CANCELLATION OF CERTIFICATE OF INCORPORATION OF A COMPANY

[Mr. M. GOVINDARAJAN]

Section 7 of the Companies Act, 2013 (‘Act’ for short) provides the procedure for incorporation of a company under the Act.  Section 7(5) of the Act provides that if any person furnishes any false or incorrect particulars of any information or suppresses any material information, of which he is aware in any of the documents filed with the Registrar in relation to the registration of a company, he shall be liable for action under section 447.

Section 7(6) of the Act provides that at any time after the incorporation of a company, it is proved that the company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company, or by any fraudulent action, the promoters, the persons named as the first directors of the company and the persons making declaration shall each be liable for action under section 447.

Section 7(7) of the Act provides that where a company has been got incorporated by furnishing any false or incorrect information or representation or by suppressing any material fact or information in any of the documents or declaration filed or made for incorporating such company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants,-

• pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or
• direct that liability of the members shall be unlimited; or
• direct removal of the name of the company from the register of companies; or
• pass an order for the winding up of the company; or
• pass such other orders as it may deem fit.

Before making any order under this sub-section,-

• the company shall be given a reasonable opportunity of being heard in the matter; and
• the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability.

In ‘MRS. NAGAPPANSWARNALATHA VERSUS M/S. COLOUR BOOKS ASSOCIATES PRIVATE LIMITED, SHRI SUNDARAM CHOCKALINGAM, SHRI R. MADESH NAYAK, A.C.A. CHARTERED ACCOUNTANT, THE REGISTRAR OF COMPANIES KARNATAKA’ – 2020 (4) TMI 419, NCLT, Bengaluru, Color Books Associates Private Limited was incorporated on 14.05.2018 under the Companies Act, 2013 bearing CIR U74999KA2018PTC113093 having registered office at 49/24,3rd Floor, 11th C Cross, Kodandaramapuram, Malleshwaram, Bangalore-560003.  The petitioner and the Respondent No. 2 are wife and husband, and  Shareholders and first Directors of the R-1 Company.   Due to disputes arised between them the petitioner proceeded to get divorce from her husband, which is pending.

Due to the dispute the petitioner shifted from Bangaluru to Trichy her own native place where parents are living.  Her husband was even arrested upon the complaint made by the petitioner with the All Women Police Station, Srirangam, Tiruchirappalli in Cr. No.30 of 2018 on 28.02.2018 for the offences under Sections 498-A, 294-b, 406, 506(1) and 354D of IPC and Section 4 of the prohibition of Harassment of Women Act, 2002 now enlarged on bail.

In the meantime, the petitioner the petitioner was shocked to receive a WhatsApp photo message from the Respondent No.2 evidencing a copy of the PAN Card No.AAHCC5749E in the name of Color Books Associates Pvt. Ltd., Bengaluru. Upon verification of public documents in the files of Ministry of Corporate Affairs, New Delhi website www.mca.gov. the petitioner found that  a Company under the name and style Color Books Associates Private Limited has been incorporated in CIN U74999KA2018PTC 113093 on 14.05.2018.  The petitioner was shocked to know that after the perusal of the Company Master Data, which reveals that the estranged Respondent No.2 is the trouble maker has perpetuated a fraud upon her by including her name without her permission and knowledge as one of its First Director of the aforesaid reference mentioned 1^st Respondent-Company.  It is not at all possible for her to lend her name in the formation of the 1^st Respondent Company as its First Director because of her marriage has already broke down and there are several cases foisted by the Respondent No.2 as against the petitioner. 

The petitioner also understood that Respondent No.2 has manipulated the 4^th Respondent-Authorities incorporated a fraudulent company with her consent either express or written behind her back.  She never signed any document for the incorporation of the company.  She has also not obtained digital signature in her name.  The petitioner alleged that her husband along with the active collusion and connivance of the 3^rd  Respondent Chartered Accountant have together criminally conspired with an ulterior motive to incorporate the reference mentioned Company without her consent, knowledge and permission by pressing into service fabricated and forged documents of proof of his identity and address proof describing her as its First Director and misled the 4^th  Respondent-Registrar of Companies,  Bengaluru to register the said reference mentioned company by most unlawful, foul and illegal means.  The petitioner stoutly denied that she was not physically present and did not affix her signature in the presence of the Chartered Accountant.

