Subh Laxmi Colonizers Private Limited vs Registrar Of Companies

M/s.Subh Laxmi Colonizers Pvt. Ltd 106, Bahubali Enclave, Vikas Marg Extension, New Delhi - 110 092 ...Appellant

Vs.

1. Registrar of Companies, Delhi 4th Floor, IFCI Tower, Nehru Palace, New Delhi - 110 019 ...Respondent No.1

2. Income Tax Department, DCIT 428-429, Lawyers Chamber, Block-I, Delhi High Court, Shershah Suri Marg, New Delhi - 110 003 ...Respondent No.2

Present: For Appellant : Mr.Ashutosh Gupta, Mr. Gaurav Rana, Advocates

For Respondents : Mr. Sanjay Kumar, Sr. Standing Counsel, Ms. Easha Standing Counsel for Income Tax, R2 Mr. Himanshu Chakrawarty, Advocate for R2

Company Appeal (AT) No.14 of 2021 Page 1 of 23 DR. ASHOK KUMAR MISHRA, TECHNICAL MEMBER

1. The present appeal has been filed by the Appellant- 'Subh Laxmi

Colonizers Pvt. Ltd. through its Authorised Official/Director - Mr. Ashok

Kumar Gupta, under Section 421 of the Companies Act, 2013 (for short

Act) against the impugned order dated 21st December, 2020 passed by the

'National Company Law Tribunal, New Delhi, Special Bench (Court-II) (for

short 'NCLT') Appeal No. 213/252 (ND)/2020.

2. It is the case of the Appellant Company that it was incorporated on 28th

April, 2006 under the Companies Act, 1956 and is engaged in the field of

'Real Estate Development Projects'. The Appellant has submitted that

there is an ongoing dispute with 'Mathura Vrindavan Development

Authority' (MVDA) and the 'Hon'ble High Court of Judicature at Allahabad'

vide its order dated 04th February, 2016 in Writ -C No. 38625 of 2012

(appearing at page no. 58 of the Appeal Paper Book) has observed as

follows:

"The Writ Petition is pending since 2012.

In our opinion, if the petitioner has any grievance in

the matter, he is at liberty to approach the State

Government under Section 41(3) of the U.P.Urban

Planning and Development Act, at the first instance.

Company Appeal (AT) No.14 of 2021 Page 2 of 23 The Writ Petition is dismissed with the aforesaid

liberty."

3. It is also stated by the learned counsel for the Appellant that there is an

advance against MVDA to the extent of Rs. 71,00,000/- appearing under

the heading Long-Term Loans and advances (Non-current Assets) in the

'Balance Sheet' of the Appellant Company as at 31st March, 2017 duly

audited by the 'Chartered Accountant' FRN-01253N for SAGC And

Associates - Sanjeev Kumar Garg (Partner) M.No.093936.

4. It was also stated by the learned Counsel for the Appellant that they have

approached the 'State Government' dated 10th April, 2018 but no response

received from the State Government. The Appellant has also stated that as

on 31st March, 2017, they have other transaction upto that date (page 81

of the Appeal Paper Book):

Sr. Particular Amount (INR)

Liabilities

1. Long Term Borrowings 64,62,500/-

2. Advance Against 7,20,000/-

property

3. Non-Current Assets - 71,00,000/-

Long Term loans and

advances

Company Appeal (AT) No.14 of 2021 Page 3 of 23 4. Cash & cash 57,137

equivalents

5. The learned counsel for the Appellant has submitted that the Company is

doing business and hence is entitled to get the restoration. They have also

cited the following judgments of this Tribunal for consideration:

 Khetan Granite Pvt. Ltd. Vs. Office of Registrar of

Companies, Jharkhand, MANU/NL/0017/2020

 Calcutta Rubber Factory Pvt. Ltd. and Ors. Vs.

Registrar of Companies, Delhi and Harayana,

MANU/NL/0602/2019

 Insuflex Ind Pvt. Ltd. Vs. Registrar of Companies,

Maharashtra and Ors. MANU/NL/0622/2019

 Basant Kumar Berlia and Ors. Vs. Registrar of

Companies, West Bengal Nizam Palace and Ors.,

MANU/NL/0031/2019

In view of the above, the Appellant has sought the restoration of the

name of the Company.

6. The Learned Counsel for the Respondent has stated that the Appellant

Company has filed its 'Financial Statement' till 31st March, 2015 only due

to which the Respondent had reasonable cause to believe that the

Company Appeal (AT) No.14 of 2021 Page 4 of 23 Appellant company was not in operation. Notice sent to the Appellant

Company under Section 248(1) of the Act and also to its Director. The

Appellant company has been issued STK-1 vide Letter No. ROC

Delhi248(1)0775182018 - 'Notice by Registrar for removal of name of a

company from the register of companies' and the same is depicted below:

"1).The 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.

