National Company Law Appellate Tribunal
Sidhi Singh vs Registrar Of Companies on 29 July, 2024
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NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
(APPELLATE JURISDICTION)
Company Appeal (AT) No. 49 of 2021
[Arising out of the Impugned Order dated 21.12.2020 passed by the
National Company Law Tribunal, New Delhi, Special Bench (Court-II) in
Appeal No. 386/252(ND)/2020]
In the matter of:
1. Sidhi Singh
C/o Mr. Surendra Kumar Singh
Residence of Industrial Area, Buxar,
Bihar-802101.
2. Surender Kumar Singh
S/o Mr. Raghav Singh
Residence of RZ-1/57, Street-1,
Tuglakabad Extn, Kalkaji,
South Delhi, New Delhi-110019
...Appellants
Versus
1. Registrar of Companies, Delhi
4th Floor, IFCI Tower, 61,
Nehru Place, New Delhi-110019
2. Income Tax Department, DCIT
428-429, Lawyers Chamber, Block-I,
Delhi High Court, Shershah Suri Marg,
New Delhi-110003.
...Respondents
Present :
For Appellant : Mr. Ashutosh Gupta, Mr. Gaurav Rana, Mr. Ajitesh Kumar,
Advocates.
For Respondents : Mr. B. Rama Ambedkar, Advocate.
Company Appeal (AT) No. 49 of 2021 Page 1 of 10
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JUDGMENT
(Hybrid Mode) [Per: Ajai Das Mehrotra, Member (Technical)]
1. This appeal is filed by the Appellants who are the Directors of M/s. SKS Boilers Private Limited (hereinafter referred to as the "said company") against the impugned order dated 21.12.2020 passed by the National Company Law Tribunal, New Delhi, Special Bench (Court-II) in Appeal No. 386/252(ND)/2020 wherein the Appeal for seeking restoration of M/s. SKS Boilers Private Limited was dismissed by the Ld. NCLT.
2. The brief facts of the case are that M/s. SKS Boilers Private Limited was incorporated on 13.04.2004. The said company had taken land on lease in Uttar Pradesh in the year 2007. The name of the company was struck off by Registrar of Companies, Delhi (for short 'RoC') on 30.06.2017 in a common action where the company was listed at Item No. 18658. The company was struck off in terms of provisions of Section 248 by the RoC Delhi as it had failed to file its financial statements.
3. The Ld. NCLT had vide the impugned order, dismissed the appeal of the appellants. The relevant portion of the order of the Ld. NCLT, is reproduced below for reference:-
"7. After hearing submissions and perusing documents placed on record by the Appellant Company, this bench observes that :
i. That the Balance Sheets placed on record by the Appellant shows 'NIL' Revenue from Operations:Company Appeal (AT) No. 49 of 2021 Page 2 of 10 3
Balance Sheet Revenue from
for the Operations (in
Financial year Rs.)
2016-2017 Nil
2017-2018 Nil
2018-2019 Nil
ii. That the Appellant Company has neither filed Bank Statement nor any Income Tax Return.
8. That the 'nil' revenue from operations depicts that the company was not utilizing its lease hold property for the purpose of carrying out its business. Further, the RoC has stated in his report that the Appellant has neither enclosed any Financial Statements preceding two years of strike off i.e., on 07.06.2017 nor any other documents with appeal to support the claim that the Company was in operation or was carrying on any business at the time, its name was struck off.
9. That the provisions pertaining to restoration of the name of the Company are provided in the Section 252(3) of the Companies Act, 2013, which, inter alia, includes that if a company is carrying out its business or in operation or otherwise it is just that the name of the company be restored, this Tribunal can order the RoC to restore the name of the company in the Register of Companies.
10. That the Appellant Company has not brought anything on record which could depict that the Appellant Company was in operation or was doing any significant business at the time when its name was struck off from the register of RoC.
11. In the current circumstances, it is worthwhile to refer to the Judgement of Hon'ble NCLAT in the matter of Alliance Commodities Private Limited Vs. Office of Registrar of Companies, West Bengal, Company Appeal (AT) No. 20 of 2019 :
"9. Section 252 (3) of the Companies Act, 2013 empowers the Tribunal to order restoration of a Company whose name has been struck off from the Register of Company Appeal (AT) No. 49 of 2021 Page 3 of 10 4 Companies, if such company, any member or creditor or workman thereof feeling aggrieved by such striking off applies before the Tribunal seeking restoration of the struck off company to the Register of Companies before the expiry of twenty years from the publication in Official Gazette of notice under Section 248(5). The exercise of such power is properly regulated and depends upon satisfaction of the Tribunal that the Company at the time of its name being struck off was carrying on business -
or in operation or otherwise it is just' that the name of company be restored. We do not find ourselves persuaded to agree with the proposition canvassed by learned counsel for the Appellant that inspite of Appellant's inability to demonstrate that the Company was at the relevant time carrying on business or in operation, the Tribunal had vast powers to order restoration of Company on the ground "or otherwise". This term "or otherwise" has been judiciously used by the legislature to arm the Tribunal to order restoration of a struck off company within the permissible time limit to take care of situations where it would be just and fair to restore company in the interest of company and other stakeholders. Such instances can be innumerable. However, this term "or otherwise" cannot be interpreted in a manner that makes room for arbitrary exercise of power by the Tribunal when there is specific finding that the Company has not been in operation or has not been carrying on business in consonance with the objects of the Company. A Shell Company or a Company having assets but advancing loans to sister concerns or corporate persons for siphoning of the funds, evading tax or indulging in unlawful business or not abiding by the statutory compliances cannot be allowed to invoke this Company Appeal (AT) No. 49 of 2021 Page 4 of 10 5 expression "or otherwise" which would be a travesty of justice besides defeating the very object of the Company..."