The respondent No. 2, Sundaram Chockalingam filed the following objections before the Tribunal-

•  The petition is not maintainable either in law or on facts and the same was filed at the behest of the father of the petitioner, who is ill disposed towards him with a mala fide intention to harass and humiliate him. The petitioner has deliberately given wrong address of the first Respondent with a mala fide intention to mislead the Tribunal.
• The allegation of the fabricated and forged documents with the signature of the petitioner is also false and denied.
• The petitioner at the behest of her father has given a false complaint against the Respondent by making several false and baseless allegations against the Respondent further the petitioner and her father got the Respondent arrested by using his influence.
• The allegations that the Petitioner was shocked to know that the second Respondent has perpetuated a fraud upon the petitioner by including her name without her permission and knowledge as one of the first Directors of the First Respondent is absolutely false and the same is denied and the petitioner may be put to strict proof of the same. 
• While the petitioner and the Respondent were living together, the petitioner and the Respondent had made arrangements to get the company registered under the name and style of  ‘Color books Associates Private Limited’, registered on 14.05.2018, so as to coincide with the birth day of their daughter and accordingly the petitioner and the Respondent had requested the third Respondent to make arrangements to get the company incorporated on 14.05.2018 and accordingly the company was incorporated on 14.05.2018.
• The Tribunal does not have jurisdiction to go into question of allegation of fraud, forgery against the Respondent in getting the first Respondent incorporated with the fourth Respondent.

Shri R.MadeshNayak, Chartered Accountant filed his objections before the Tribunal as below-

• the Petitioner has approached this Tribunal with unclean hands and she has not only suppressed material facts in order to make the case tailor - made for her requirement as against the 3rd Respondent, but she is also guilty of the principle 'suppreciovarisuggestiofalsi' and on this ground alone, the present petition is liable to be dismissed in limine.
• The marriage of the petitioner with second respondent   was disclosed by the 2nd Respondent himself when he visited the 3rd Respondent's office for incorporation of a Company.
• The 2^nd  Respondent approached the 3^rd  Respondent seeking his professional services for incorporating a Private Limited Company. 
• He has had clearly informed the 2^nd  Respondent that the presence of his wife, i.e., petitioner is very much necessary at the time of incorporation of the Company as she would have to sign on certain application forms, declarations and documents required for incorporating a Company in his presence.
• The 2^nd Respondent informed the 3^rd Respondent that his wife had just delivered a baby girl and she would not be in a position to travel to the 3rd Respondent’s office. The 2^nd Respondent further informed the 3^rd Respondent that he would get all the necessary documents signed by his wife, i.e., Petitioner. 
• He acting in good-faith and out of humanitarian grounds to help the lady from the trouble of commuting prepared the documents and declarations required for incorporation of the Company and sent it with the 2^nd Respondent for getting the petitioner's signature.
• After having verified the correctness of the documents and the identity proofs of the proposed Directors, has certified the same and uploaded the incorporation documents in the MCA portal and upon approval from the MCA authorities, the 1^st  Respondent Company came to be incorporated. 
• He did not have any ulterior motive in incorporating the 1^st  Respondent Company.
• The petitioner had applied and got the DSC by herself and the 3^rd Respondent was in no way party to the DSC application filed by the Petitioner before the certifying authorities. 
• He has discharged his professional duty without mala fide intention and the allegations made by the Petitioner are untenable and baseless, and thus the Company Petition is liable to be dismissed.

The Registrar of Companies did not contest the respondents and it covered only the points in the incorporation of the company as detailed below-

