Shri Balaji Cycle Pvt. Ltd. & Anr vs Roc, Nct Of Delhi & Haryana

IN THE MATTER OF: Before NCLT Before NCLAT 1. Shri Balaji Cycle Pvt Ltd 22/3/1, Chah Indara, Near Jubilee Cinema, Chandni chowk, Delhi-110006 1st applicant 1st appellant

2. Shri Suresh Kumar Sharma, S/o Sh Kedarnath Sharma, R/o 790, Sector-14, Sonepat (Haryana) 131001. 2nd applicant 2nd appellant

Versus

The Registrar of Companies, NCT of Delhi and Haryana, 4th Floor, IFCI Towers, Nehru Place, New Delhi-110019. 1st respondent 1st respondent.

For Appellant:- Mr S.P. Singh Chawla, Advocate.

For Respondents: - Mr. Sanjib K Mohanty, Advocate.

JUDGEMENT

MR. BALVINDER SINGH, MEMBER (TECHNICAL)

The present appeal has been filed by the appellant under Section

421 of the Companies Act, 2013 against impugned final order and judgement

dated 15.03.2018 passed by the National Company Law Tribunal Principal

Company Appeal (AT) No.137/2018 2

Bench, New Delhi in No.CP-44(ND)/2017 whereby the company petition has

been dismissed.

2. The brief facts of the case are that the appellant company was

incorporated on 30.4.1997 under the provisions of Companies Act, 1956.

The authorised share capital of the company was Rs. 5,00,000/- divided into

50,000/- equity share of Rs. 10/- each. The issued, subscribed and paid up

capital of the company was Rs.1,00,000/- divided into 10,000/- equity shares

of Rs. 10/- each.

3. The ROC-respondent struck off its name from the register on account

of the company being not carrying on any business or in operation under

Section 560 of the Companies Act, 1956. The name of the appellant -company

was struck off vide Official Gazette Notification dated 23.06.2007. The claim

of the appellant is that the appellant is active since its inception and has

prepared its Balance Sheet and Profit and Loss Account and also holding its

board meetings and general meetings.

4. The ROC has filed its reply and has disclosed that the company has not

filed any statutory documents i.e. Balance Sheet and Annual Returns since

its incorporation which contravene the provisions of section 159/220 of the

Companies Act, 1956 compelling the ROC to believe that the appellant

Company was not carrying on any business or was not in operation.

6. The reason for striking off the name of the appellant company is non-

filing of Balance Sheet and Annual Returns since its incorporation which

resulted in the belief that the appellant was not carrying out any business.

Notice for striking off was published in the Official Gazette on 23.6.2007. In

Company Appeal (AT) No.137/2018 3

reply, the ROC has further submitted that appellant company may be put to

strict proof as to it carrying out business operations since incorporation

including submitting of income tax returns, viability of running the company,

composition of Board of Directors, shareholders, creditors and their consents

thereof for the present application for restoration. The appellant company did

not produce any Income Tax Returns and has placed on record the true copy

of the audited Balance Sheet and Profit & Loss Account only for the financial

year ending on 31.03.2016. The name of the appellant company has been

struck off by following the procedure laid down by Section 560 of the

Companies Act, 1956 and the record is not traceable in the office of ROC. The

notice issued under section 560(5) has been placed on record.

7. Learned NCLT after hearing the parties passed the impugned order

dated 15.3.2018, the relevant portion is as under:-

"ROC has raised the serious objections that petitioner company may

be put strict proof as to it carrying out business operations since

incorporation including submitting of income tax returns, viability

of running the company, composition of Board of Directors,

shareholders, creditors and their consents thereof for the present

application for restoration. Despite opportunity Petitioner Company

did not produced Income Tax Returns and has placed on record the

true copy of the audited Balance Sheet and Profit & Loss Account

only for the financial year ending on 31.3.2016. Therefore, adverse

inference has to be drawn against petitioner. In the factual

Company Appeal (AT) No.137/2018 4

background it would fortify the view that the company has no

business transaction and was not in operation since its inception.

