Karnataka High Court
Sri Mukambika Agricultural Estates vs The Registrar Of Companies on 8 February, 2013
Author: Aravind Kumar
Bench: Aravind Kumar
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IN THE HIGH COURT OF KARNATAKA
AT BANGALORE
DATED THIS THE 8TH DAY OF FEBRUARY 2013
BEFORE
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
CO.P. NO. 260/2012
BETWEEN:
Sri. Mukambika Agricultural Estates,
and Forest Industries Private Limited,
A company incorporated under
Provisions of the Companies Act 1956
Having its Registered Office at
Balmata, Mangalore-2,
Karnataka State,
Represented by its Director
Mr. N.M. Sahir. ...Petitioner
(By Smt. Rajani, Advocate)
AND:
The Registrar of Companies,
Department of Company Affairs,
'E' Wing, 2nd Floor, Kendriya Sadana,
Koramangala,
Bangalore-560 034 ... Respondent
(By Shri. Srinivas. S, CGC. )
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This company petition is filed under Section 560 (6) of
the Companies Act, 1956, praying to direct the respondent
to restore the name of the petitioner company in the Register
of the Registrar of Companies
This company petition coming on for admission, this
day, the Court made the following:
ORDER
Petitioner is seeking for a direction to the Registrar of Companies [hereinafter referred to as 'the ROC' for short] to restore the name of petitioner's company in the register of the Registrar of Companies.
2. I have heard the arguments of Smt. V. Rajini, learned counsel appearing for the petitioner and Shri. S. Sreenivas, the learned Central Government Standing Counsel appearing for respondent and perused the records. The officials of the ROC who are present before the Court have also assisted this Court in arriving at the following decision.
3. Petitioner herein filed an application before the ROC on 31.07.2005 for striking off of the name of 3 petitioner's company by invoking Section 560 of the Companies Act, 1956 [hereinafter referred to as 'the Act' for short] under the 'Simplified Exit Scheme' contending inter alia that it was not doing/carrying any business since 01.06.1986 and it did not intend to do any business or commercial activity, as laid down in the main objects of the Memorandum of Association. The financial statements namely, duly audited balance sheet for the period up to 31.05.2005 was filed before the ROC. After examining the said application on merits and ROC being satisfied with the prayer of the petitioner, struck off the name of the petitioner's company from the Register of the Companies and applicant company stood dissolved on the publication of the notice in the Official Gazette dated 21.10.2006 which came to be published in Part-III of Section-1. The copy of the said notification is at Annexure-C to the present petition. The plea that was put forward before the ROC at the time of seeking for striking off its name was that market condition was not viable and the then market condition prevailing had adversely affected its business interest and as such, it did 4 not intend to carry on the business which admittedly came to be accepted by the ROC.
4. Now, after a lapse of six years, shareholders of the petitioner's company namely, its Directors and members have thought it fit and in their wisdom resolved to restore the company and have expressed their intention to carryon the business activities, as enumerated in the aims and objects of the Memorandum of Articles of Association of the petitioner's company. In this direction, the Directors and its members have passed a resolution, authorizing its Director to file necessary papers in this regard before ROC. The resolution passed to the said effect on 30.07.2012 is appended to the present petition at Annexures-D and D1 respectively.
5. It is contended by Smt. Rajini, learned counsel appearing for the petitioner that no prejudice or harm would be caused if the petitioner's company is restored back and its name is entered and continued in the register of the Registrar of Companies, as otherwise, it would adversely affect the interest of the company and 5 the objects envisaged in the Memorandum and Articles of Association would be jeopardized. On these grounds, she seeks for allowing the petition.
6. Per contra, Shri. S. Srinivas, learned Central Government Standing Counsel, reiterating the contentions urged in the statement of objections filed, would contend that name of the petitioner's company was struck off on account of the voluntary act of the Directors and its members and as on the date it was struck off, it was not in operation and restoring the name of such company, which is not in operation with nil assets and liability, would not serve any purpose and it would be meaningless. However, it is also contended in the statement of objections to the following effect:
"Further, it is submitted that the Respondent has no objection in restoring name of the company under Section 560 (6) of the Companies Act, 1956 in case the company is not defunct or is carrying on business or is in operation and the company files its Annual return under section 159 and balance sheet under section 220 of the 6 Companies Act for the financial year 2007 to 2012".
On these grounds, ROC has sought for suitable Order being passed.
