Rajinder Bawa, Director, Baver ... vs Registrar Of Companies
2010 Latest Caselaw 2206 Del

               IN THE HIGH COURT OF DELHI AT NEW DELHI

                           COMPANY JURISDICTION

                     COMPANY PETITION NO. 406 OF 2008

                                               Reserved on : 16-04-2010
                                     Date of pronouncement: 27-04-2010

Rajinder Bawa, Director, Baver Suspension (P) Ltd.
                                                          ...........Petitioner
                            Through Mr. Pradeep Dhingra, Advocate

                                    Versus

Registrar of Companies                       .........Respondent
                 Through Mr. V.K.Gupta, Dy. Registrar of Companies



CORAM :

       HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA

1.     Whether Reporters of local papers may be allowed to see the
       judgment? Yes
2.     To be referred to the Reporter or not? Yes
3.     Whether the judgment should be reported in the Digest?        Yes


SUDERSHAN KUMAR MISRA, J.

1. This petition has been filed under S.560(6) of the

Companies Act, 1956, seeking restoration of the name of the M/s

Baver Suspension Pvt. Ltd. to the Register of Companies maintained

by the Registrar of Companies. M/s Baver Suspension Pvt. Ltd.

(hereinafter referred to as the „company‟) was incorporated under the

Companies Act, 1956 on 16th August, 1993 vide Certificate of

Incorporation No. 55-54845 as a private limited company with the

Registrar of Companies, NCT of Delhi and Haryana.

2. The petitioner herein is Mr. Rajinder Bawa, who is a

member as well as a Director of M/s Baver Suspension Pvt. Ltd.

3. The Registrar of Companies, i.e the respondent herein,

struck the company‟s name off the Register due to defaults in

statutory compliances, namely, failure to file annual returns for the

period 30.09.2001 to 30.09.2008, and failure to file balance sheets for

the period 31.03.2001 to 31.03.2008. Consequently, the Registrar of

Companies initiated proceedings under S.560 of the Companies Act,

1956, for the purpose of striking the name of the company off the

Register maintained by the Registrar of Companies. It is stated by

counsel for the respondent that the procedure prescribed under S.560

of the Companies Act, 1956 was followed, notices as required under

S.560(1), S.560(2), S.560(3) and, ultimately, under S.560(5) were

issued, and that the name of the petitioner company was published in

the Official Gazette on 23rd June, 2007 at S.No. 1977.

4. The petitioner states that the company has been active

since incorporation, and has also been maintaining all the requisite

documentation, as per the provisions of the Companies Act, 1956. In

support of this statement, copies of income tax returns for the

assessment years 2005-2006, 2006-2007, 2007-2008; sales tax

returns for the years 2002-2008; bank statements for the years 2003-

2004, 2004-2005, 2005-2006, 2006-2007 and 2007-2008 up to 10th

September, 2008, have been annexed to this petition.

5. It is further stated by the counsel for the petitioner that

the registered office of the company had shifted in 2006, and that the

responsibility for intimating the respondent of that fact was given to

M/s Shaival and Sunil, Chartered Accountants. This was admittedly not

done by the said Chartered Accountants. Consequently, the company

did not receive any show cause notice, nor was it afforded any

opportunity of being heard before the aforesaid action was taken by

the respondent. It is categorically stated by the respondent that his

office received no intimation of the change of address of the registered

office of the company in the requisite Form 18.

6. It is stated by counsel for the petitioner that the present

petition is within the limitation period stipulated by S.560(6) of the

Companies Act, 1956, i.e. 20 years.

7. The petitioner avers that the accounts of the company

were prepared and audited every year, and that the company had

engaged the services of the aforesaid Chartered Accountants, i.e. M/s

Shaival and Sunil, to perform the task of filing the returns with the

office of the Registrar of Companies. It is submitted that the aforesaid

Chartered Accountants did not file the returns and other necessary

documents with the Registrar of Companies and did not reveal this fact

to the Directors of the company, who were concentrating on other

affairs of the company as business flourished. It is further submitted

that it was only in August 2008 that the fact of non-filing of the

returns and other documents with the respondent, as well as the fact

that the company‟s name had been struck off the Register maintained

by the respondent, was known to the company, when it tried to file

Form 8 in respect of a charge created on the property of the company

with the Central Bank of India.

8. Counsel for the respondent does not have any objection to

the revival of the company, subject to the company filing all

outstanding statutory documents, i.e. annual returns for the period

30.09.2001 to 30.09.2008, and balance sheets for the period

31.03.2001 to 31.03.2008, along with the filing and additional fee, as

applicable on the date of actual filing. The certificates of „No Objection‟

of the Directors, to the restoration of the name of the company to the

Register maintained by the respondent, have also been placed on

record.

