V Sundar vs The Registrar Of Companies

INCOME TAX DEPARTMENT Through Assessment Officer Aayakar Kaaryaalay, 121 MG Road, Nungambakkam, Chennai - 600034 ...RESPONDENT No. 2

Present : For Appellant : Mr. Vishnu Mohan, Advocate For Mr. Rahul Balaji, Advocate For Respondent : Mr. Avinash Krishnan Ravi, Advocate, For R1 JUDGMENT

(Hybrid Mode) [Per: Justice Sharad Kumar Sharma, Member (Judicial)] The instant company appeal engages, consideration of a very short

question, about the parameters which are required to be followed for the

purposes of conducting the proceedings under Section 252 of the Companies

Act, 2013, for the purposes of the modalities, which are required to be

Comp. App. (AT) (CH) No.86/2023 Page 1 of 8 adopted for de-listing the company and its consequential restoration?

Another question which will engage consideration is as to the Appellate

Tribunal when they are exercising their powers under Section 252 of the

Companies Act, 2013, what will be the implications over the controversy in

questions pertaining to Section 252(3) which has been argued by the Ld.

Counsel for the Appellant. Particularly in the context of powers contained

under Section 248 of the Companies Act, 2013, vested with the Registrar of

Companies, to remove the name of the company from the Register of

Companies.

2. Brief facts are that, one of the shareholders of the company, which was

registered under the name and style of Thiruppur Sri Mahaganapathy

Apparels Private Limited, was a company which stood registered under the

provisions of the Companies Act, particularly that has contained under

Section 7 of the Companies Act, 2013. The facts, which has come on record

it shows that the companies stood de-registered from the Register of

Companies and for its restoration, the Appellant has filed an application

under Section 252 of the Companies Act, 2013, praying for restoring of the

company, which was struck off by the Respondent by an order passed under

Section 248 of the Companies Act, 2013. The Appellant contends that the

name of the company stood struck off from the Register of company, as

Comp. App. (AT) (CH) No.86/2023 Page 2 of 8 maintained by the Registrar of Companies in pursuance to the notice which

was sent by the Respondent to the Appellant company on 14.11.2011.

3. The precise reason for striking off the name of the company was that

the Appellant company has approached the United Bank of India for an

extension of the credit facilities of Rs. 45 Lakhs, as against the securities

which were created in favour of the bank by the hypothecation deed dated

16.07.2004. Based upon the aforesaid transaction and the financial

assistance, which had been extended by the United Bank of India, the

Appellant company, is said to have been purchased immovable assets on the

basis of the sale deed as, it was got registered on 05.08.2014. The name of

the company was struck off from the register on the ground, that the company

had purchased the properties in accordance with the sale deed of 05.08.2014,

and the same was reflected in the encumbrance certificate. It was stated that

since the liabilities of the United Bank of India was providing for requiring

the repayment of the loan was not satisfied and default was committed for

which the notice was issued on 08.09.2010, the Appellant contends that the

companies was facing an acute financial crunch due to the downward trend

of the business and they did not had enough funds available in their coffers

to meet day to day expenses and business operation. The financial creditor

offered a proposal for the purpose of the settlement of the dues qua the

advance payments, which was offered to be made for by the sale of assets.

Comp. App. (AT) (CH) No.86/2023 Page 3 of 8 The bank's proposal for the settlement of the dues for full and final settlement

has been filed by the Appellant before the Ld. Tribunal. Contenting thereof

that in the event of the company is restored in the records of the Register of

the company, the company would be able to meet all its allied contractual

obligations by entering into the sale of immovable assets, which would be in

the interest of the creditors and the other stakeholders of the company. But

however, the Respondents initiated the proceedings under Section 560 of the

Companies Act, 2013, on which an objection was preferred on 10.01.2023,

that looking to the balance sheet of the Appellant for the financial year 2010-

11 to 2019-20 as approved to show that the company was functional during

the said period was not brought on record, or proved otherwise.

4. While on the other hand, the Respondent was seeking the dismissal of

the company petition praying for the revival of the company into the Register

of companies maintained by the Registrars of Companies. The same was not

considered, and the Ld. Tribunal, while considering the implications

contained under Section 252(3) of the Companies Act, 2013, had proceeded

to pass an order whereby the application preferred for the revival of the

company, to be restored back was rejected. The ground taken for the

purposes of rejecting the application by the Ld. Tribunal was that the

conditions given under Section 252(3) of the Companies Act, 2013, which,

according to the inference drawn by the Ld. Tribunal, it was observed that

Comp. App. (AT) (CH) No.86/2023 Page 4 of 8 the Appellant has not been able to satisfy the twin ingredient to be satisfied

to the effect that the company at the time of its name being struck off, was

actually carrying on the business, and was in operation.

