Dwight Gary Gibbs And Ors. vs Gostha Bihari Gardens And Resorts Pvt. Ltd. And Ors.

M.M. Kumar, CJ

The instant petition filed under Section 560(6) of the Companies Act, 1956 has been placed before us after its transfer from Hon'ble Delhi High Court. The prayer made by the petitioner namely Mr. Dwight Gary Gibbs @ Devarata Dasa, being the majority shareholder of the company holding 95.21% shares, is that appropriate orders be passed for revival/restoration of the name of the Respondent Company Gostha Bihari Gardens & Resorts Pvt. Ltd. on the register of the Registrar of Companies, Ministry of Corporate Affairs, New Delhi and place the company and all other persons in the same position as nearly as possible as if the name of the petitioner company has never been struck off.

Brief facts of the case are that respondent company was incorporated on 17.09.1999 under the provisions of the Companies Act, 1956 as a private limited company with the Registrar of Companies- Delhi. The registered office of the Respondent No. 2 company was at Flat No. 28, First Floor, Sector 3, Pocket 16, Dwarka, New Delhi. It is submitted that the petitioner being the majority shareholder appointed Respondent No. 3 & 4 as the first Directors of the company. The petitioner made all the investments in the respondent company and the finances were managed by the Respondents 3 & 4.

The petitioner has also referred to the detailed objects of the company by placing on record the Memorandum of Association and Articles of Association (Annexure P2). It is sufficed to observe that company-Respondent No. 2 was engaged in the business to manage, administer, own, take on hire and to carry on the business of running Hotel, Motels, holiday camps, holiday resorts, guest houses, restaurants, banquet halls, caterers, cafes, refreshment rooms and lodging or apartments, housekeepers, swimming pools, health clubs, baths, dressing rooms, importers of aerated and mineral water and other drinks, purveyors, caterers for public amusement generally.

The authorized capital of the Respondent company used to be Rs. 5,00,000 divided into 50,000 equity shares of Rs. 10/- each and the paid-up capital was Rs. 1,05,020/-.

It has been averred by the petitioners in the instant petition that they had advanced an unsecured loan of Rs. 6,90,000/- to the respondent company and the same remains unpaid. The loan advanced has not been denied by the respondents.

It is further submitted that the respondent No. 2 company was set up by Mr. Dwight Garry Gibbs (DevrataDasa) and his wife Mrs. Degesree R. Gibbs (Guruprasad Devi Dasi), both being the petitioners in the instant petition. Both the petitioners changed their birth name i.e. Dwight Gary Gibbs and Degesree R. Gibbs to their devotional names i.e. Devarata Dasa and Guruprasad Devi Dasa respectively in the year 1977 when both got inclined to serve at ISKCON and became a disciple of A. C. Bhakti Vedanta Swami. The copies of affidavit concerning the change of name are placed on record. The petitioners, both US citizens, came to India in the year 1987 and started leading a spiritual and devoted life at ISKCON Vrindavan. The petitioners also purchased land at Vrindavan for providing services to the devotees and also set up a Gaushala.

With the intention of serving the society they also established respondent No. 2 Company and appointed Mr. C.P. Chugh, a taxation advisor, for assistance in the incorporation of the respondent No. 2 company since both of them were US citizens and were unaware of the procedures involved. It is appropriate to mention that the petitioners were the majority shareholders in the respondent No. 2 company since its incorporation. The petitioners invested funds in the respondent No. 2 company and a bank account of the company was also opened with the State Bank of India vide board resolution dated 18.02.1999 [Annexure-P5(colly)]. The petitioners advanced unsecured loans to the respondent No. 2 company and the same is evident from the balance sheets of the company which is attached with the petition [Annexure-P8(colly)]. It is further submitted that the petitioners were appointed as the first directors of the respondent No. 2 company. Form-32 filed with the ROC is placed on record [Annexure-P6(colly)].

It is asserted that in the year 2002 they had gone back to US for the education and marriage of their daughter and came back to India in the year 2005. The stay of the petitioners was short as their Visa had expired and they had to go back to US only to return in 2014. During the period from 2005 to 2014 they were in constant touch with respondent No. 3 & 4 and were assured that the company was working well. The petitioners had put their full trust and faith in the respondent No. 3 & 4 for the smooth functioning of the company in their absence. The petitioners on their return in the year 2014 were shocked to know that the company they had set up did not exist any more as its name was struck off from the register of companies maintained by the ROC.