12. In view of the above, this Bench is not inclined to interfere with the striking off action taken by the RoC against the Appellant Company under Section 248(5) of the Companies Act 2013.
13. The Appeal is accordingly dismissed."
4. In its written submissions dated 30.03.2022, the Appellants have submitted as under:-
"4. It is submitted that the Hon'ble National Company Law Tribunal, New Delhi bench while passing the Impugned order has erred in law and fact by not considering that the Appellant Company has long term borrowings of Rs. 8,17,860/- which are still to be paid back to the Creditors. That Hon'ble Tribunal also failed to consider the fact that Appellant Company has current assets worth Rs. 67,98,873.09/- which are still lying with the Company and the same cannot be utilized or disposed off while the Company is struck off. Further the Hon'ble NCLT has erred in law and fact by not considering the Huge amount of investment made by the Company in the form of capital advances of Rs. 67,34,000/- which the Company is not able to recover owing the striking off. A copy of the Financial Statement of the Company for the year 2014-15, 2015-16 & 2016-17 are annexed herewith and marked as Annexure-A.
5. The Hon'ble NCLT has erred in law and fact by not appreciating the fact that the Company had taken land admeasuring 1098 sqm industrial unit in Uttar Pradesh for manufacturing of Bio Mass Agra Based for a lease of 90 years which in itself is ample to corroborate that the company was in operation at the time of alleged Strike Off by the ROC/Respondent No.l."Company Appeal (AT) No. 49 of 2021 Page 5 of 10 6
5. In support of their contentions, the Appellants has cited following judgments of this Tribunal wherein restoration of the company was allowed in similar circumstances:
• Khetan Granite Private Limited V. Office of Registrar of Companies, Jharkhand, MANU/NL/0017/2020.
• Calcutta Rubber Factory Pvt. Ltd. and Ors. V. Registrar of Companies, Delhi and Haryana, MANU/NL/0602/2019. • Insuflex Ind Private Ltd. V. Registrar of Companies, Maharashtra and Ors., MANU/NL/0622/2019.
• Basant Kumar Berlia and Ors. V. Registrar of Companies, West Bengal Nizam Palace and Ors., MANU/NL/0031/2019.
6. In its reply dated 21.09.2021, the Respondent No. 1 (RoC) submitted that the said company had filed its financial statements only till financial year ending 31.03.2013 due to which it had reasonable cause to believe that the petitioner company was not in operation and after due notice published in the website of Corporate Affairs and in the official gazette, the company was dissolved w.e.f. 30.06.2017 and that the said actions of RoC has been upheld by the Ld. NCLT.
7. In its reply dated 26.07.2023 on behalf of Respondent No. 2 (Income Tax Department, New Delhi) has submitted that as per the record, the said company has filed Income Tax Returns regularly from Assessment Year 2007-08 to 2020- 21 except that of Assessment Year 2018-19. As per the record there is an outstanding Income Tax demand of Rs. 1000/- for Assessment Year 2019-20; and that there are other companies also working from same address where the Appellants are Directors which were struck off or are in the process of striking off due to non-operation or non-compliance by RoC except two companies. The intention of the said company is only for revival to hold the property in its name Company Appeal (AT) No. 49 of 2021 Page 6 of 10 7 and not for the purpose of any operation and that no other company of this group has filed appeal for revival except M/s. SKS Boilers Pvt. Ltd.
8. In its oral submissions, the Learned Counsel for the Appellants stated that the said company was intending to carry on business and though it had temporarily no revenue from operation, but there were assets and liabilities including plants and machinery, land and loans and advances as reflected at page 66, 70 and 71 of the Appeal Paper Book. It is submission of the Learned Counsel for the Appellants that the company has substantial movable and immovable assets hence it cannot be said that the said company was not carrying on any business or operation. Further, the Learned Counsel stated that the company is not a shell company and has not indulged in any unlawful activity.