2).Therefore, on the basis of aforesaid ground(s), I intend to

remove the name of Company from the register of companies

and request you to send your representation along with copies

of the relevant documents, if any, within thirty days from the

date of receipt of this notice.

3). Unless cause to the contrary is shown within the time period

above mentioned, the name of the above mentioned company

shall be liable to be removed from the register of companies.

However, the directors of the company shall be liable for

appropriate action under the Act."

Company Appeal (AT) No.14 of 2021 Page 5 of 23

7. The Respondent has also stated that no 'Income Tax Return' have been

annexed by the Appellant. The dispute between the Appellant Company

with a third party cannot be a ground for non-filing of 'Balance Sheet' or'

Annual Income Tax Return'. If it is a real estate company, it should have

placed ownership of certain land and property or fixed assets or some

projects under development which they have not done and accordingly,

this appeal deserves to be dismissed.

8. The NCLT while passing the impugned order dated 21st December, 2020

has observed at para 5, 6, 8, & 10 as depicted below:

"Para 5 - It is averred by the Appellant that it has an ongoing

dispute with the Mathura Vrindavan Development Authority.

Therefore, it could not file its Annual Returns, Financial

Statement and Income Tax Returns with the statutory

authorities.

Para 6 - It is further submitted by the Appellant that "it

received the order from the Hon'ble High Court of Judicature

at Allahabad on 04.02.2016, wherein it was stated that the

Company is at liberty to approach the State Government under

Section 41(3) of the U.P Urban Planning and Development Act,

1973 at the first instance."

Company Appeal (AT) No.14 of 2021 Page 6 of 23 Para 8- That the Appellant Company has placed on record the

copies of the Financial Statements for the period from 2015-16

to 2018-19 and Bank Statements from 05.034.2014 to depict

that the Company was in operation.

Para 10 - After hearing submissions of the Appellant and

perusing the documents placed on record by the Appellant, this

Bench observes:

(i) That the balance Sheets placed on record by the Appellant

shows a Revenue of Rs. 23,500 only during the Financial year

2015-16 and Nil revenues from the Financial Year 2016-17 to

Financial year 2018-19 from its operations.

Financial Revenue

year From

Operations

(in Rs.)

2015-16 23,500

2016-17 Nil

2017-18 Nil

2018-19 Nil

Company Appeal (AT) No.14 of 2021 Page 7 of 23

"In view of the stated reasons, the Bench has not shown

inclination to interfere with the striking of action taken by the

ROC against the Appellant company under the provisions of

Companies Act, 2013."

Based on the above observations, the NCLT has not shown inclination

to interfere with the striking off action, taken by the ROC against the

Appellant Company under the provisions of Act.

9. We have carefully perused the pleadings of all the parties and extant

provisions of the Companies Act, 2013 and Rules made there under and

we are having the following observations: -

a) The revenue from the options as reflected in the impugned order

dated 21st December, 2020 is totally correct i.e in the Financial Year

2015-16 of Rs. 23,500/- and thereafter Nil.

b) We also agree with the observations of the NCLT that the 'Bank

Statement' attached by the Appellant and appearing at page no. 97

and 98 of the Appeal paper book does not reflects any transactions

between 08th October, 2017 and 16th August, 2019.

c) We also agree with the NCLT that no income tax return have been

filed by the Appellant. Although no reply has been filed by the

Standing Counsel for Income Tax but the learned Standing counsel

for Income Tax has confirmed that no income tax return has been

Company Appeal (AT) No.14 of 2021 Page 8 of 23 filed with the Income tax department so far. The Learned Standing

Counsel did not provide any negative input about the Appellant

Company. However, the extract appearing at page 58- Annexure E

reflects that the Appellant got the bid of MVDA being the highest

bidder and for meeting the requirement of 25 % of the bid offer, they

deposited a Cheques of State Bank of India for Rs. 3 lakhs and the

same was bounced. The Appellant failed to get the bid because of

non-compliance of the terms and conditions of the auctions and

hence its security money was also forfeited. The Hon'ble High Court

of Judicature at Allahabad has asked the Appellant to approach the

'State Government' under Section 41(3) of the 'U.P Urban Planning

And Development Act', if he has any grievance in the matter. The

Appellant has approached the State Government on 10.04.2018 (as

per the oral submission) and has not received any response so far.

d) It is quite astonished to observed that the Hon'ble High Court of

Judicature at Allahabad passed the order on 04th February, 2016

and the Appellant has approached the 'State Government' on

10.04.2018 after the lapsed of two years. This itself seems to be a

casual approach of the Appellant.