The petitioners were aghast and taken aback by the acts of respondent No. 3 & 4. The trust and faith that they had reposed in respondent No. 3 & 4 had been completely betrayed and their hopes were shattered. To add to the woes it was also brought to their notice that illegal alterations had been made in the directorship and shareholding of the respondent No. 2, company in their absence and they were no longer directors of the company. It is submitted by the petitioners that no document showing the change in shareholding had been filed with the ROC. The petitioners also came to know that the statutory compliances in respect of the company had not been carried out.

The name of the company was struck off in the year 2011 under the Fast Track Exit mode vide application SRN B23732761 dated 30.10.2011. A copy of the e-form FTE along with certain documents filed by Respondent No. 3 & 4 have been placed on record [Annexure- P9(colly)].

Under Section 560(6) a remedy for revival of the company has been provided and on the grounds given therein a company could be revived and its name is restored on the register of the Registrar of Companies. The aforesaid provision reads as under:-

"560. Power of Registrar to strike defunct company off register.-

(1) Where the Registrar has reasonable cause to believe that a company is not carrying on business or in operation, he shall send to the company by post a letter inquiring whether the company is carrying on business or in operation.

(2) If the Registrar does not within one month of sending the letter receive any answer thereto, he shall, within fourteen days after the expiry of the month, send to the company by post a registered letter referring to the first letter, and stating that no answer thereto has been received and that, if an answer is not received to the second letter within one month from the date thereof, a notice will be published in the Official Gazette with a view to striking the name of the company off the register.

(3) If the Registrar either receives an answer from the company to the effect that it is not carrying on business or in operation, or does not within one month after sending the second letter receive any answer, he may publish in the Official Gazette, and send to the company by registered post, a notice that, at the expiration of three months from the date of that notice, the name of the company mentioned therein will, unless cause is shown to the contrary, be struck off the register and the company will be dissolved.

(4) If, in any case where a company is being wound up, the Registrar has reasonable cause to believe either that no liquidator is acting, or that the affairs of the company have been completely wound up, and any returns required to be made by the liquidator have not been made for a period of six consecutive months, the Registrar shall publish in the Official Gazette and send to the company or the liquidator, if any, a like notice as is provided in sub-section (3).

(5) At the expiry of the time mentioned in the notice referred to in sub-section (3) or (4), the Registrar may, unless cause to the contrary is previously shown by the company, strike its name off the register, and shall publish notice thereof in the Official Gazette; and on the publication in the Official Gazette of this notice, the company shall stand dissolved: Provided that-

(a) the liability, if any, of every director, manager or other officer who was exercising any power or management, and of every member of the company, shall continue and may be enforced as if the company had not been dissolved; and

(b) nothing in this sub-section shall affect the power of the Court to wind up a company the name of which has been struck off the register.

(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."

A perusal of the above cited provision would show that a company having been struck off the register could be revived on an application made by it, or its member or creditor before the expiry of twenty years from the date of publication in the official gazette striking off its name from the register of the Registrar of Companies. According to the provision the Tribunal needs to be satisfied that the company at the time of striking off had been carrying on business or was in operation or otherwise it is just that the company be restored to the register of the Registrar of Companies.

We have gone through the petition and also the reply filed by the Respondents' No. 3 & 4. The respondents in the said reply have denied that they have carried out the acts unlawfully and have raised the objection that the petition is barred by Limitation.

The ROC in its reply has stated that the name of the company was struck off on an application filed by the then directors of the company under the Fast Track Exit Scheme 2011. It is also submitted that the notice of striking off dated 27.01.2012 under section-560(5) was given by the ROC and the same was published in the official gazette on 11.02.2012. Copy of the said notice is annexed along with its reply (Annexure-B). It is further submitted on behalf of ROC that it has no objection if the respondent company is restored but the company must be directed to file the Annual Returns and Balance Sheets for the period 2004 to 2008 and thereafter till date with prescribed filing fee and additional fee as per the provisions of the Companies Act.

In respect of Section 560(6) of the Act the petitioner has made an attempt to show that the operations by the company have been carried and copies if the annual returns, statement of account and balance sheet for different financial years have been placed on record. A perusal of the aforesaid documents would show that the company-respondent No. 2 had been filing its annual returns and balance sheet since its incorporation. The last annual returns and balance sheet till the year 2010 have been filed. The accounts which have been attached with the petition also inspire confidence and can be accepted as evidence of facts that the company was carrying on its operation or it has property.

