2013 on 13.06.2017.

Heard the counsel for the Applicant the ARoC and perused the record placed on file. The Counsel for the Applicant has referred to the IT Return Acknowledgements for the AYs 2011-12, 2012-13, 2013-14, 2016-17 and 2017-18. It is reflected from the IT Return Acknowledgements that there is no substance in the Company, the figures are shown in zero in the said acknowledgements. We have also seen from the Director's Report for the year ended 31.03.2016 that gives the impressing that the Company is not carrying on any business as most of the figures are shown in 'brackets', 'zero' and 'nil'. The Profit & Loss Account for the year ended 31.03.2016 gives the same picture. IN short, the Applicant Company failed to establish that it was carrying on any business at the time of striking off its name from the Register of the Companies. Further, no valid ground has been shown for non-compliance of the provisions of the Companies Act, 2013 since 2012. Thus, the decision with regard to the striking off the name of the Applicant Company by the RoC is fully justified in the light of the fact that the Company is not doing any business for a long and it is a sham Company.

3 In the light of facts and circumstances mentioned above, the Applicant Company does not deserve any order for restoration of its name in the Register of Companies. Accordingly, the Petition stands dismissed. However, there is no order as to cost."

2.Submissions of the Appellant

 The Learned Counsel appearing for the Appellant Company

contended that the Appellant Company and Directors were never

served with a notice under Section 248(1)(c) of the Companies Act,

2013 and which is evident from the fact that there was no affidavit

of service of notice filed by the First Respondent/Registrar of

Companies.

 The Learned Counsel appearing for the Appellant contended that it

is mandatory for First Respondent/Registrar of Companies to send

sufficient notice showing that it had reasonable cause to believe that

the subject company is not carrying on any business or operation

for a period of two immediately preceding financial years. Therefore,

the First Respondent/RoC has failed to follow the due process of law

which has caused prejudice to the rights of the Appellants and did

not give an opportunity to present their case; that the Appellant

Company has been carrying on business at the time of striking of

the name of the Appellant Company on 07.06.2017. The Learned

Counsel for the Appellant placed reliance on the judgement of this

Tribunal in in the case of G.S.C. Industries Pvt Ltd V. Registrar of

Companies (Company Appeal (AT) No.84/2018) in which the

Tribunal has held "What is material to be shown by Appellant is that

at the time of striking off the Company was carrying business or was

in operation...." It is contended that in the present case the strike 4

notice was published on 30.06.2017, therefore, the relevant period

in this case shall be counted from 30.06.2015 to 30.06.2017 as

contemplated under Section 248(1)(c) of the Act.

 The Appellant Company has filed Income Tax Returns for the

assessment year 2016-17 and 2017-18 recording a business loss of

Rs.29,315/- and Rs.26,081/- respectively.

 The Learned Counsel for the Appellant submitted that the Second

Respondent/Income Tax Department has admitted in its reply that

they are in support of the revival of the company provided their dues

are paid.

 It is further submitted that on 15.4.2017 the Appellant company has

entered into Letter of Intent (LOI) with Isquare Properties Pvt Ltd and

on 02.05.2017, a Memorandum of Understanding was entered into

with Kshitij Infratech Pvt Ltd for initiating business of hostel facility

on which the registered office of the company is situated.

 It is stated that the AGMs have been held by the Company during

the period 30.06.2015 and 30.06.2017 and the AGM of 02.09.2015

and 02.09.2016 falls within the relevant period and notice of the

AGM have been annexed in the Appeal Book.

 The Learned Counsel for the Appellant has placed reliance on the

ratio of the judgement in Three Star Properties Pvt Ltd V. Kanwar

Pal Singh (Company Appeal No.127/252/ND/2018 to buttress his

argument "that ...further, it is also seen that where litigations are

pending and where immovable property rights involved as held in CP

No.406/2009 by the Hon'ble Delhi High Court, as in the instant case 5

too as facts vouch, it is only proper that the name of the company be

restored to the Register. This Tribunal is of the view that hence there

exists a "just" ground for the restoration of the name of the appellant

company in the Register of RoC but, however, the restoration is subject

to the following terms and conditions...."

