Sivagnangovindasamy Nambi Manasanthi ... vs Roc Chennai

Company Appeal (AT) (CH) No. 32 / 2022 (Filed under Section 421 of the Companies Act, 2013)

(Against the Impugned Order dated 12.01.2022 in CA/558/2020 along with MA/06/CHE/2021 in CA/558/2020 & MA/1034/2020 in CA/558/2020, passed by the National Company Law Tribunal, Division Bench-I, Chennai)

In the matter of: Sivagnanagovindasamy Nambi Shareholder cum Director of Manasanthi Mental Health Care Private Limited, No. 40, Luz Church Road, Mylapore, Chennai - 600004 ... Appellant Versus The Registrar of Companies, Chennai Block No. 6, B Wing, 2nd FIoor, Shastri Bhawan, 26, Haddows Road Chennai- 600034 ... Respondent Present : For Appellant: Mr. K. Gaurav Kumar, Company Secretary

For Respondent: Mr. Avinash Krishnan Ravi, Advocate

ORDER

(Hybrid Mode) [Per: Shreesha Merla, Member (Technical)]

1. Aggrieved by the Impugned Order dated 12.01.2022, passed in

MA/06/CHE/2021 in CA/558/2020 and in MA/1034/2020 in CA/558/2020,

Comp. App (AT) (CH) No. 32/2022 Page 1 of 12 whereby and whereunder, the National Company Law Tribunal, Division

Bench - I, Chennai (`NCLT') has dismissed the Application filed by the

Appellant herein namely Manasanthi Mental Health Care Private Limited,

seeking to restore the name of the Company in the Register of the Respondent /

Registrar of Companies (`RoC'), Chennai.

2. It is the case of the Appellant represented by Mr. K. Gaurav Kumar,

Company Secretary that the Appellant Company has been active since its

Incorporation and has identified during the period 2011 - 2012 certain future

Projects and also pumped in additional Capital to the tune of Rs.19 Lakhs and

that the Annual Returns and the Balance Sheets of the Company could not be

filed with the Respondent / RoC, due to inadvertence and lack of Professional

expertise and therefore the name of the Company was Struck Off and resultantly

Form STK-7 was issued on 05.07.2017. MA/06/CHE/2021 was filed by the

Appellant / Applicant that the DIN No. of the Appellant Company has also been

Struck Off. The Learned Company Secretary for the Appellant submitted that a

Writ Petition was filed before the Hon'ble Madras High Court in WP No. 8590 /

2018 and WMP No. 10520 / 2018, in which, the Hon'ble Madras High Court,

passed an Order of Stay on disqualification of Directors referring to the

Common Order, passed in WP No. 6896 / 2018 and WMP No. 8544 / 2018.

Comp. App (AT) (CH) No. 32/2022 Page 2 of 12

3. The Learned Company Secretary for the Appellant drew our attention to

the relevant Paragraphs in WP No. 6896 /2018 and in WMP No. 8544 / 2018,

which read as hereunder:

4. Mr. K. Gaurav Kumar, Learned Company Secretary also relied upon the

following observations of the Hon'ble Madras High Court in the Writ Petition

filed by the Appellant in WP No. 8590 / 2018 and WMP No. 10520 / 2018,

which is reproduced as hereunder:

The above lines asserts that the Hon'ble High Court had exempted the aggrieved parties from utilizing Sec. 252 of the CA as a means of revival of the Company and has provided an exclusive alternative to the aggrieved party to use the CODS Scheme to revive the concerned Company by filing the respective Annual Financial Documents which was done by the Appellant.

Comp. App (AT) (CH) No. 32/2022 Page 3 of 12 The Appellant also relies on the following paras in the Writ Petition filed by the Appellant in WP No. 8590 & WMP No. 10520:

``2........ But curiously, the names of the companies in which the petitioners were Directors were struck off from the Register of Companies and a list of disqualified directors under Section 164(2)

(a) of the Companies Act, 2013 has been issued by the Second respondent on 08.09.2017. Now the last date for filing the annual return has been extended from 29.11.2017 to 30.04.2018 under the condonation of delay scheme, 2018 ...''

``Since a batch of Writ Petitions in W.P. Nos. 25455 & 25456 of 2017 etc., are pending on the same issue with interim orders of stay and there has been a further order passed by this court in W.P. NOS. 6896 & WMP NOS. 8544 of 2018 on 26.03.2018 making it clear that the said order will cover all the similarly situated persons whose writ petitions are pending before this court with interim orders, there shall be an order of interim stay so far as the petitioners are concerned......''