The case of the petitioners is also supported by the judgment of the Hon'ble Delhi High Court in Shitiz Metals Limited v. Registrar of Companies and Ors. 2013(8) AD (Delhi) 512. Paragraph 5 and 6 of the said judgment reads as under:

On a careful consideration of the matter I am of the view that the petitioner-company has made out a case for the invocation of the powers of this Court under sub-section (6) of section 560 of the Companies Act. The amount of (???)14.80 lakhs was undisputedly advanced by the petitioner-company as loan to the respondent-company. The loan has not been repaid. It was not also disclosed in the balance sheet filed with the ROC. At the stage of examining the application for striking off the name, the ROC adopts a summary procedure and if the necessary documents furnished, he may strike off the name of the company from the register. But that does not mean that he condones any fraud or malpractice. Mr. KS Pradhan has drawn my attention to the provisions of section 628 of the Companies Act, which provides for penalty for false statements made in any return, report, certificate, balance sheet, statement or other document filed by the company for the purposes of any of the provisions of the Act if it is false in any material particular or omits any material fact deliberately and with the knowledge that it is false or material. Imprisonment for a term which may extend to two years is provided. The provisions of sub-section (6) of section 560, are over riding in nature and the action of striking off name of the company from the register is not conclusive. Any creditor can make an appropriate application to the company court before the expiry of 20 years from the publication in the official gazette seeking restoration of the name of the company in the register so that it can pursue its remedies which are available to it under the law for recovery of the amount from the company whose name was struck off.

In the present case, I am satisfied that the name of the company should be restored to the register. I direct accordingly. It would be open to the petitioner-company to take any action, if it is so advised against Nichoklson Export and Import Pvt. Ltd. for recovery of the amount due. The aforesaid company as well as all other persons are restored to the same position, as if the name of the said company has not been struck off.

It has been averred by the petitioners in the instant petition that they had advanced an unsecured loan of Rs. 6,90,000/- to the respondent company and the same remains unpaid. The loan advanced has not been denied by the respondents.

The plea with regard to the petition being barred by limitation cannot be accepted as Section-560(6) clearly mentions that the application can be made by the company, member or creditor before the expiry of twenty years from the date of publication in the Official Gazette. In the present case the notice was published in the year 2012 and the instant application was filed in the year 2016.

As a sequel to the aforesaid discussion it is seen from the documents available on record that the company was carrying on its business and was operative at the time of its name struck off from the register. Besides it is seen that the appeal has been filed within the stipulated period prescribed under Section 560 of the Act and nobody would be prejudiced by the restoration of the company. On the contrary the restoration is clearly in the interest of the company. Since the company is a running enterprise and the petition has also been filed within the stipulated time, the Tribunal clearly has the power to restore the name of the Company. In this factual background and in the interest of justice the petition filed by the Petitioners deserves to be allowed.

Even otherwise there is overwhelming evidence on record to show that the petitioners being US citizens had incorporated the respondent No. 2 company for a noble cause and they were duped and cheated by their own advisors i.e. respondents No. 3 & 4. The bank account statements from 19.02.1999 onwards show that the bank account of the respondent No. 2 company was opened with the State Bank of Patiala under the signature of petitioners and they had invested all the money for setting up the company along with taking care of all the expenses later on. The petitioners have further strengthened their stand by also attaching copies of the Annual Returns and Balance sheets that show them as 95.2% shareholders in the respondent company. Further the petitioner has also placed on record a copy of Annual returns showing that the shareholding of the petitioners was reduced but there is no Board Resolution to that effect placed on record. It is also submitted by the petitioners that when they had returned back to India and came to know about the acts done by the Respondents No. 3 & 4, they filed a police complaint against them before S.P. Mathura (Annexure P13).

Therefore keeping in view these facts we deem it just to restore the company on the register of companies maintained by ROC.

Accordingly, this appeal is allowed. The notice dated 11.02.2012 published in the official gazette in so far as the name of the Appellant Company having been struck off is hereby declared illegal and set aside. The restoration of the company's name to the Register would however be subject to its filing of all outstanding documents with proper filing fees along with additional fees required by law and completion of all formalities, including payment of any late fee or any other charges which are leviable. The name of the Respondent Company shall then stand restored on the Register of the Registrar of Companies, as if the name of the company had not been ever struck off.

The petition is disposed of accordingly.

Let the copy of the order be served to the parties