Revive Strike off Company NCLT Chandigarh Legal Advice

Today, in this piece, we will practically and legally examine the validity of scrapping off a company’s name from the Register of Companies by the Registrar of Companies (ROC). We look at this scenario in light of the judgement passed by the National Company Appellate Tribunal (NCLAT) in the case of Tweak the Future Innovations Pvt Ltd. vs. Registrar of Companies on 03^rdMarch, 2020. The reader can access the full judgement by clicking on the affixed link herein below.

Link – https://indiankanoon.org/doc/57243956/

Statement of Facts: Tweak the Future Innovation Pvt Ltd. vs. Registrar of Companies, Punjab & Chandigarh.

Date of Decision: 03^rd March 2020.

Company Appeal (AT) No. 300 of 2019

Section: 248, 252,and 421 of the Companies Act 2013.

Chandigarh

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Details of the Appellant Company are as follow:

Name- M/s Tweak the Future Innovations Private Limited

Type- Private Company (Limited by Shares)

Corporate Identity Number – U72900CH2011PTC032760

Incorporation date – 22^nd February 2011.

Business- Software Development

Composition- Two Shareholders and Two Directors

This is an appeal against the order of the NCLT bench of Chandigarh dated 5^th September 2019 where it had dismissed the appeal of the company for its revival.It is the contention of the Appellant that the Company has been continuing to carry out its operation and business since the day of the incorporation. However, the respondent has ordered to remove the name of the company from the registrar of the companies as it has been published in the official gazette on 11^th September, 2018. Responding to these Allegations, the respondent averred that the removal of the name was not done on any baseless grounds. It was ordered to be removed because the appellant had failed to fill their statutory documents and submit their financial statements along with Annual returns for the period of 3 years starting from 2014. They averred that it led them to conclude that the company has stopped functioning, so eventually they decided to strike off its name.

However, it is stated by the Appellant Company that they have filed all the financial statements till 2017 along with the additional fee of Rs. 73,800/- and thus have duly complied with the requirements laid down under the Companies Act, 2013. Further, they submitted that they have also been consistent in filing their Income Tax Returns after the audit conducted by the Department of Income Tax. To rebuff the claims made by the respondent regarding the operation of the Company, they placed reliance on the two Memorandums of Understanding (MOUs) entered into with North Atlanta preschool, USA for providing a parent engagement and school management platform (software),and withAchievers Technology Private Limited for co-developing a software named ‘SoCo World’. These MOUs were entered into just before the respondent decided to go ahead with scrapping off the company’s name due to its inactivity.

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Further, the appellant contended that the Respondent ordered to struck off its name when, in fact, it was still carrying out its business and this happened despite having filed the pending statutory returns till 2018 complying with all the requirements. Thus, they stated that the decision to scrape off the name of the appellant company was utterly baseless and should be condemned.To substantiate all of its claims, the company submitted a few invoices of 2018 for billing done for access and use of web and mobile platforms, annual subscriptions etc.

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The Reliefs sought by the Appellant Company are given herein below:

“i. Allow the present appeal and set aside the impugned/final order dated 05.09.2019 passed by the National Company Law Tribunal, Bench at Chandigarh in Appeal No.04/chd.CHD/2019

To direct the respondent to restore the name of the appellant Company I.e. Tweak the futures private limited in the register of companies maintained by the Respondent

iii. Pass such other direction and make such provisions as deemed just for placing the name of the appellant company and its directors in the same position as nearly as may be as if the name of the appellant company had not been struck off from the register of companies.

Set aside the notification published by the Respondents for striking off the name of the company to the extent the same is applicable to the appellant company
Pass any other or further order or direction, which the Hon’ble Appellate tribunal may deems fit and proper in the facts and circumstances of the case in the interest of justice”

The Respondent, then, stated that the order of the NCLT is suggestive of the fact that Appellant Company did not file any income returns and it is, in fact, still disputed whether it still carries its operation. To strengthen this claim they asked the court to place its reliance on the Tax Returns filed with Income tax authority which shows NIL income of the company suggesting that they were not carrying on its business operation when the decision to scrape off its name of was made. Thus they averred that they have struck off the name of the company only after following the due process as laid down under section 248 of the Companies Act, 2013.

Also Read- how to revive strike off company

“248. Power of Registrar to remove name of company from register of companies

(1) Where the Registrar has reasonable cause to believe that—

… (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 intentionto remove the name of the company from the register of companies and requesting them tosend their representations along with copies of the relevant documents, if any, within aperiod of thirty days from the date of the notice…”

The Court, after perusing the evidences placed on record, stated that the appellant company was operational at the disputed time and have filed all the returns with relevant additional fee to compensate for the delay. The notice of ROC issued on 03^rd November 2018 to the company to file its statutory returns for financial year 2017-18 shows that the name of the company was still existing in the records of ROC even after the removal of name of the company. Section 252 (3) of Companies Act, 2013 is attached herein below:-

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“252(3) – If a company, or any member or creditor or workman thereof feels aggrieved by the Company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of Section 248 may, if satisfied that the Company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the Company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed 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 from the register of companies.”

The court quipped that the word “Operation” in commercial sense means developing business platform also and the appellant have been indulged in the same process. Disposing off all the other prayers, it held that the ROC should restore the name of the Appellant Company to the Register of Company. Further, it also directed the Appellant to pay Rs.1,00,000/- by way of Bank draft in favour of Pay & Account Officer, Ministry of Corporate Affairs, Chandigarh/ New Delhi towards cost for not filing statutory documents as required under Companies Act, 2013.