(Emphasis Supplied)

5. It is the case of the Appellant that a conjoint reading of both the Orders

passed by the Hon'ble High Court states that the Appellant herein was allowed

to use the CODS Scheme 2018 as an alternative to Section 252 of the

Companies Act, 2013 to revive the Company by filing the relevant Annual

Documents. It is submitted that as per the CODS Scheme 2018 a defaulting

Company is permitted to file its overdue documents which were due for filing

till 30.06.2017 in accordance with the provisions of the Scheme. It is the

Comp. App (AT) (CH) No. 32/2022 Page 4 of 12 Appellant's case that the Scheme was initially introduced, it was only meant for

those Companies which were `not Struck Off', however, subsequent to the

Orders of the Hon'ble Madras High Court, the CODS Scheme, 2018 was

extended and may be made applicable, such benefits given to those Companies

which were Struck Off and whose Directors preferred these Writ Petitions, and

therefore asking the Appellant herein to pay the due penalties under the CODS

Scheme and simultaneously filed a Section 252 Company Petition and further

make payments under Penalties would construe `Doctrine of Double Jeopardy'.

6. The Learned Company Secretary placed reliance on the following

Judgments in support of his case that `Concept of Justness', must be ascertained

and determined, based on the facts of each case and that the case of the

Appellant which provides Mental Healthcare to the Society and also has several

Creditors mentioned in the Balance Sheet, ought to be considered, based on the

ratio of these Judgments.

Sr. Citation No.

1 Helen C. Rebella Vs. Maharashtra S.R.T.C.:

2 Intec Corporation Private Ltd. Vs. The Registrar of Companies, NCT of Delhi & Haryana in CO.PET.191/2016:

3 Tweak the Future Innovations Pvt. Ltd. Vs. Registrar of Companies, Punjab & Chandigarh in CA(AT) No. 300/2019:

Comp. App (AT) (CH) No. 32/2022 Page 5 of 12 4 Siddhant Garg & Anr. Vs. Registrar of Companies in (2012) 171 Comp. Cas.326:

5 M/s. Insys Instruments Systems (India) Pvt. Ltd. Vs. Registrar of Companies, Karnataka CA(AT) No. 231/2018:

6 Mihir Mohan Pyne Vs. Ministry of Corporate Affairs in W.P. No. 9561(W) of 2018

7 M Kumar Syntex Private Limited vs ROC, Delhi & Haryana & Ors in CA AT No. 141 of 2021

7. Mr. Avinash Krishnan Ravi, the Learned Counsel for the Respondent /

RoC vehemently argued that the Appellant Company has not filed the Annual

Returns and Financial Statements as per the provisions of the Companies Act,

2013, for the Financial Years 2010-11, 2011-12, 2012-13, 2013-14, 2014-15,

2015-16 & 2016-17 and thereby failed to follow the statutory compliance as

provided under Section 92 (4) and Section 137 of the Companies Act, 2013 and

additionally the Appellant Company also did not make any Application under

Section 45 for obtaining the `Dominant Status'. Such action of the Appellant

gave a reason for the Respondent to believe that the Company was in-operative.

It is submitted that the Company was finally Struck Off under Section 248(5) of

the Act on 29.06.2017 and its name was published in the Gazette of India dated

15-21st July 2017 under S.No.1516.

Comp. App (AT) (CH) No. 32/2022 Page 6 of 12

8. Aggrieved by this Order, the Appellant filed a Petition under Section

252(3) of the Companies Act, 2013, which was dismissed by the NCLT. As

regarding the averment of the Appellant that the Company has physically filed

all pending Returns until the Financial Year ending 2017 under CODS Scheme

2018 and paid the Challan Fees by way of Deposit in the Registry of the

Hon'ble Madras High Court, it is stated that the Receipt of Fee is not yet

confirmed by the Registry. It is submitted that the Respondent in his

Report to the NCLT dated 16.12.2020 has clearly stated the reason for Striking

Off under Section 248(1)(c) of the Act was solely on account of failure to file

Statutory Returns as per Sections 92 & 137 of the Act. It is submitted that the

Appellant had wrongly interpreted the Orders of the Hon'ble Madras High

Court dated 12.04.2018 and 26.03.2018 in WP No. 6896 / 2018 and in WMP

No. 8544 / 2018. In fact, the Orders clearly direct the Appellant Company to file

Compliances under the CODS Scheme 2018 as hard copies with the

Respondents, but does not confer any specific privilege for restoration of the

Companies which are `Struck Off'. It is submitted that while passing the Order

dated 12.01.2022, NCLT has also delved upon the fact that the Appellant

Company was not carrying on any business or any operation at the time of

Strike Off and now the Appellant has furnished proof of filing of documents

and payment of Fees under the CODS Scheme 2018. It is submitted in the

Written Submissions by the Appellant that the Appeal may be considered on

merits.

Comp. App (AT) (CH) No. 32/2022 Page 7 of 12 Assessment:

9. Simply put, the failure to file Returns by a Company under the

Companies Act, 2013 (hereinafter referred to as `The Act'), has broadly two

consequences namely, `disqualification of the Directors of the subject

Companies', if there is a 3 year failure of filing of the Returns and the Company

can be Struck Off from the Register of the RoC, if there is a two year period of

default of filing of the Returns. Succinctly put, the disqualification of Directors

of a Company is distinctly different from the removal of the Company from the

Register of the RoC. At this juncture, it is relevant to reproduce the reliefs

sought for by the Appellant Company in this Appeal.

