M/S Kesinga Paper Mills Private ... vs Ministry Of Corporate Affairs ...
2010 Latest Caselaw 2963 Del

              IN THE HIGH COURT OF DELHI AT NEW DELHI

                        COMPANY JURISDICTION

                  COMPANY PETITION NO. 406 OF 2009

                                             Reserved on : 11-05-2010
                                   Date of pronouncement: 04-06-2010

M/s Kesinga Paper Mills Private Limited
                                                      ...........Petitioner
                         Through Mr. Vishnu Langawat, Advocate

                                 Versus

Ministry of Corporate Affairs through 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

petitioner company to the Register of Companies maintained by the

Registrar of Companies. M/s Kesinga Paper Mills Pvt. Ltd. was

incorporated under the Companies Act, 1956 on 8 th February, 1995

vide Certificate of Incorporation No. 55-65229 as a private limited

company with the Registrar of Companies, NCT of Delhi and Haryana.

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

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

in statutory compliances, namely, failure to file annual returns and

balance sheets since incorporation. 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 his office. 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. 8527.

3. The petitioner states that the company has been active

since incorporation. In support of this statement, copies of extracts of

minutes of various Board meetings held in 1995, 2001 and 2009, and

the balance sheet for the financial year 1995-96, have been annexed

to this petition.

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

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. On examination, it appears that the

address of the registered office of the petitioner company in the

records of the respondent is different from the address stated to be

the current registered office of the petitioner company. With regard to

the current address, the petitioner has submitted that it has been the

registered office of the company since 10th November, 2001. A

certified true copy of an extract of Board Minutes dated 10th

November, 2001, has been filed, wherein the decision to change the

registered office of the company was taken and Late Mr. Dina Nath

Verma, the then Whole Time Director, was authorized to file Form 18

with the respondent. However, no proof has been placed on record by

the petitioner of due intimation of this change in its registered office to

the respondent in the requisite Form 18. Therefore, it is likely that the

petitioner did not receive any notice issued by the respondent under

S.560, Companies Act, 1956, due to its own default.

5. 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 from the date of publication of the

notice in the Official Gazette.

6. The petitioner submits that it was unable to file the

required statutory documents due to the illness of its Whole Time

Director, namely, Mr. Dina Nath Verma, who is stated to have expired

in 2001. It is also submitted that after the expiry of Late Mr. Dina Nath

Verma, the affairs of the company were neglected, that it was only on

5th April, 2009 that the petitioner‟s Board decided to entrust all

compliance-related work to Mr. Vinod Chadha, a Director of the

company. It is further submitted that it was only when the aforesaid

Mr. Vinod Chadha carried out an in-depth review 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.

7. In addition, it is stated that the petitioner has filed a writ

petition in the High Court of Orissa, being W.P.(C) No.9098/03,

seeking relief against certain parties for trespassing on land originally

allotted to the petitioner, wherein a stay order in favour of the

petitioner was passed on 22nd September, 2003, and the matter is

stated to be pending.

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 and balance

sheets since incorporation, 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."

10. Further, when a litigation is pending by or against a

company, it is only proper that its name be restored to the Register to

enable the matter to be carried to its conclusion, as has been held by

this Court in M/s Indian Explosives Ltd. v Registrar of

Companies, CP. No.185/2008, decided on 21st April, 2010.

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.‟

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. 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 almost fourteen years, the illness of the Whole Time

Director precluded the other management of the company from

ensuring that the annual returns and other statutory documents were

being filed with the respondent. Further, the management did not

even bother to inform the respondent of the change of address of its

registered office in the required Form 18, which is why the petitioner

did not receive any of the notices or letters issued by the respondent

in this regard. 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 fourteen

years. Earlier decisions on the same lines are M/s Santaclaus Toys

Pvt. Ltd v Registrar of Companies, CP. No.271/2009, decided on

16th February, 2010; M/s Medtech Pharma India Pvt Ltd v

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

2010; and Rajinder Bawa, Director, Baver Suspension (P) Ltd v

Registrar of Companies, CP No. 406 of 2008, decided on 27th April,

2010.

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. 75,000/- as exemplary costs, payable to the

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

of Rs. 22,000/- 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 in the above terms.

SUDERSHAN KUMAR MISRA, J.

JUNE 04, 2010