 The Learned Counsel for the Appellant submits that the Appellant

company owns a piece of land bearing Municipal Nos 2119 to 2121

built on plot/khasra No.494-495 in Block J measuring 354 sq yds

situated at Gali No.58, Naiwala, Karol Bagh, Delhi State, New Delhi;

that the registered office of the Appellant Company is also situated

in the said plot which establishes that the Appellant Company has

been in operation and conducting the business during the said

period and NCLT has erroneously dismissed the Petition filed by the

Appellant herein.

3.Submissions of the First Respondent/ROC

 The Learned Counsel for the Respondent strenuously argued that

the Appellant 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. In terms of Section 248(4)

of the Companies Act, 2013, public notices in Form STK-5 were

issued to 27291 companies including the Appellant Company by

making publication in official gazette on 28.04.2017 and these

notices have also been placed on the website of Ministry of Corporate 6

Affairs (MCA). That the public notices in form STK-5A were also

published in leading newspapers namely Hindustan Times.

 That 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 the Notice published, sent and non-receipt

of any objection from the company, directors, dissolution in Form

STK-7 having effect from 07.06.2017 was published on the website

of the Ministry of Corporate Affairs on 08.07.2017.

 That the NCLT has passed the impugned order dated 20.02.2020 in

due consideration of the relevant fact that as per the records of the

1st Respondent/RoC, the Appellant company was not carrying out

any operation for a period of 2 immediately preceding financial years

nor is having any immovable property in its name.

4.Submissions of the Second Respondent/Income Tax Department

 The Learned Counsel for the 2nd Respondent submitted that the

details of the Income Tax Returns filed by the Appellant Company

from Assessment Year 2015-16 to 2019-2020 are detailed herein:-

Assessment Date of Filing Income/(Loss) Taxes Paid Year Returned 2015-16 No Return filed

2016-17 14.02.2018 (-)29315 Nil

2017-18 15.02.2018 (-)26081 Nil

2018-19 No Return filed

2019-20 No Return filed 7

 It is submitted that the restoration of the Company be subject to

payment of outstanding tax/dues of the Income Tax Department. It

is also submitted that once the Income tax proceedings are

completed and demand is crystallized, the demand never gets time

barred by any limitation. Hence, the company should be restored

with an undertaking to clear its tax liability due and payable to the

Income Tax Department.

5. Assessment

 At the outset, we address ourselves to the contention of the Learned

Counsel for the Appellant company that sufficient notice under

Section 248(1(c) of the Act was not sent hence the provisions of said

Section was not complied with, on account of which the Appellant

Company was not given an opportunity to present their case. At this

juncture we find it relevant to produce the subject notice relied upon

by 1st Respondent in support of its case that the Appellant Company

was in the knowledge of the said notice. Additionally it is also the

case of the First Respondent that similar notices were also sent to

27291 companies in form STK-5 8

(Emphasis supplied) 9

 From the aforenoted Notice it is clear that it is 'undated'. Section

248 of the Act deals with the powers of Registrar to remove name of

the company from register of companies. Section 248(1)(e) of the Act

provides that a notice shall be sent 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 of notice. For better

understanding, Section 248(1) of Companies Act, 2013 is

reproduced as under:-

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

(b)xxxx

(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 10

requesting them to send their representatives along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice."

 The importance of the 'date' cannot be undermined keeping in view

that Section 248(1)(c) provides that a company should be carrying

on business or operation for two immediately preceding financial

years. On a query from the Bench to the Learned Counsel appearing

for the First Respondent/RoC as to which 'Mode of Despatch' the

aforenoted 'Notice' was sent, it was informed to the Bench that the

Notice was sent by 'ordinary' process. Hence there is no 'Proof of

Service' which could be ascertained. However, a general notice with

respect to all the names which have been struck off from the RoC

has been said to be listed on the website of Ministry of Corporate

Affairs (MCA). A perusal of the reply affidavit filed by the RoC indeed

shows that the website of the MCA under Form STK-7 shows a total

of 17993 + companies were shown to have been struck off from the

register of the companies. Having regard to the fact that the

publication in the newspaper only refers to the link of the website of

the MCA but it does not state anywhere the names of the companies,

which are only reflected/specified in the website, and admittedly a

general notice relating to thousands of companies, this Tribunal is

of the considered view that notice in the proper form which is 'dated'

and sent by a 'Mode of Despatch' establishing a 'Proof of Service'

would be considered 'sufficient notice', keeping in view the facts and

circumstances of the attendant case on hand.