12. As a sequel to the above discussions this petition fails and the

same is dismissed."

8. Being aggrieved by the impugned order dated 15.3.2018 the appellant

have filed the present appeal.

9. The appellant has stated that the appellant has been carrying on the Cycle

manufacturing business since its incorporation. The appellant further stated

that the company did not receive any show cause notice issued by the

respondent and also stated that the property adjacent to the appellant had

somehow colluded with the postman to prevent any correspondence from

reaching the appellant.

10. The appellant further stated that the due to various factors, such as the

illness of its directors, paucity of funds, severe recession, as well as a general

slump in the market, the appellant business was not very successful after

incorporation and, therefore, it was unable to file the necessary statutory

documents with the respondent since accounting year 2000-2001. The

appellant further stated that the appellant only came to know about the name

of the appellant being struck off only in 2017 but the company continued to

operate and carry on its business in its usual course.

11. The appellant stated that due to inadvertence the appellant company has

not had the opportunity to justify to the respondents that the name of company

should not be struck off. Further the company stated that the ample time has

not been provided to the company to present that the company is carrying on

business or is in operation. The appellant stated that the company has been

Company Appeal (AT) No.137/2018 5

regular in preparing annual accounts and also holding its board meetings,

general meetings of the shareholders as and when required, maintain proper

records, register. The appellant stated that the company has two shareholders

and three creditors and they have consented to the restoration of the name of

the appellant company in the Register of Companies maintained by the ROC.

The appellant further stated that during the pendency of the application, the

appellant has also paid lease rentals to HSID for the land allotted to the appellant

situated at Industrial shed No.39 in the Industrial Estate, Murthal, Sonipat.

12. Learned counsel for the appellant stated that the learned NCLT had

directed the company to furnish certificate from HSIDC in relation to the

allotment of plot that it still stands in the name of the company and all the dues

have been paid. The appellant stated that they have paid the dues.

13. Reply has been filed on behalf of the ROC, Delhi. 1st respondent stated

that the appellant had not filed any statutory documents i.e. Balance Sheet and

Annual Returns since its incorporation which was in contravention of Section

159/220 of the Companies Act, 1956 which compelled 1st Respondent to believe

that appellant company was not carrying on any business or in operation, 1st

respondent considered it fit to strike off the name of the company.

14. 1st respondent stated that the name of the appellant was struck off from

the register of Registrar of Companies under Section 560 of the Companies Act,

1956 and finally notification under Section 560(5) was issued and published in

the Official Gazette of India on 23.6.2007. The name of the appellant was struck

off due to non-filing of the Balance Sheet and Annual Return since its

incorporation which compelled 1st respondent to believe that appellant was not

carrying out any business.

Company Appeal (AT) No.137/2018 6

15. 1st respondent stated that the notices under Section 560 of the Companies

Act,1956 were issued but are not readily traceable as the records of ROC, Delhi

and Haryana have been shifted to Manesar but 1st respondent stressed that the

notices under Section 560(5) was issued and published in the official gazette vide

dated 23.6.20017.

16. We have heard the learned counsel for the parties and perused the record.

17. Learned counsel for the appellant argued that the appellant has been

carrying on the Cycle manufacturing business since its incorporation. The

appellant further argued that the company did not receive any show cause notice

issued by the respondent and also argued that the occupier of the property

adjacent to the appellant had somehow colluded with the postman to prevent

any correspondence from reaching the appellant.

18. Learned counsel for the 1st respondent argued that the appellant had not

filed any statutory documents i.e. Balance Sheet and Annual Returns since its

incorporation which was in contravention of Section 159/220 of the Companies

Act, 1956 which compelled 1st Respondent to believe that appellant company

was not carrying on any business or in operation, 1st respondent considered it

fit to strike off the name of the company. 1st respondent further argued that the

name of the appellant was struck off from the register of Registrar of Companies

under Section 560 of the Companies Act, 1956 and finally notification under

Section 560(5) was issued and published in the Official Gazette of India on

23.6.2007. 1st respondent also argued that the notices under Section 560 of the

Companies Act,1956 were issued but are not readily traceable as the records of

ROC, Delhi and Haryana was shifted to Manesar but 1st respondent stressed

Company Appeal (AT) No.137/2018 7

that the notices under Section 560(5) was issued and published in the official

gazette vide dated 23.6.2007.