• As per the record of this office, the 1^st  Respondent Company was incorporated on 14.05.2018 in the state of Karnataka with CIN U74999KA2018PTC113093 and registered office is situated at 49/24, 3rd Floor, 11th C Cross, Kodandaramapuram, Malleswaram,  Bangalore, Karnataka-560003.
• As per the Memorandum of Association of the Company, the promoter/ subscriber to the Memorandum are Shri Sundaram Chockalingam, the 2nd Respondent and Smt. Nagappan Swarnalatha the petitioner.
• As per the AOA, the said persons are also the first Directors of the Company. 
• The incorporation documents are filed in E Form spice with spice MOA and AOA which are digitally signed by the above two Subscribers and witnessed by Shri R. Madesh nayak CA with membership No.218234 with his digital signature. Along with the said incorporation forms in terms of Section 7 read with Companies (Incorporation) Rules 2014 (Rule 12 to 17) and Rule 38, the Subscribers including the petitioner has submitted affidavit in INC 9.
• The first Director including the petitioner have submitted form DIR 2 which is the consent to act as the Director of the Company in terms of Section 152(5) read with  Rule 8 of the Companies (Appointment and Qualification of Director Rule 2014). 
• As per the incorporation documents filed with the RoC, the registered office of the Company is owned by Shree S. Nagappan who is the father of petitioner and the rental agreement entered with the said owner along with NoC for using his premises as registered office of the Company is also filed with this office.
• Therefore, basing on the above documents, the Company was incorporated by the Central Registration Centre of MCA.
• Other averments are not within the knowledge of RoC.

The Tribunal considered in the instant Company Petition whether the incorporation of the R-1 Company was done in accordance with extant provisions of Law with due consent of the Petitioner or not.  The Tribunal observed that-

• Respondent No.2 himself has initiated the process of incorporation of the R-1 Company by engaging the service of R. MadeshNayak. Chartered Accountant for the purpose.
• The Chartered Accountant has not witnessed the petitioner to sign relevant documents required for incorporation of the Company. And also contended that by believing the version of second Respondent that the petitioner/wife was having kid and thus she was incapacitated to come physically present before him, has given the requisite forms for incorporation to him for obtaining signatures of his wife.
• The Chartered Accountant has declared that both the petitioner as well as Respondent No.2 signed before him. At the same time he declared that the petitioner was not present before him.
• The Chartered Accountant has enclosed Form No. INC-32 wherein he has given declaration and certification, which reads as under:

Declaration and certification by professional

I, MadeshNayak, member of The Institute of Chartered Accountants of India having office at No. 6/36, 1st Floor, 1st Main, 8th Cross, Madivala, Bangalore-560068 who is engaged in the formation of the Company declare that I have been duly engaged for the purpose of certification of this form. It is hereby also certified that I have gone through the provisions of the Companies Act, 2013 and rules there under for the subject matter of this form and matters incidental thereto and I have verified the above particulars (including attachments) from the original/certified records maintained by the Applicant which is subject matter of this form and found them to be true, correct and complete and no information material to this form has been suppressed. I further certify that:

1. The draft memorandum and articles of association have been drawn up in conformity with the provisions of sections 4 and 5 and rules made there under; and
2. All the requirements of Companies Act, 2013 and the rules made there under relating to the registration of the company under section 7 of the Act and matters precedent or incidental thereto have been complied with. The said records have been properly prepared, signed by the required officers of the Company and maintained as per relevant provisions of the Companies Act, 2013 and were found to be in order;
3. I have opened all the attachments to this form and have verified these to be as per requirements, complete and legible;
4.  I further declare that I have personally visited the premises of the proposed registered office given in the form at the address mentioned herein above and verified that the said proposed registered office of the company will be functioning for the business purposes of the company (wherever applicable in respect of the proposed registered office has been given).

It is understood that I shall be liable for action under Section 448 of the Companies Act, 2013 for wrong certification, if any found at any stage. 

The Tribunal observed that the Respondent No. 3 failed to fulfill his statutory professional duties in following the extant provisions of the Act, in incorporating the R 1 Company. He has given false declaration that the petitioner has signed the requisite documents in question before him. Therefore, the incorporation of R 1 Company ab initio void as per the said proviso, apart from criminally liable for action against the Second and third Respondent.  The Tribunal compared the signature of the petitioner in the incorporation documents with other ID cards issued by various authorities and found that the signature in the incorporation document is not tallied with the other documents.   The Tribunal was of the considered opinion that the incorporation of R 1 Company vitiated by fraud, and the same is done by the Second Respondent in connivance with third Respondent. 

The Tribunal issued the following directions-

• The Tribunal declared that the incorporation of Color Books Associates Private Limited (Respondent No. 1 Company, is vitiated by fraud and consequently, the Certificate of Incorporation dated 14.05.2018 issued by the Government of India, Ministry of Corporate Affairs, Central Registration Centre is declared as invalid with immediate effect;
• The Respondent No.2 is directed to discharge all liabilities, if any, on behalf of the Respondent No. 1 Company, done in the course of business of the Company.