9. We have gone through the records and submissions made by the Learned Counsel for the Appellants and Respondents. The company was struck off on 30.06.2017. As per the report of the Income Tax Department, the company had filed returns up to Assessment Year 2020-21 and the Appellants had submitted copies of Audited Accounts up to March 2020 which are part of the Appeal Paper Book. The accounts reflect that the company has land, plant and machinery as well as loans and advances to recover. We have also gone through the decisions of the co-ordinate Benches in the case of GRS Properties Private Limited Vs. Office of Registrar of Companies, NCT of Delhi & Haryana, in Comp. App. (AT) No. 165 of 2021, Manacles Transformers Pvt. Ltd. & Anr. Vs. Registrar of Companies, Delhi, in Com. App. (AT) No. 175 of 2022, D.D. Finance and Holdings Private Ltd. Vs. Registrar of Companies, NCT of Delhi & Haryana, in Com. App. (AT) No. 112 of 2022 and Krishana Kumar Aggarwal Vs. The Company Appeal (AT) No. 49 of 2021 Page 7 of 10 8 Registrar of Companies, in Com. App. (AT) No. 03 of 2022. The relevant portion of judgment in Com. App. (AT) No. 175 of 2022 is as under:
"10. .....In DD Finance and Holdings Private Limited Vs. RoC in Company Appeal (AT) No. 112 of 2022 decided on 05.03.2024 by this Tribunal it was held:-
"14. Now the term otherwise just and equitable under Section 252(3) of the Companies Act, 2013 envisage revival/restoration of the company on the rolls of ROC if it is not a shell company or a company dealing with siphoning funds or advancing loan to sister concern. Rather they have a fixed substantial asset worth crores. The company is still sole absolute owner and in possession of the property situated at Bhakti Bhavan Estate, Kulri, Mussoorie and if the company's name is not restored then, of course, it would result to an irreparable loss and prejudice to the appellant and the fixed assets of company would be a deadlock and would result in wastage of property which is, of course, contrary to the public policy. Admittedly the property is free from all encumbrances.
25. For the reasons aforesaid we find it just and equitable to restore the name of the appellant company to the record of ROC and thus we set aside the impugned order dated 27.05.2022 passed by the Ld. NCLT and direct the ROC, New Delhi to restore the name of the company to the Register of Companies subject to the following compliances:"
10. The relevant portion of the Judgement of this Tribunal dated 08.02.2023, in Comp. App. (AT) No. 165 of 2021, in the matter of 'GRS Properties Private Limited' Vs. Office of Registrar of Companies, NCT of Delhi & Haryana', is reproduced below for reference:
"7. After hearing the parties, going through the pleadings made on behalf of the parties and in view of the fact that the Audited Financial Balance Sheets of the Year 2015-16, 2016-17, 2017-18, 2018-19 & 2019- 20 of the Appellant /Company 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 Company Appeal (AT) No. 49 of 2021 Page 8 of 10 9 operations. Hence, we are of the view that the order passed by the National Company Law Tribunal (New Delhi, Bench-V) as well as Registrar of Companies, NCT Delhi & Haryana is not sustainable in law."
11. The relevant portion of the Judgement of this Tribunal dated 06.12.2019, in the matter of 'Calcutta Rubber Factory Pvt. Ltd. & Ors. Vs. Registrar of Companies, Delhi and Haryana', 2019 SCC OnLine NCLAT 851, is given below for ready reference:
"11. The company is having a lease hold plot allotted by HUDA and the appellant company undertakes to file the returns and the financial statements after the period 2012-13. The company was carrying on business but was running into losses which accumulated to Rs. 630589/- from the year ending 31st March, 2013 and loss of Rs. 3500/- and Rs. 3500/- from the year ending as on 2016-17, 2017-18. From these facts it cannot be said that the company is not carrying on any business. 12. From the above discussions and observations we have come to the conclusion that it would be just that the name of the company is directed to be restored........."
12. In the present case the company had filed Audited Accounts till March 2020 copies of which annexed in the Appeal Paper Book. The said company has also filed Income Tax Returns up to Assessment Year 2020-21 as per the report of the concerned Income Tax Officer. The company has substantial assets and liabilities, it owns property and plant and machinery. Since the company has substantial assets and liabilities, it cannot be said that the company does not carry on any business or operations. No prejudice shall be caused to any one if the company is restored.
13. Considering the above facts and circumstances, we find it just and equitable to restore the name of the company to the records of RoC. The Company Appeal (AT) No. 49 of 2021 Page 9 of 10 10 impugned order dated 21.12.2020 passed by the Ld. NCLT in Appeal No. 386/252(ND)/2020 is set aside and the name of the said company M/s. SKS Boilers Private Limited is restored to the Register of Companies maintained by RoC subject to following compliances:-
i. Appellant/Company shall pay costs of Rs. 2,00,000/- (Rupees Two Lakh) to the Registrar of Companies, NCT Delhi & Haryana within eight (8) weeks from the passing of this Judgment.
ii. After restoration of the Company's name in the Register maintained by the RoC, the Company shall file all their Annual Returns and Balances Sheets. The Company shall also pay requisite charges/fee as well as late fee/charges as applicable.
iii. In spite of present orders, RoC will be free to take any other steps punitive or otherwise under the Act for non-filing/late filing of statutory returns/documents against the Company and Directors.
14. The instant Appeal is allowed to the above extent. Connected I.A's, if any, are also disposed of.
[Justice Yogesh Khanna] Member (Judicial) [Mr. Ajai Das Mehrotra] Member (Technical) Place: New Delhi Dated: 29.07.2024 Ram N. Company Appeal (AT) No. 49 of 2021 Page 10 of 10