Valuefab Solutions Pvt. Ltd vs Roc, Karnataka

Valuefab Solutions Pvt. Ltd. ...Appellant 230, Lake Shore Homes Layout, Kasavanahalli Village, Sarjapur Road, Bengaluru- 560037, Karnataka

Vs

ROC, Karnataka ....Respondent II Floor 'E' Wing Kendriya Sadan, Kormangala, Bengaluru- 560034 Present: For Appellants: Ms. Asmita Deshpande, Advocate.

For Respondents: None.

JUDGEMENT

A.I.S. CHEEMA, J. :

The Appellant Company is Private Limited Company. It was struck off

from the Register of Companies vide notification dated 17th July, 2017 for

failure to file Financial Statements and Annual Returns. In response to show

cause notice from respondents the appellant had informed on 20th February,

2017 that the Directors of the Applicant Company were in the process of

winding up and they will comply with the statutory requirements for the same.

The appellant claims that it was mislead by an online portal "Vakil Search" that

it was not mandatory to file Annual Returns and thus there was default.

Appellant filed application under Section 252 of the Companies Act, 2013 to 2

restore the company on just an equitable cause but the NCLT vide impugned

order dated 26th February, 2018 dismissed the petition. Thus this appeal.

2. Counsel for the appellant has been heard. The respondent ROC remained

absent in spite of service of notice.

3. Counsel for appellant referred to the copy of the Company Petition

200/2017 (Annexure-B) (Pg. 36) to submit that the appellant had filed the

petition when the company was struck off from the Register of Companies. The

learned counsel referred to provision filing of appeal to the Tribunal under

Section 252 if a person is aggrieved by an order of the registrar notifying a

company as dissolved under Section 248 of the new Act. She referred to Sub-

Section 3 of Section 252 which reads as under:

" If a company, or any member or creditor or workmen 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 as deemed just

Company Appeal (AT) No. 147 of 2018 3

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."

According to Ld. Counsel even if the company was not carrying on the

business or was not in operation, still if otherwise it is just that the name of

the company should be restored to the register of companies then the NCLT

should have allowed the name of the appellant company to be restored. She

claimed that the appellant had given reasons in NCLT that the appellant

wanted the company to be restored so that it could comply with the winding up

procedure and the company could have an honourable exit.

4. We have gone through the impugned order. The NCLT has in details

recorded in initial part of its judgment the pleadings made by the

appellant/petitioner. (We wish the concerned NCLT at Bangaluru Bench will

give at least paragraph numbers in the Judgment so that reference would be

easy). At page 3 of the certified copy of the impugned order the learned NCLT

referred to the case put up by registrar of companies as under:

" The Registrar of Companies has filed Counter affidavit dated 18th

January, 2018 along with the Annexures. The Registrar of

Companies herein denies all the averments made in the Petition

save the averments which are specially admitted herein below and

submit his counter to the Petition as under:

Company Appeal (AT) No. 147 of 2018 4

i.) The Petitioner Company is a private limited company

incorporated on 21.02.2012 vide CIN NO.

U72900KA2012PTC062633. The Registered Office of the Petitioner

Company is situated at No.230, Lake Shore Homes Layout,

Kasavanahalli village, Sarjapur Road, Bengaluru -560037. The copy

of the Company Master Data is shown as Annexure I.

ii.) It is submitted that on verification of the MCA 21 Portal in the

month of March 2017 when action under Section 248(1) of the

Companies Act, 2013 (hereafter called as the 'Act') was initiated

against the eligible Companies it was seen that the Petitioner

Company has not filed either the Balance Sheet or the Annual

Returns from the year 2013-14 to 2015-16. Therefore the

Respondent had reasonable cause to believe that the Petitioner

Company is not carrying on any business or operation and therefore

a notice in Form STK-1 dated 16th March, 2017 was sent to the

Company with a copy of the same to Mr. Guntupalli Siva Rama

Krishna Prasad and Mr. Srinivasa Rao Nudurpati, Directors of the

Company to the address available in the MCA 21 portal. The copies

of the said notices are shown as Annexures III & IV respectively.