11

 Section 252 deals with 'Appeal to Tribunal' and the same is

reproduced as under:-

"252. Appeal to Tribunal-(1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies:

Provided that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned :

Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company.

(2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation.

(3) If a company, or any member or creditor or workman 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 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 12

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."

 What has to be essentially examined by this 'Tribunal', keeping in view

the provision of Section 252(3) of the Act is

a) Whether the Appellant Company was carrying on business or in

operation at the time of its name being struck off?

b) Whether the Appellant company had any assets/immovable

property at the time the name was being struck off?

c) Whether the Company has held any AGM; if it was carrying on

business two years prior to the date of striking of the company which

in the instant case is 30.06.2017?

 NCLT has referred to the Income Tax returns for the Assessment Year

2011-12, 2012-13, 2013-14, 2016-17, 2017-18 and observed that the

figures are shown as 'zero' in the said acknowledgements. We find force

in the contention of the Appellant Company that this observation is

incorrect as in the Income Tax Returns acknowledgements for the years

2016-17 and 2017-18 it is shown that the current loss of Rs.29305/-

and Rs.26081/-.

 As the strike notice was published on 30.06.2017, the relevant period

in the instant case is the preceding two years i.e. 30.06.2015 and

30.06.2016. The Affidavits filed by the Appellant Company show that

the Hotel is running on the property owned by the company bearing

Municipal Nos 2119 to 2121 built on plot/khasra No.494-495 in Block

J situated at Gali No.58, Naiwala, Karol Bagh, Delhi State, New Delhi

and there is an Agreement entered into with Isquare Properties Pvt Ltd 13

on 15.04.2017 for developing three floors of the aforesaid property for

the purpose of running a student hostel and an MOU with Kshitij

Infratech Pvt Ltd on 2.5.2017 for converting the 3rd floor in Library and

Computer Programming Institute. It is significant to mention that this

has not been denied or disputed by the First Respondent.

 Be that as it may, a perusal of the Notices given for conducting AGM

Meeting are 2.9.2015, 2.9.216, both which fall within the relevant

period of two years prior to the 30.06.2017. This Tribunal is of the

earnest view that there is reasonable cause to believe that the Company

is carrying on business for the relevant period of two years keeping in

view the Income Tax Returns filed between 2015-2020. The MOU, LOI

entered into by the Appellant Company, notices of AGM which also fall

within the relevant period, this Tribunal is of the considered opinion

that it is otherwise 'just' that the name of the company be restored.

The Hon'ble Apex Court in Mrs Hellen C Rebellow & Ors Vs

Maharashtra SRTC reported in (1999) 1 SCC 90 observed that the

word "just" stands for equitability, fairness and reasonableness having

a large peripheral field. We are of the view that the Tribunal has to

examine the concept "just" not exclusively from the perspective of a

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

as a whole. Keeping in view the aforesaid reasons, this Tribunal is of

the earnest view that it would be 'just', reasonable, equitable and fair

that the name of the Company be restored in the books of the Registrar

of Companies. Needless to add, the dues payable to the Income Tax 14

Department/Second Respondent shall be complied with, failing which

the Department is at liberty to proceed in accordance with law. .

 For all the aforesaid reasons, the Appeal is allowed and the impugned

order is set aside and the name of the Appellant Company be restored

in the Register of Companies.

6. The Registry is directed to upload the Judgement on the website of this

Tribunal and send a copy of this Judgement to NCLT (National Company Law

Tribunal, New Delhi) forthwith.

(Justice Anant Bijay Singh) Member (Judicial)

(Ms Shreesha Merla) Member (Technical) 4th April, 2022 Bm