(Emphasis Supplied)

10. From the aforenoted reliefs prayed for in this Appeal, it can be clearly

seen that the Appellant herein is seeking a direction to be allowed to file the

remaining Financial Returns without being saddled with additional Fees and

Comp. App (AT) (CH) No. 32/2022 Page 8 of 12 also to be allowed to Scan and Upload all the physically filed Returns of the

Company till 2017.

11. The Learned Counsel Mr. Avinash Krishnan Ravi, appearing for the RoC

drew our attention to the General Circular No.16 / 2017, issued by the Ministry

of Corporate Affairs on 29.12.2017 with respect to the Condonation of Delay

Scheme (CODS), 2018. A bare perusal of this Scheme shows that the Scheme is

for defaulting Companies and their Directors, seeking an opportunity for the

defaulting Companies to become compliant and normalise the Operations and it

is specifically meant for an opportunity to be provided for the `Directors who

are disqualified'. The relevant portion is extracted as hereunder:

``Whereas, consequent upon notification of provisions of section 164(2), Ministry of Corporate Affairs (MCA) had launched a Company Law Settlement Scheme 2014 providing an opportunity to the defaulting companies to clear their defaults within the time period specified therein and following the due process as notified.

Whereas, MCA in September 2017, identified 3,09,614 directors associated with the companies that had failed to file financial statements or annual returns in the MCA21 online registry for a continuous period of three financial years 2013-14 to 2015-16 in terms of provisions of section 164(2) r/w 167(1)(a) of the Act and they were barred from accessing the online registry and a list of such directors was published on the website of MCA.

Whereas, as a result of above action, there have been a spate of representations from industry, defaulting companies and their directors seeking an opportunity for the defaulting companies to become compliant and normalize operations.

Comp. App (AT) (CH) No. 32/2022 Page 9 of 12 Whereas, certain affected persons have also filed writ petitions before various High Courts seeking relief from the disqualification.''

12. From the aforenoted extract, it is crystal clear that the CODS Scheme

2018 is meant for providing an opportunity for the disqualified Director who

has defaulted by not filing the Annual Return or Financial Statement for a

continuous period of three years. Therefore, this Tribunal is of the considered

view the CODS Scheme 2018 is not applicable to the facts of this case, where

due to the non-filing of Returns, the Company was `Struck Off' from the

Register of RoC. It is also interesting to note that the Hon'ble Madras High

Court Order dated 26.03.2018, relied upon by the Learned Company Secretary

is only an Interim Order whereunder, the Hon'ble Madras High Court has

directed the matter to be posted after a period of 8 weeks.

13. We find force in the contention of the Learned Counsel for the

Respondent that in the Final Order of WP No. 6896 / 2018 dated 05.11.2019, it

is held by the Hon'ble High Court, that a Director can be appointed in any other

Company without hindrance, once the CODS Scheme has been complied with

and therefore the direction given by the Hon'ble High Court in the Section 164

(2) (a) is distinctly different from any Notice / Direction issued under Section

248 of the Companies Act, 2013.

Comp. App (AT) (CH) No. 32/2022 Page 10 of 12

14. On a pointed query from the Bench, as to whether, the Appellant

Company is ready and willing to comply all the provisions contemplated under

Law and pay the Requisite Charges / Fee as well as Late Charges / Fee, the

Learned Company Secretary Mr. K. Gaurav Kumar has consented to comply

with the same. Having regard to the nature of the business of the Appellant

Company which provides Mental Healthcare & Services to the Members of the

Society apart from the fact that a bare perusal of the Financial Statements

shows that the Company has Creditors and Loans and was in the process of

setting up a Hospital, this `Tribunal' is of the considered view that the ratio of

the Three Judge Bench Judgment of the NCLAT, Principal Bench in CA (AT)

No. 101 / 2021 can be made applicable to the facts of this case and therefore,

this Appeal is Allowed and the Impugned Order is set aside with the following

directions:

(a) The Appellant shall pay cost of Rs.1 Lakh to the RoC, Chennai within 4 weeks from today;

(b) After restoration of the Company's name in the Register maintained

by the RoC, the Company shall file all their Annual Returns and

Balance Sheets and shall pay the Requisite Charges / Fee as well as

Late Charges/Fee, as applicable under Law within 4 weeks thereafter.

(c) The RoC would be free to take any punitive steps or otherwise under the Companies Act, 2013, for non-filing / late filing of Statutory Returns / Documents, against the Company and its Directors. The instant `Appeal' is `Allowed' to the aforenoted extent.

Comp. App (AT) (CH) No. 32/2022 Page 11 of 12

15. The Office of the Registry is directed to upload this Judgment on the Website of this `Appellate Tribunal', without delay.

(Justice Rakesh Kumar Jain) Member (Judicial)

(Shreesha Merla) Member (Technical)

SR / TM 18/01/2024

Comp. App (AT) (CH) No. 32/2022 Page 12 of 12