19. After hearing both the parties we observe that the appellant has not

produced any document to satisfy us that the appellant is carrying on business

and is in operation. The documents show the names of the companies whose

names were struck off was published in Official Gazette of India on 23.6.2007

was placed before us. Even the appellant has also annexed a copy of the same.

Further we have noted that it is the practice of the ROC to issue show cause

notice to the companies giving them 30 days' time to submit their reply. No reply

was submitted by the appellant nor assertion by the appellant has been made

for the same. Further we are unable to accept the argument of the appellant

that the occupier of the property adjacent to the appellant had somehow colluded

with the postman to prevent any correspondence from reaching the appellant.

On this point we are of the opinion if there was such things happening and the

appellant had some doubt then the appellant should have complained to the

Police as well as Postal Authorities. We observe this is an afterthought

argument. It also gives an impression that while all this is being done the

company which argues that we are carrying on business or in operation is

negligent that it can allow non-communication to it which itself would be

detrimental to running its business or operation. It only strengthens that the

company is not carrying on any business or in operation.

20. The appellant further argued that the due to various factors, such as the

illness of its directors, paucity of funds, severe recession, as well as a general

slump in the market, the appellant business was not very successful after

Company Appeal (AT) No.137/2018 8

incorporation and, therefore, it was unable to file the necessary statutory

documents with the respondent since accounting year 2000-2001. The

appellant further stated that the appellant only came to know about the name

of the appellant being struck off only in 2017 but the company continued to

operate and carry on its business in its usual course. The appellant further

argued that due to inadvertence the appellant company has not had the

opportunity to justify to the respondents that the name of company should not

be struck off. Further the company argued that the ample time has not been

provided to the company to present that the company is carrying on business or

is in operation. The appellant argued that the company has been regular in

preparing annual accounts and also holding its board meetings, general

meetings of the shareholders as and when required, maintain proper records,

register. The appellant argued that the company has two shareholders and three

creditors and they have consented to the restoration of the name of the appellant

company in the Register of Companies maintained by the ROC. The appellant

further argued that during the pendency of the application, the appellant has

also paid lease rentals to HSID for the land owned by the appellant situated at

Industrial shed No.39 in the Industrial Estate, Murthal, Sonipat and the property

is still in the name of the appellant.

21. 1st respondent argued that the appellant had not filed any statutory

documents i.e. Balance Sheet and Annual Returns since its incorporation which

was in contravention of Section 159/220 of the Companies Act, 1956 which

compelled 1st Respondent to believe that appellant company was not carrying on

any business or in operation, 1st respondent considered it fit to strike off the

Company Appeal (AT) No.137/2018 9

name of the company. Ample opportunity has been given to the appellant to

reply to show cause but the appellant did not care to file the same.

22. We have heard the parties on this issue. We observe that the appellant

has not filed the statutory returns and financial statement as required under

Companies Act, 1956. We noted that the consent of the shareholders and the

creditors have been filed by the appellant. We noted that the shareholders and

creditors are all family members. As regards the plea taken by the appellant that

the appellant has deposited lease rentals with the HSIDC, we further observe

that the lease rentals have been deposited only after when the NCLT asked for

proof in its order dated 19.5.2017 (Page 94). We are not sure what course of

action the company would have taken either to deposit or otherwise of the lease

rentals if the NCLT has not asked for proof. Subsequent event to deposit the

lease rental after the proof has been asked for cannot be taken a good ground to

assert that the company has already been in business or in operation.

23. In view of the above observations and discussions, the appeal has no merit

and deserves to be dismissed. Accordingly, the appeal is dismissed. No orders

as to costs.

(Justice A.I.S. Cheema) (Mr. Balvinder Singh) Member (Judicial) Member (Technical)

New Delhi:

Dated:10-4-2019

BM

Company Appeal (AT) No.137/2018