7. On hearing the learned counsel for both sides and on perusal of the case papers, the following point would arise for my determination.
"Whether the name of the petitioner- company is to be restored by setting aside the Order of the Registrar of Companies by setting aside the entry made in the Notification dated 21.10.2006 vide Annexure-C whereunder name of petitioner's company has been struck off from the Register?".
8. In order to examine the rival contentions, it would be appropriate for this Court to extract the provisions of sub-section (6) of Section 560 of the Companies Act, 1956 which govern the prayer made and it reads as under:
"560 (6): If a company, or any member or creditor thereof, feels aggrieved by the 7 company having been struck off the register, the Court, on an application made by the company, member or creditor before the expiry of twenty years from the publication in the Official Gazette of the notice aforesaid, may, if satisfied that the company was, at the time of the striking off, carrying on business or in operation or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register; and the Court may, by the order, give such directions and make such provisions as seem just 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".
9. A perusal of the said provision would indicate that this Court is empowered to restore the name of a company which has been struck off from the Register of the Registrar of Companies, before the expiry of 20 years from the date of publication in the Official Gazette and if satisfied that the company was, at the time of the striking off, carrying on business or in operation or "otherwise that it is just that the company be restored to the register".
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10. In the instant case, the Board of Directors of the petitioner-company have exercised their wisdom to revive the company which has been struck off. Admittedly, the name of the petitioner-company was not struck off from the register on account of any defunct act of the company but, it is at the behest and at the instance of the petitioner itself namely, as it opted to be struck off by taking shelter under the 'Simplified Exit Scheme'. Now, by virtue of resolution passed on 30.07.2012 as at Annexure-D, which is within the statutory period of 20 years from the date of Order of striking off of the name of the petitioner-company (21.10.2006), the impediment of limitation found in sub-section (6) of Section 560 would not get attracted. In fact the ROC himself has also given his consent in the counter objection for restoration of course with a rider namely, directing the petitioner- company to file its annual return and balance sheet, as required under Section 159 and 220 of the Companies Act, 1956 by payment of fine and additional fee. In other words, he has consented for the revival of petitioner- company and its name being restored in the register 9 subject to fulfillment of the requirement of the above section. In that view of the matter, I am of the considered view that the prayer sought for in the petition to restore the name of the petitioner-company in the register of the Registrar of Companies requires to be granted.
11. However, it is to be noticed that by virtue of this Order, the restoration of striking off of the petitioner- company would get extinguished or in other words the company is deemed to be in existence, even though it ceased to be in operational. As such, the balance sheet of the petitioner-company including its annual returns, as required under Section 159 and 220 of the Companies Act is required to be filed, so as to comply with the mandatory provisions of the Act, as otherwise, it would run contrary to very statutory provision itself. The time limit has been prescribed for filing of the Annual Returns and in the event of there being any default committed, the ROC would be empowered to levy and collect ten times the fee prescribed, as provided under sub-section (2) of Section 611 of the Companies Act.
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12. At this juncture, the learned counsel appearing for the petitioner undertakes that the petitioner-company would file the annual returns as also the balance sheet of the company for the period from 01.06.2005 till this date before the ROC within an outer limit of four weeks from the date of receipt of a copy of this Order. On such returns being filed, the ROC shall determine the fee payable as contemplated under sub-section (2) of Section- 611 read with Schedule-X of the Companies Act. It is also made clear that in view of the fact that there was no transactions of business by the petitioner-company during this period, as submitted, question of levy of fine and recovering it from petitioner company, as required under section 162 of the Act would not arise.
13. In view of the fact that petitioner had the benefit of not filing the returns for a period of seven years and now the company is being sought to be revived and also in view of the fact that the ROC has entered appearance and spent considerable time by filing a detailed statement of objections, it would be suffice if costs of Rs.10,000/- is 11 ordered to be paid to the Registrar of Companies, apart from the fee that would be determined by the ROC, while accepting the accounts/returns that would be filed by the petitioner-company. Accordingly, I answer the point for determination in favour of petitioner and pass the following order.
Company Petition is hereby allowed. Order dated 21.10.2006 bearing No. CVS/560 (5) SES/2005, Annexure-C, insofar as striking off of the name of the petitioner-company is hereby set aside and the name of the petitioner-company is ordered to be restored and shall be continued in the Register by the Registrar of Companies. It is made clear that deposit of costs of Rs.10,000/- before filing of the annual returns and balance sheets shall be condition precedent.
Sd/-
JUDGE Vr