iii.) In the said notice STK-1 that was sent to the company and the

directors of the company, it was mentioned that the petitioner

company was not carrying on business or operation for a period of

two immediately preceding financial years and that the company

Company Appeal (AT) No. 147 of 2018 5

has not applied u/s 455 of the Act and that the respondent proposes

to strike off the name of the company from the Register of company

as per Sec 248 of the Act unless a cause is shown to the contrary

within 30 days from the date of receipt of the STK-1 notices.

iv.) It is submitted that a consolidated notice in STK-5 in English

and Hindi was released as per Rule 7 of the Companies (Removal of

name of Companies from the Register of Companies) Rule, 2016, in

the Official Website of the Ministry of Corporate Affairs on

28.04.2017 and in the Official Gazette on 20.05.2017 and the same

was published in the newspaper in Kannada in Vijay Karnataka

(Kannada Edition) and in English in the Times of India on

13.05.2017 and in all the above said notices i.e. STK-1. STK-5 and

STK-5 A, 30 days' time was given to show cause to the contrary to

the action of strike off. Copies of the notice in website, Official

Gazette and paper publication in Vijay Karnataka and the Times of

India are shown as Annexure-V, VI, VII & VIII respectively.

v.) It is submitted that since neither cause was shown to either

the physical notices or to the website, Gazette and newspaper

notices either by the Company or by its Directors, and also since no

Balance Sheet or Annual Return was filed by the Petitioner

Company till 21.06.2016 the day on which the list of defaulting

companies were crystallized, the Respondent proceeded to strike of

the name of the Petitioner Company from the Register of Companies

Company Appeal (AT) No. 147 of 2018 6

and published a notice in STK-7 in the homepage of the MCA on

17.07.2017. A copy of the said STK-7 Notice is shown as Annexure-

IX. It was also published in the official Gazette on 29.07.2017

stating that the from 17.07.2017 names of the companies mentioned

therein including the petitioner company have been struck off from

the Register of Companies as per sec 248(5) of the Act. A copy the

publication made in the Official Gazette on 29.07.2017 is shown as

Annexure-X.

vi.) It is stated in the petition that the applicant company was a

non-functional company at the time of strike off and that it wants the

company to be revived only for the purpose of winding up of the

company.

vii.) The Petitioner has prayed that the name company be restored

to the Register of Companies under section 252 of the Act. Subject to

the satisfaction of this Hon'ble Tribunal and in the event of this

Hon'ble Tribunal willing to revive the Company, then the Respondent

humbly prays that this Hon'ble Tribunal may kindly,

a) Direct the petitioner to undertake to file the overdue

returns upto date within 30 days in the MCA 21 Portal

from the date of the order of NCLT reviving the company

and comply with the provisions of Companies Act, 2013;

b) Direct the Petitioner to pay costs as decided by this

Hon'ble Tribunal to be paid to the account of Central

Company Appeal (AT) No. 147 of 2018 7

Government favouring the Pay and Accounts Officer,

Ministry of Corporate Affairs, Southern Region, Chennai,

towards the expenses incurred by the Respondent in

taking Section 248 action, like postage, stationary,

advertisement charges etc.

c) Direct that the revival order be automatically vacated if

the above compliance are not made within a maximum

period of 30 days from the date of the receipt of the order

of the Petitioner.

The Registrar of Companies has exercised its power under

Section 248 of the Companies Act, 2013 read with (Removal of name

of Companies from the Registrar of Companies) Rules, 2016 after

following the procedure as per the law, giving opportunity to the

Petitioner Company to file its Statutory Returns and upon non-filing

of Statutory Returns the name of the Company was struck off."

