Non- revival of Struck off Company - Arving Jain Vs. Akarshan Hotel (P.) Ltd.

                      Non- revival of Struck off Company

Arving Jain Vs. Akarshan Hotel (P.) Ltd.

Short Summary:

In this Flash editorial, the author begins by referring the provisions of section provisions of section 252(1) and Section 252(3) of Companies Act, 2013 along with provisions of Section 560 of Companies Act, 1956 relating to REVIVAL OF COMPANIES STRUCK off from the record of the Registrar due to order of ROC or application of the Company.

The main shove of the article, is upon the question ‘ Whether where an application for restoration of company was made by petitioners who were not proved to be either director or member or creditor of said company, such application could not be accepted”

In this editorial author discuss the provisions under Section 560 of the CA, 1956 and judgement delivered by NCLT, New Delhi Bench in case of Arvind Jain Vs. Akarshan Hotel (P.) Ltd.

This is article no. 248 of the series of editorials written by the author on corporate laws {Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

Case element:

Case Name	Arvind Jain Vs. Akarshan Hotel (P.) Ltd.
Bench Name	The National Company Law Tribunal (NCLT), New Delhi Bench
Link	http://nclt.c2k.in/OtherNCLT/Publication/principal_bench/2017/Others/28.pdf
Heard & Pronounced on Order	30th June, 2017
Order Passed by	Chief Justice(Rtd) M.M. Kumar (President) Sh. R.Varadharajan, Hon'ble Member (J)
Section	560 of Companies Act, 1956 252 of Companies Act, 2013

A.  Factual Background:

I.        This petition filed by three brothers under Section 560 (6) of the erstwhile Companies Act, 1956 prays for restoration of the name of Respondent-1 Company on the register of Registrar of Companies-Respondent no. 2.

II.        The petition was originally filed before Hon'ble High Court of Delhi. In view of the notification of the provisions of Companies Act, 2013 and taking into consideration notification REGD NO. D.L.- 33004/99 dated 07-12-2016 issued by Ministry of Corporate Affairs and in particular clause 3 thereof, the above Company Petition has been transferred by the Hon'ble Delhi High Court vide its order dated 25-4-2017 to the Principal Bench, National Company Law Tribunal, New Delhi.

III.        The petitioners used to be Directors of the Respondent No. 1 Company since 12.06.1996. The Petitioners collectively held 10802 equity shares since 12-06-1996 constituting 100% shareholding of the Respondent No. 1 Company.

IV.        Respondent No. 1 Company is a closely held family company. Because of such family disputes no annual filing was done in the Respondent No. 1 Company.

V.        The Company has been struck down by the Registrar of Companies, Delhi off its Register w.e.f. 31.05.2007. The Petitioners submitted that the action of Registrar above is highly prejudicial to their interest. Hence, under these circumstances the name of the Respondent No. 1 Company is to be restored to the register in the Registrar of Companies, NCT of New Delhi and Haryana.

VI.        The Registrar of Companies has filed a detailed reply stating that the respondent No. 1 had not filed any statutory documents i.e. Balance Sheet after year 1991 & Annual Returns after the year 1992 as per the requirement of the provisions of the Companies Act, 1956.

VII.        The respondent had a reasonable cause to believe that the company was not carrying out any business. The respondent has requested that if it is decided to restore the name of the company under section 560(6) of the Companies Act, 1956, then it may be directed to file all the statutory documents i.e. Annual Returns, Balance Sheets etc till date with prescribed filing fee and additional fee as on the date of actual filing as per provisions of Companies Act, 2013.

VIII.        Petitioners undertake to file all pending documents with Registrar of Company after restoration of the name of the Company. The Petitioners have also stated that though the balance sheet for the year 2006 was prepared and is also annexed with the Company Petition as Annexure A3 (Colly), it could not be filed with the Respondent No. 2 as certain disputes arose between the members of the family, which disrupted the proper and smooth functioning of the affairs of the Respondent No. 1 Company.

 B.  Provisions relating to Revival of Company:

Section 560(6)

(6) If a company, or any member or creditor thereof, feels aggrieved by the company having been struck off the register, the Tribunal, 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 Tribunal 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.

Section 252(1):

Statutory Provisions: Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies:

Section 252(3):

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.

C. Decision of the NCLT:

When we examine the facts of the present case, it becomes evident that in the year 1992 as per the master data attached by the petitioners, none of the petitioners were either director, member or creditor of the company. ven in 2007 when the company was struck off from the register of the Registrar of Companies the petitioners do not figure in the list of shareholder or creditor or director etc.

the Registrar of Companies-Respondent no. 2 it has not been revealed that at any stage petitioner acquired the share or uploaded on the website of the Register or submitted the same personally so as to constitute them either members of the respondent no. 1 company. The petitioners as such have not been able to show any document to claim their locus standi to be the director of member of the company. They are simply persona non grata. There is no possibility for us to assume that there is land in the name of the company at Mussoorie. No other condition laid down in section 560(6) of the Companies Act, 1956 has been satisfied namely; that the company was in operation or it could be presumed to be carrying on its business at the time when it was struck off. Therefore, the Petition is liable to be dismissed.

This Petition fails and the same is dismissed with costs of Rs. 10,000/-.

 Conclusion:

In the above case the Hon’ble NCLT has decided that, where an application for restoration of company was made by petitioners who were not proved to be either director or member or creditor of said company, such application cannot be accepted and dismissed the petition

As per language of Section 252(2) “Any person aggrieved by an order of the Registrar” may file an appeal to the Tribunal against the order of the Registrar. Here the question,

v  Whether under Companies Act, 2013, any person other than Director or Members or Creditors may file application in the NCLT?

v  If the answer of above question is YES, then whether petition can be file by such other person after 3 year within 20 years?

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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