e) The Appellant's 'Balance Sheet' just reflects certain loans and

advances and other non-current assets including certain long term

Company Appeal (AT) No.14 of 2021 Page 9 of 23 borrowings and certain advances for properties as appearing at page

62 of the Appeal paper book and the same is depicted below:

f) The only important aspect is the Advance under the heading 'Non-

Current Assets' given to MVDA of Rs. 71 lakh appearing in the books

up to 31.03.2019 duly audited by Chartered Account - D.Mangla &

Associates FRN - 030756N M.No.539744 Darpan Mangla-partner, is

a point for consideration, apart from this the State Government is to

look into the aspect of refunding certain amounts paid by this firm

towards the bid other than the security deposit which is apparently

clear from the order of the Hon'ble High Court of Judicature at

Company Appeal (AT) No.14 of 2021 Page 10 of 23 Allahabad appearing at page no. 58 of the Appeal Paper book as

depicted below:

g) No doubt, the Company has taken certain long term borrowings

from the 'Director' and certain other companies as depicted below

as appearing from Audited Balance Sheet as at 31st March, 2019

(Page 65):

Company Appeal (AT) No.14 of 2021 Page 11 of 23

h) It has also taken advance against the property from two persons as

appearing in their audited Balance Sheet as at 31st March, 2019

(page No. 65).

Company Appeal (AT) No.14 of 2021 Page 12 of 23

i) All these reflect that the company is to pay back all these liabilities

and also to ensure the recovery of its money from MVDA amounting

to Rs. 71 lakh.

This Tribunal has held in CA(AT) No. 290 of 2019 decided on

20.01.2020 Khetan Granite Pvt.Ltd. Vs. Office of RoC, Jharkhand

held that where the Company has non-current assets and current

assets having substantial value then it cannot be said that the

Appellant company is not carrying any business or operation.

Similarly, in CA(AT) No. 203 of 2019 decided on 12.12.2019 in

Insuflex Ind Pvt. Ltd Vs. ROC, Maharashtra and ors. has held that

if the circumstances are only non-filing of Financial Statement and

returns and if there is no non-compliant against the Appellant

company and if it has been strike off, then this Tribunal was of the

view that the order of the NCLT is not sustainable in law and it would

"just" that the name of the company be directed to be restored. The

Companies Act, 2013 elaborately deals on the subject vide Section

248 & 252 of the Companies Act, 2013. For brevity and clarity, the

same is reproduced below:

"Section 248: Power of Registrar to remove name of

company from register of companies. 248. (1) Where the

Registrar has reasonable cause to believe that--

Company Appeal (AT) No.14 of 2021 Page 13 of 23

(a) a company has failed to commence its business within

one year of its incorporation 1 [or];

(b) 2 [***]

(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 3 [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 10A; 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

Company Appeal (AT) No.14 of 2021 Page 14 of 23 copies of the relevant documents, if any, within a period

of thirty days from the date of the notice.

(2) Without prejudice to the provisions of sub-section (1),

a company may, after extinguishing all its liabilities, by

a special resolution or consent of seventy-five per cent.

members in terms of paid-up share capital, file an

application in the prescribed manner to the Registrar for

removing the name of the company from the register of

companies on all or any of the grounds specified in sub-

section (1) and the Registrar shall, on receipt of such

application, cause a public notice to be issued in the

prescribed manner: Provided that in the case of a

company regulated under a special Act, approval of the

regulatory body constituted or established under that Act

shall also be obtained and enclosed with the application.

(3) Nothing in sub-section (2) shall apply to a company

registered under section 8.

(4) A notice issued under sub-section (1) or sub-section (2)

shall be published in the prescribed manner and also in

the Official Gazette for the information of the general

public

Company Appeal (AT) No.14 of 2021 Page 15 of 23 (5) At the expiry of the time mentioned in the notice, the

Registrar may, unless cause to the contrary is shown by

the company, strike off its name from the register of

companies, and shall publish notice thereof in the Official

Gazette, and on the publication in the Official Gazette of

this notice, the company shall stand dissolved.

(6) The Registrar, before passing an order under sub-

section (5), shall satisfy himself that sufficient provision

has been made for the realisation of all amount due to

the company and for the payment or discharge of its

liabilities and obligations by the company within a

reasonable time and, if necessary, obtain necessary

undertakings from the managing director, director or

other persons in charge of the management of the

company:

Provided that notwithstanding the undertakings referred

to in this sub-section, the assets of the company shall be

made available for the payment or discharge of all its

liabilities and obligations even after the date of the order

removing the name of the company from the register of

companies.