9. In Purushottamdas & Anr (Bulakidas Mohta Co P.

Ltd) v Registrar of Companies, [1986] 60 Comp Cas 154 (Bom),

the Bombay High Court, in paragraph 20 thereof, has held, inter alia,

that;

"The object of section 560(6) of the Companies Act is to give a chance to the company, its members and creditors to revive the company which has been struck off by the Registrar of Companies, within a period of 20 years, and to give them an opportunity of carrying on the business only after the company judge is satisfied that such restoration is necessary in the interests of justice."

This decision has been followed by this Court in M/s

Deepsone Non-Ferrous Rolling Mills Pvt Ltd v Registrar of Companies,

NCT of Delhi and Haryana, CP No. 285/2009; M/s Kakku E and P

Control Pvt Ltd & Anr v The Registrar of Companies, NCT of Delhi and

Haryana, CP No. 409/2008 and M/s Sohal Agencies Pvt Ltd v Registrar

of Companies, NCT of Delhi and Haryana, CP No. 297/2009.

10. Looking to the fact that the company is a running

company, that its Director has filed this petition within the stipulated

limitation period, and to the decision of the Bombay High Court, this

petition deserves to be allowed. However, a greater degree of care

was certainly required from the company in ensuring statutory

compliances. Here, annual returns for the period 30.09.2001 to

30.09.2008, and balance sheets for the period 31.03.2001 to

31.03.2008, were not filed. Furthermore, the company did not even

bother to intimate the ROC of the change of its registered office to a

new address. To my mind, this is not merely a case of negligence on

the part of the Chartered Accountants whose services had been

engaged. If any employee, whether part-time or full-time, defaults in

his duties, the primary responsibility for ensuring statutory

compliances remains that of the management. At the same time, since

there is the possibility of the company to continue functioning,

therefore, and as held in Purushottamdas & Anr (Bulakidas Mohta

Co P. Ltd) v Registrar of Companies (supra); it is only proper that

the impugned order of the respondent, which struck off the company‟s

name from the Register of Companies, be set aside.

11. I might notice that Rule 94 of the Companies (Court)

Rules, 1959 states, inter alia, as follows;

„Unless for any special reasons that the Court shall otherwise order, the order shall direct that the

petitioners do pay to the Registrar of Companies his costs of, and occasioned by, the petition.‟

12. To my mind, the expression „shall otherwise order‟ used in

Rule 94, as reproduced above, means that although, ordinarily, the

costs of the Registrar of Companies must be paid by the petitioner,

however, if the Court considers it necessary to do so, it may give other

orders in this behalf also. From this it follows that it is open to the

Court to issue specific orders departing from the norm by imposing

lower or no costs at all, or even levying further additional costs,

depending on the circumstances.

12. As has also been held in M/s Santaclaus Toys Pvt. Ltd v

Registrar of Companies, CP. No.271/2009, decided on 16th

February, 2010 and in M/s Medtech Pharma India Pvt Ltd v

Registrar of Companies, CP.No.241/2009, decided on 19th April,

2010, by this Court; the facts and circumstances of this case show that

it is not merely a case where the interests of justice and requirements

of the statute would be met merely by the payment of costs of the

Registrar of Companies. It is difficult to believe that although the

company was functioning for eight years, the management was so

preoccupied with other matters that they were unable to spare time to

inquire from its staff as to whether the annual returns and other

statutory documents were being filed. It is also equally improbable

that the staff of the company was precluded from informing the

Managing Director, or other Directors, of the fact that the statutory

returns mandated under the Companies Act are not being filed. There

is also no excuse for not having informed the respondent of the

change in address of its registered office. The whole matter has

obviously been handled in a very casual manner and must be

deprecated. To my mind, such conduct does not display sound and

responsible business functioning expected of companies. The non-filing

of returns and balance sheets with the respondent had also made it

impossible for any interested party to find out about the financial

health of the company over a span of eight years.

13. For all these reasons, the restoration of the company‟s

name to the Register maintained by the respondent will be subject to

the payment of Rs. 50,000/- as exemplary costs, payable to the

common pool fund of the Official Liquidator. In addition, further costs

of Rs. 25,000/- be paid to the Registrar of Companies. Costs be paid

within three weeks from today. The restoration of the petitioner

company‟s name to the Register will be subject to the petitioner filing

all outstanding documents required by law and completion of all

formalities, including payment of any late fee or any other charges

which are leviable by the respondent for the late filing of statutory

returns. The name of the company, its directors and members shall

then, as a consequence, stand restored to the Register of the Registrar

of Companies, as if the name of the company had not been struck off,

in accordance with S.560(6) of the Companies Act, 1956.

14. Liberty is granted to the respondent to proceed with penal

action against the company, if so advised, on account of the

company‟s alleged default in compliance with S.162 of the Companies

Act, 1956.

15. The petition is disposed of.

SUDERSHAN KUMAR MISRA, J.

APRIL 27, 2010