5. The NCLT referred to Rulings cited to record that facts of those matters

were different. NCLT then referred to Section 252 (3) of the Companies Act

referred and observed:

"It is stated in the petition that the petitioner company was not

carrying on the business and operational at the time when the name

was struck off by the Registrar of Companies and that the petitioner

company had made a representation to the respondent by its letter

Company Appeal (AT) No. 147 of 2018 8

dated 20.02.2017 that they are in the process of closure. It is further

stated that the petitioner company had commenced its product

development activity immediately after incorporation until June

2013, but could not generate any revenue and was not conducting

business thereafter. The Board therefore decided to wind up the

company since there was no potential for business. It is also

mentioned that the bank account maintained with HDFC Bank was

also closed as on 31.03.2016.

As per the Profit and Loss Account for the year 2016-17, the

Company has not done any business and has incurred certain

expenditure towards travelling expenses, audit fee etc. of

Rs.45,875/- and the Company has no fixed assets nor any non-

current and current assets, except cash balance of Rs. 1,79,023/- as

on 31.03.2017. The Company has mentioned that the Company

wants to go for winding up as per para 4.7 of the petition which is

reproduced below:

"That the applicant avers that the Company had

commenced its product development activity immediately

after incorporation until June, 2013. However, could not

generate any revenue and was not conducting any

business thereafter. The Board had also decided to wind

up the Company since there was no potential for

business."

Company Appeal (AT) No. 147 of 2018 9

Vide para 4.11(reproduced below), the Petitioner Company confirms

that the Bank Accounts have been closed:

"That the bank account maintained with HDFC Bank

was also closed as on 31.03.2016. Copy of the Bank

closure letter enclosed as Annexure-H."

After hearing the Counsel for the Petitioner Company and perusal of

the material on record the report of the Registrar of Companies,

Karnataka and ongoing through the provisions of Section 252(3) of

the Companies Act, 2013, this Tribunal is of the view that the

applicant company was a non-functional company at the time of

strike off its name and that the company wants to be revived only

for the purpose of winding up of the company. The citations relied

upon by the learned counsel for the petitioner are in respect of the

Companies Act, 1956. The ground on which the name of the

company has to be restored is not at all conveyed by Section 252(3)

of the Companies Act, 2013."

The NCLT concluded that if restoration of the name of the Company was

to be allowed only for the purpose of winding up, it would defeat the very

purpose of striking off the company. It also found that the appellant/petitioner

had no assets other than nominal cash balance in the current liabilities and

there was no justification for restoring the name of the company.

Company Appeal (AT) No. 147 of 2018 10

6. The learned counsel for the appellant vehemently argued that the

company was mislead that filing of returns was not necessary due to advice

received from the online portal copy of which has been filed with the appeal at

page 90. We find that this cannot be an excuse for non-filing of the financial

statements and returns. We do not find that there is any error in the judgment

of the NCLT where it observes that just for going through process of winding up

would not be a reason to set aside the striking off of the company for non-

compliance. It appears the process for striking of the company of the name of

the company was duly followed by the ROC as is clear from the counter

affidavit filed by ROC which has been extensively referred to by NCLT and

which portion of the judgment we have reproduced. It is not a case that the

Company was carrying on business or was conducting its operations and

default in filing took place. The object of Section 252 appears to be to safeguard

companies which were carrying on business or were in operation so that they

should get opportunity to be restored. We do not find that there would be

justification to restore the name of the company only for the company to go

through the process of winding up, or closure.

7. At the time of arguments learned counsel for the appellant tried to

submit that because of the striking off of the present company the directors

have been affected due to DIN getting blocked and they are aggrieved because

they are connected with other companies also. Learned counsel was unable to

show that any such ground was taken before NCLT or in the Company Petition.

As such we have not allowed the learned counsel to raise this new ground for

Company Appeal (AT) No. 147 of 2018 11

the first time in the appeal. Again, it would also be no 'just' cause under

Section 252(3) of the new Act.

8. Considering the record and the submissions made before us, we do not

think that there is any substance in this appeal.

9. The appeal is dismissed. However there will be no orders as to cost.

(Justice A.I.S. Cheema) Member (Judicial)

(Balvinder Singh) Member (Technical)

New Delhi Date: 22nd May, 2018

Sh/nn

Company Appeal (AT) No. 147 of 2018