M/S Rajasthan Foils Pvt. Ltd. vs The Registrar Of Companies, Nct Of ...
2010 Latest Caselaw 4776 Del

               IN THE HIGH COURT OF DELHI AT NEW DELHI

                           COMPANY JURISDICTION

                     COMPANY PETITION NO. 501 OF 2009

                                                   Reserved on: 27-09-2010
                                        Date of pronouncement :08-10-2010

M/s Rajasthan Foils Pvt. Ltd.
                                                           ...........Petitioner
                            Through :    Mr. Ashish Aggarwal, Advocate

                                   Versus

The Registrar of Companies,
NCT of Delhi & Haryana.
                                                          .........Respondent
                            Through :    Mr. K.S.Pradhan, Dy. Registrar for
                                         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 under S.560(6) of the Companies Act, 1956,

seeks restoration of the name of the petitioner company to the

Register of Companies maintained by the Registrar of Companies, i.e

the respondent herein. M/s Rajasthan Foils Pvt. Ltd. was incorporated

under the Companies Act, 1956 on 6th June, 1996 vide Certificate of

Incorporation No. 55-79443 as a private limited company with the

Registrar of Companies, NCT of Delhi and Haryana.

2. In view of its failure to file balance sheets for the period

31.03.2000 to 31.03.2008 and annual returns for the period

30.09.2000 to 30.09.2008 with the respondent, the petitioner

company defaulted in complying with statutory requirements.

Consequently, the respondent initiated proceedings under S.560 of the

Companies Act, 1956, for the purpose of striking the petitioner‟s name

off the Register. According to the respondent, 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 the name of the petitioner

company was published in the Official Gazette on 23rd June, 2007 at

S.No. 9444.

3. The petitioner alleges that it did not receive any 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 petitioner‟s registered office in the records of the

respondent is correct. It is therefore presumed that the petitioner was

duly served with the notices issued under S.560 by the respondent.

4. It is stated by petitioner that it has been active since

incorporation, and has never been defunct or non-operational, with a

turnover of approximately 24 crores in the year 2008-2009. In support

of this statement, copies of registration certificates issued by the

District Industries Centre (Bhiwadi), Rajasthan from 1999 onwards

that show the status of the petitioner as a Small Scale Industry; copies

of registration certificates issued by the Department of Central Excise,

showing that the petitioner is a Dealer under S.7(1) and (2) of the

Central Sales Tax Act, 1956; a copy of the petitioner‟s PAN card; and

copies of income tax return acknowledgements and the audited

balance sheets for the assessment years 2007-2008, 2008-2009 and

2009-2010 have been annexed to this petition.

5. It is alleged that all statutory documents, including

accounts that were audited every year, were prepared every year by

SMR & Associates, Chartered Accountants, who had been engaged by

the petitioner to do the same. However, the task of filing the statutory

documents with the office of the respondent was entrusted to one Shri

Ramesh Kumar Sharma, one of the Directors of the petitioner

company, who was also looking after the day-to-day affairs of the

company. Shri Ramesh Kumar Sharma admittedly resigned in 2002

due to ill health, and his responsibilities were given to Shri Siddharth

Sharma, who was allegedly inexperienced with regard to the statutory

compliances that were to be made by the company. It is further

submitted that it was only in October 2009, during a routine diligence

that was conducted as the petitioner was seeking a fresh credit facility

from a bank, that the fact that its name had been struck off the

Register was known to the petitioner.

6. 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. balance sheets for the period

31.03.2000 to 31.03.2008 and annual returns for the period

30.09.2000 to 30.09.2008, 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 petitioner to the

Register, have also been placed on record.

7. 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."

8. Looking to the fact that the company is functional; that

this petition has been filed within the prescribed limitation period, i.e.

within 20 years from the date of publication of the notice in the Official

Gazette; and to the decision of the Bombay High Court in

Purushottamdas & Anr (Bulakidas Mohta Co P. Ltd) v Registrar

of Companies (supra), this petition deserves to be allowed.

However, a greater degree of care was certainly required from the

company in ensuring statutory compliances. A change in the

management of a company and inexperience in the new management

is no excuse for not complying with the requirements of the statute.

Yet, at the same time, since there is the possibility of the company to

continue functioning, it is only proper that the impugned order of the

respondent, which struck the petitioner‟s name off the Register, be set

aside.

9. 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.

10. The facts and circumstances of this case show that this is

not 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. 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 nine

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

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

2010 and M/s Model Machinery Co. (P.) Ltd. v Registrar of

Companies, CP. No. 170/2009, decided on 4th June, 2010.

11. 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 ` 1,00,000 as exemplary costs, payable to the

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

of ` 25,000 be paid to the respondent. 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

petitioner company, its directors and members shall then, as a

consequence, stand restored to the Register maintained by the

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

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

12. 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.

13. The petition is disposed of in the above terms.

SUDERSHAN KUMAR MISRA, J.

October 08, 2010.