2023 (2) TMI 329 - AT - Companies Law

Seeking restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC) NCT of Delhi Haryana - not carrying on any operations for a period of two immediately preceding financial years - HELD THAT - In view of the fact that the Appellant Company having valid property Lease Deed from UPSIDC and still activities are going on in Chandni Chowk shop. Further Balance Sheet filed for the Financial Year 1998-99 and Acknowledgement of Income Tax Return of the Company filed till the Annual Year 2019-20 shows that the Appellant Company is having substantial movable as well as immovable assets. Therefore it cannot be said that the Appellant Company is not carrying on any business or operations. Hence the order passed by the National Company Law Tribunal (New Delhi Bench Court-II) as well as Registrar of Companies NCT of Delhi Haryana is not sustainable in law. The impugned order is set aside - the name of the Appellant Company be restored to the Register of Companies subject to the compliances fulfilled - appeal allowed.

Summary

Issues Involved:
1. Restoration of the company's name in the Register maintained by the Registrar of Companies (RoC).
2. Compliance with statutory requirements under the Companies Act, 1956 and 2013.
3. Validity of the order passed by the National Company Law Tribunal (NCLT) and the Registrar of Companies.
4. Impact of the company's non-filing of financial statements and annual returns.
5. The company's operational status and its assets.

Issue-wise Detailed Analysis:

1. Restoration of the Company's Name in the Register:
The Appellant sought the restoration of M/s M Kumar Syntex Private Limited's name in the Register maintained by the RoC, NCT of Delhi & Haryana, after it was struck off. The company was incorporated on 10.04.1987 and was involved in textile activities. The company failed to file its financial statements from the financial years ending 31st March 2002 to 31st March 2020, primarily due to the ill health and old age of Mr. Mahendra Kumar, the main director.

2. Compliance with Statutory Requirements:
The company had been diligent in filing returns until 31st March 1999. However, due to non-compliance with the filing of annual returns and balance sheets, the company was struck off. The Appellant argued that the company continued to hold assets, including a leasehold property, and intended to resume operations, hence the need for restoration. The company also held regular board meetings and AGMs, and filed income tax returns, indicating continued operations.

3. Validity of the NCLT and RoC Orders:
The Appellant contended that the RoC did not serve a show cause notice or provide an opportunity to be heard before striking off the company's name, violating principles of natural justice. The Appellant argued that the RoC failed to ensure that sufficient provisions were made for the realization of amounts due to the company and the discharge of its liabilities, as required under Section 248(6) of the Companies Act, 2013.

4. Impact of Non-filing of Financial Statements and Annual Returns:
The RoC justified the striking off by stating that the company had not filed financial statements for two or more years, indicating non-operation. The RoC noted that the last available balance sheet was for the financial year 1999. The Appellant, however, provided financial statements for the years 2015-16 to 2017-18 and income tax returns for assessment years 2012-13 to 2019-20, although these documents showed zero revenue from operations.

5. Company's Operational Status and Assets:
The Appellant demonstrated that the company held substantial movable and immovable assets, including a leasehold property in Kosi, Distt. Mathura, and continued activities at a shop in Chandni Chowk. The Appellant argued that non-restoration would result in irreparable loss and wastage of property, contrary to public policy. The Appellate Tribunal found that the company was still carrying on business or operations and had substantial assets, making the NCLT and RoC's orders unsustainable in law.

Judgment:
The Appellate Tribunal set aside the impugned order dated 31.08.2021 passed by the NCLT (New Delhi Bench, Court-II) and directed the restoration of the company's name in the Register of Companies, subject to the following compliances:
i) Payment of costs of Rs. 1,00,000/- to the RoC within eight weeks.
ii) Filing of all pending annual returns and balance sheets with requisite charges and late fees.
iii) The RoC is free to take punitive or other steps under the Companies Act, 2013, for non-filing/late filing of statutory returns/documents.

The appeal was allowed to the extent mentioned above, and the Registry was directed to upload the judgment on the Appellate Tribunal's website and send a copy to the NCLT (New Delhi Bench, Court-II).