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TMI Blog2019 (2) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Learned Counsel for the Appellant submitted that in the Companies Act, 1956 ('old Act', in short), there were guidelines for Fast Track Exit mode of defunct companies under Section 560 of the old Act, which was dated 7th June, 2011. 4. On 29th August, 2013, new Act came into force with Section 248 dealing with power of the Registrar to remove name of Company from Register of Companies. Section 248 needs to be reproduced and the same are as under:- 248. Power of Registrar to remove name of company from register of companies.- (1) Where the Registrar has reasonable cause to believe that- (a) A company has failed to commence its business within one year of its incorporation; [or] [* * * * * ] (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 section 455, 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 copies of the relevant documents, if an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thing 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." Thus, under Sub-Section (1), if there was failure to commence business or if the company was not carrying on any business or operation for a period of two immediately preceding financial years and the Company had not applied for dormant status, the Registrar could initiate action. Sub-Section (2) gave right to the Company to itself apply for removing the name of the Company from Register of Companies on grounds mentioned in Sub-Section (1), after doing compliance as mentioned. Sub-Section (4) of Section 248 provides for a Notice to be issued under Sub-Section (1) or Sub-Section (2) to be published in official gazette for information of the general public and Sub-Section (5) prescribes that at the expiry of the time mentioned in the Notice unless cause to the contrary is shown by the Company, the Registrar may strike off the name and publish Notice in Official Gazette and the Company shall stand dissolved. Thus, the procedure for removal may initiate under Sub-Section (1) at the instance of Registrar or under Sub-Section (2) volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1 with Affidavit of Respondent (Diary No.5674), which informed the Appellant that the Company was not carrying on business or operation for a period of 2 immediately preceding financial years and has not made any application within such period for obtaining the status of dormant company under Section 455 and thus, the ROC stated that he intended to remove the name of the Company from the Register. Opportunity was given to the Appellant to send representation. Learned Counsel for the Appellant stated that in response to such Notice, the Appellant sent Reply on 27th April, 2017 (Annexure 8 - Page 58). The Reply reads as under:- "This is with reference to your notice dated 17.03.2017 stating that pursuant to sub-section (1) and (2) of section 248 of the Companies Act, 2013 since the Company is not carrying on any business or operation for a period of five immediately preceding financial years and has not applied for the status of a dormant Company under Section 455, you intend to remove the name of the Company from the register of companies unless a cause to the contrary is shown. We hereby state that the Company is indeed not carrying on any business from the past 5 years and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dealing with the Reply of the Appellant, which had been filed on 27th April, 2017. She stated that the consequence was that the Directors of the Company were struck by disqualification under Section 164 of the new Act. It is the case of the Appellant that in the circumstances, the Directors of the Appellant filed Writ Petition 45742 - 45743 / 2017 in the High Court of Karnataka, Bengaluru which by Orders dated 11th October, 2017 stayed the Orders of the ROC with regard to the effect of disqualification. 9. The Counsel for the Appellant stated that the Writ Petition is still pending. According to the Appellant, when such developments were taking place the Government came up with a scheme called "Condonation of Delay Scheme, 2018" ("Scheme of 2018", in short). The Ministry of Corporate Affairs issued General Circular 16/2017 dated 29.12.2017. The copy of the Circular has been filed (Annexure 13 - Page 68). It appears that the scheme was brought in view of the provisions of Section 164 of the new Act and the fact that number of affected persons had filed Writ Petitions before various High Courts seeking relief from disqualification with a view to give opportunity for non-complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and should not have given benefit of the scheme to the Appellant. 