Company Appeal (AT) No.14 of 2021 Page 16 of 23 (7) The liability, if any, of every director, manager or other

officer who was exercising any power of management,

and of every member of the company dissolved under

sub-section (5), shall continue and may be enforced as if

the company had not been dissolved.

(8) Nothing in this section shall affect the power of the

Tribunal to wind up a company the name of which has

been struck off from the register of companies."

"Section 252 - Appeal to Tribunal.

252. (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

Company Appeal (AT) No.14 of 2021 Page 17 of 23 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

Company Appeal (AT) No.14 of 2021 Page 18 of 23 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 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."

j) From the above discussions, it is very much clear that the Appellant

Company has filed the 'Balance Sheet' till 31.03.2015. What it has

committed a mistake that the Company has not filed the 'Balance

Sheet' for Financial Year 2015-16, 2016-17 till notice was issued in

Form STK-1 on 25.05.2018 by the Registrar for Removal the name

of the Company from Registrar of Companies. Simply non-filing of

Financial Statement cannot be a ground for striking off the name of

the company, if the company is otherwise in the business or

Company Appeal (AT) No.14 of 2021 Page 19 of 23 operation of the Company. For a Real Estate Company, it is not

possible always to generate the income on year to year basis. It is

very much clear that this company applied against the bid of MVDA

and it could not succeed. It is also very much clear that this

company has given an advance of Rs. 71 lakh to the MVDA as the

same is reflected in the Balance Sheet on 31.03.2017, 31.03.2018

& 31.03.2019 duly signed by the Board of Directors - Mr. Ajay

Kumar Gupta and Mr. Ashok Kumar Gupta and counter signed by

the Chartered Accountant- D.Mangla & Associates FRN - 030756N

- Darpan Mangla, Partner M.No.539744 and the same is also

reflected in the Balance Sheet on 2016-17 which has been signed by

these two Directors and the Chartered Accountant - FRN-01253N

for SAGC And Associates - Sanjeev Kumar Garg (Partner)

M.No.093936.

k) In the past also, this Tribunal has taken a soft attitude for

restoration of the name of the company, perhaps keeping in mind

the growth of the economy. The Income tax department also did not

inform any negative input about the company. Although, they have

not submitted their reply in writing but in the oral submissions on

specific query, they did not spell out any negative input about the

company. The ROC is also dissatisfied only on the limited ground

Company Appeal (AT) No.14 of 2021 Page 20 of 23 that the Appellant company has not filed their Balance Sheet and

hence have assumed that they are not doing any business or

operation. This power, in any case, always vest with the ROC to take

appropriate measures under Section 248, if the RoC has the

reasonable cause to believe certain events as enumerated in Section

248 (1) of the Act.

l) The RoC is empowered to review this Company even after few years

and they can take appropriate measures in accordance with the

provisions of the Act. So far as the present case of the Appellant is

concerned, simply, because of the failure to file a Financial

Statement and returns that too only of the two years should not

result the company into striking off their name. These are small

companies, business is erratic. This company is having the share

capital hardly Rs.1 lakh as it looks from their Balance Sheet. It has

given advance to MVDA of Rs. 71 lakhs naturally by obtaining loans

and advances from the Directors and others so that at a later stage

they can go for the Real Estate Business.

m) In view of the facts and circumstances of the case, it seems fit and

proper to restore the name of the company under the umbrella of

grounds "Just" to restore the name of the company and hence we

are passing the following directions:

Company Appeal (AT) No.14 of 2021 Page 21 of 23 (1) The Impugned order dated 21.12.2020 is quashed and set aside.

(2) The name of the Appellant Company shall be restored to the

Register of Companies subject to the following compliances:

i. The Appellant shall pay costs of Rs. 4,00,000/-

(Rupees Four lakh only) to the Registrar of Companies,

New Delhi within 30 days.

ii. The Appellant will also deposit any dues towards sales

tax dues with the concerned department, if any, and

produce the proof of the same before the ROC, Delhi

within 45 days.

iii. Within 45 days of the restoration of the company's

name in the register maintained by the RoC, the

company will file all their Annual returns, Financial

Statements & balance sheet profit and loss account for

the period ending 2015-16 to date i.e. 2021-22.

iv. The Company will also pay requisite charges/ fee as

well as late fee/charges as applicable.

v. In spite of present orders, RoC will be free to take any

other steps punitive or otherwise under the Act for non-

filing/ late filing of statutory returns/documents

against the company and Directors.

Company Appeal (AT) No.14 of 2021 Page 22 of 23

n) The Appeal is accordingly allowed. No order as to costs.

[Justice M.Venugopal] Member (Judicial)

(Dr. Ashok Kumar Mishra) Member(Technical)

25th May, 2022

New Delhi

Raushan.K

Company Appeal (AT) No.14 of 2021 Page 23 of 23