5. Further, the Appellant was not able to satisfy that restoration of the

name of the company in the register of the company, would be in the interest

of, the company for the justifiable reasons to be given in the application. The

Ld. Tribunal has taken a view that since the Appellant has not been able to

satisfy the aforesaid condition and coupled with the fact that the application

was preferred with the delay. Coupled with the fact that the application did

not give any justifiable reason, the same was rejected.

6. The Registrar of Companies, has put in appearance, and have filed a

response and in the reply thus filed by them, though they have made an

attempt to deny the averments made in the company appeal, but on perusal

of the averments as made in para 4, it was observed that since the company

failed to follow the statutory compliance of section 159 and section 220 of

the Companies Act, 1956, and also that as there was no statutory details

pertaining to the subject company, as it was available on the MCA portal.

Therefore, it was presumed that the appellant company was not carrying out

the business operations as per the directions issued by the Ministry vide its

correspondence of 15.09.2011 under Section 560 (1) of the Companies Act,

Comp. App. (AT) (CH) No.86/2023 Page 5 of 8 1956, the name was struck off of the company by the notice issued on section

560 (3) on 10.01.2012.

7. The question would be, as to whether a restoration of the name of the

company could be denied on the ground of limitation, that there was a

delayed application preferred for seeking restoration of the company

particularly, in the context of the grounds taken by the Respondent, in the

objection preferred before this Appellate Tribunal, which was limited to the

extent that the company was not able to show that there was a sufficient proof

that the company was active.

8. On the contrary, and as it has been argued by the Ld. Counsel for the

Appellant who has submitted that in the balance sheets, which was presented

by them before the Ld. Tribunal, it showed that the company was in an

operational condition and the business activities were being carried out, but

these documents were declined to be accepted and considered merely on the

ground that the balance sheets were not endorsed by the Chartered

Accountant. He has further contended that Company at the time being struck

off, did have assets on its balance sheet.

9. The reason which has been taken by the Tribunal for denying the

permission of the company to be restored back, in the Register of Companies,

is on the ground that the company has failed to satisfy that it was still in an

operational condition and was active in carrying the business. But if the

Comp. App. (AT) (CH) No.86/2023 Page 6 of 8 objection which has been filed by the Respondent is taken into consideration,

coupled with the documents which was placed on record by the Appellant,

before the Ld. Tribunal, it was absolutely a misinterpretation, which has been

made by the Ld. Tribunal regards to the status of the company, as being

inactive operation, and a very vague observation has been made in para 12

of the impugned order denying the revival of the company in the Register of

the companies maintained by the Registrar of Companies. Particularly, the

objection which has been filed by the Registrar of Companies and reasons

which has been assigned by extracting its powers under Section 560(3) of

the Companies Act, 2013, that is the notice for a striking of the company

from the Register, which was made by an order of 29.03.2012. We feel it apt

that the reasons given in the objection preferred by the Respondent justifying

the striking of the name of the company from the register may not be justified

owing to the reasons which has been given in the impugned order, which are

in contradiction to the stand taken by the Registrar of Companies.

10. Thus, the striking of the company from the register maintained by the

Registrar of Companies by its order dated 29.03.2012 cannot be aptly said to

be justified, in view of a catena of judgments as noted in the Judgment of

this Appellate Tribunal in CA (AT) (CH) No. 66 / 2023 when it has been

held that it should be the Hon'ble Court's endeavour to support the revival

of the Company rather than otherwise. Thus, the 'Impugned Order' would

Comp. App. (AT) (CH) No.86/2023 Page 7 of 8 hereby stand 'quashed', the matter is 'remitted back' to the 'Ld. Tribunal',

to reconsider the application for restoring the company, the name of which

was struck off from the register on 29.03.2012, and would pass an

appropriate order in accordance with law after considering the application

for revival of its registration in Register of Companies, after considering the

documents which have been placed on record, in support of its contention

that the company was still in operation as on the date when the company was

directed to be struck off from the register of the Registrar of the Companies.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical)

06/04/2026 SN/MS/AK

Comp. App. (AT) (CH) No.86/2023 Page 8 of 8