11. The learned Counsel for the Appellant relied on the Judgement in the matter of "Sandeep Singh and Anr. vs. Registrar of Companies and Ors." [W.P. (C) 11381/2017 & CM 46432-46433/2017] (Annexure 16 - Page - 97) of the Hon'ble High Court of Delhi dated 21.12.2017. The Judgement refers to the Petitioners in that Writ Petition making grievance relating to disqualification incurred under Section 164(2) of the Act due to the fact that the Company in that matter, had not carried out business for past 3 years and the bank accounts were also not in operation. The Petitioners in that matter claimed benefit of the above Scheme of 2018. In that matter also, the Company had been struck off from the Register of Companies. The Petitioner claimed that they could not seek revival as the Company was not carrying out any business and was liable to be struck off and requested the High Court that they would voluntarily seek dissolution of the Company under Section 242 of the Act, if they get the opportunity. The Hon'ble High Court in paragraphs - 5 and 6 of the Judgement observed as under:- "5. This Court is of the view that since, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had on 2nd July, 2018 passed the following Order:- "Learned Counsel for the appellant submits that in view of the orders dated 26th April, 2018, the appellant have tendered the necessary documents in physical forms like Annual Returns and Balance Sheet to the ROC alongwith Demand Drafts. Ms. V. Santoshi Jagirdar, Deputy ROC, Karnataka states that ROC no more receives physical documents. Learned counsel for the appellant states that DIN No. of the concerned Directors have been suspended and as such they have to do the compliances by physical form. The ROC, Karnataka may accept the documents filed in physical form and DD subject to the decision of this Appeal. The Deputy ROC, Karnataka states that the DDs are about to expire. Counsel for the appellant states that she will replace the DD." The learned Counsel stated that in view of such Order passed, the Appellant has already filed the necessary documents as would be necessary to be filed under the Scheme of 2018. It has been argued that in the circumstances of the present matter and looking to the facts and compliances done, the striking off under Sub-Section (5) of Section 248 should be read with Sub-Section (2) of Section 248 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present letter we are annexing the relevant materials required for availing the said Scheme. We have also calculated the fees and penalty applicable and are herewith paying the same. We also undertake and are ready to pay any penalty and fees levied by this Hon'ble Authority. In light of the above, and pursuant to the Order passed by the Hon'ble NCLAT please permit us to avail the benefit of Condonation of Delay Scheme, 2018 and do the needful." By another letter dated 1st May, 2018, the Appellant forwarded copy of the Order dated 26th April, 2018. The copies of the letters bear stamps of receipt from the office of ROC. 18. ROC filed Affidavit dated 29th June, 2018 (Diary No.5674) and it has been argued for the ROC that as the Appellant had not filed balance sheet or Annual Returns since the time of incorporation till 2015-2016, and so the ROC believed that the Company was not carrying on any business or operation and thus, Form STK 1 was sent on 17th March, 2017. Copies were also sent to the Directors. The Affidavit claims that no cause was shown by the Appellant to the physical notices or the Notice on website till 21.06.2017 and so the ROC proceeded to strike off the name of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al shows receipt of the Reply by ROC on 27.04.2017. Thus, the Affidavit of ROC is not correct that no Reply was given to STK 1. As regards, the claim that physical copies were submitted without there being Order of this Tribunal, this Affidavit of ROC dated 29th June, 2018 was filed on 02.07.2018 in the Registry. On 02.07.2018, when the matter had come up before us, we passed the following Order:- "Learned counsel for the appellant submits that in view of the orders dated 26th April, 2018, the appellant have tendered the necessary documents in physical forms like Annual Returns and Balance Sheet to the ROC alongwith Demand Drafts. Ms V. Santoshi Jagirdar, Deputy ROC, Karnataka states that ROC no more receives physical documents. Learned counsel for the appellant states that DIN No. of the concerned Directors have been suspended and as such they have to do the compliances by physical form. The ROC, Karnataka may accept the documents filed in physical form and DD subject to the decision of this Appeal. The Deputy ROC, Karnataka states that the DDs are about to expire. Counsel for the appellant states that she will replace the DD." It would not be appropriate to stand on technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect, if it were to be on the basis of Section 248(2). When the scheme was still available, the NCLT could have permitted steps as we have noticed in the matter of "Sandeep Singh" (supra). 22. We have already taken note of special Resolution passed by the Appellant Company on 13th December, 2016, which was filed with the ROC on 8th February, 2017 (Annexure 7 Page 57) and the Reply of the Appellant Company dated 27.04.2017 (Annexure 8 Page 58). The declarations given by the Appellant take care of the requirements of Sub-Section (2) of Section 248 that Company may after extinguishing all its liabilities, by a special Resolution, file an application in the prescribed manner to the Registrar for removing the name of the Company from the Register of Companies. Material for satisfaction under Sub-Section (6) of Section 248 was also available to ROC. When the Appellant filed the Resolution with the Registrar of Companies on 8th February, 2017, if the Form STK 2 was not available to the public, the Appellant cannot be held responsible and in the circumstances, it would not be appropriate for the Respondent to stand on technicalities and resist efforts of the Appellant to take benefit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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