Maa Tapeshwari Construction (P.) Ltd. vs Union of India (UOI)

Remesh Kumar Datta, J.—Heard Learned Counsel for the petitioner-company, learned Central Government Counsel and Learned Counsel for the Registrar of Companies (''RoC'').

The application has been filed for restoration of the name of the petitioner-company in the register of companies by setting aside the order dated 21-6-2007 passed by the RoC, Bihar and notified in the Gazette of India, vide Gazette Notification No. 27, dated 7-6-2007.

It is stated that the aforesaid company was incorporated on 14-2-2003 as a private limited company having an authorised capital of Rs. 3 lakh divided into 30 thousand equity shares of Rs. 10 each and paid-up capital of the company was Rs. 1,10,000. The company was formed for carrying on the business of all types of civil constructions. The company was also registered as one of the contractors with the Public Health Engineering Department and the Irrigation Department of the Government of Bihar and it is stated that it was getting contract from the said two departments.

However, it is stated that inadvertently the balance sheet and annual returns of the company were not filed with the RoC. It is further pointed out that the company is not a large one and is essentially a husband-wife operation being located in a remote place, namely, Deo in the district of Aurangabad and, thus, when the directors of the company went out of station, which was quite frequent, in connection with the business of the company, the letters were either not received or misplaced. It is the stand of the company that immediately after its incorporation the company started getting Government works and was having sufficient turn over. The same being of Rs. 23,44,461 in the financial year ending on 31-3-2005, Rs. 15,76,385 in the financial year ending on 31-3-2006, Rs. 33,81,408 in the financial year ending on 31-3-2007 and Rs. 1,92,083 in the financial year ending on 31-3-2008. It is submitted that the said turnover is noted in the balance sheets and profit and loss accounts of the company which have been duly audited by a chartered accountant. It is submitted that the company was always in business and carrying on substantial business activities and has substantial movable and immovable assets which is clear from the aforesaid financial statements. However, when the director visited the office of the RoC in June 2008, he learnt that the name of the company was struck off from the register of companies by the impugned order dated 31-6-2007 published in the Gazette dated 7-7-2007.

In the counter-affidavit, supplementary counter-affidavit and additional counter-affidavit filed on behalf of the RoC, it is stated that the name of the petitioner-company has been struck off from the register of companies after duly complying with the provisions of Section 560 of the Companies Act, 1956 (''the Act'') by issuing letter, registered letter and thereafter publishing the show cause in the Official Gazette and finally striking off the name of the company. It is stated that the same was done because from the very inception, after incorporation, the company never filed annual returns and other documents as required under the Act. Reference is also made to a Circular issued by the Government of India in the Department of Company Affairs that if in such cases for three consecutive years the statutory returns are not submitted, then steps may be taken for striking off the name of the company concerned. It is submitted that not only the petitioner-company did not file the statutory returns but even the letters and notices sent by the RoC under the provisions of Section 560 of the Act have remained unanswered which ultimately led to the conclusion that the company in default is not carrying on any business and, accordingly, the said order was passed.

Learned Counsel for the petitioner-company submits that from the facts stated in the application it is clear that the company has always been carrying on its business and only due to the negligence of the staff entrusted with the work of filing of returns, the proper compliance of the Act was not made. It is, thus, submitted that it is not a case where the company was actually defunct rather it is a case where the necessary returns were not filed before the Registrar. It is also contended by Learned Counsel for the petitioner that the RoC has not exercised his independent mind in the matter but has acted purely on the basis of direction issued by the Central Government which is not permissible since the Registrar is a statutory authority and he has to exercise his statutory powers by applying his independent mind in the matter. Learned Counsel for the RoC countered the same by submitting that while cognisance was taken of the letter of the Central Government, the Registrar has not acted blindly in the matter rather he has complied with the entire formalities step by step as provided in Section 560 of the Act before striking off the name of the company from the register of companies. It is the petitioner which is to be blamed for not having bothered to even reply to the letters and notices issued by the Registrar. However, it is stated that the RoC does not have any objection if the name of the company is ordered to be restored in the register of companies provided the petitioner files all the statutory returns along with other forms within thirty days along with the fees and additional fees as per the provisions of the Act and complying with the other statutory formalities.

On a consideration of the aforesaid facts and circumstances and the submissions made by the parties, this Court is of the view that considering the financial statements of the company it is evident that the company was not defunct and had not become defunct at the time when its name was struck off from the register of companies rather it was carrying on its business activities which had resulted in substantial turnover from year-to-year subject to the fluctuations arising out of the receipt or non-receipt of Government contract which is its main commercial activity. In the said circumstances, it is a fit case where the name of the company ought to be restored to the register of companies Learned Counsel for the petitioner has also submitted that the company and its directors undertake to file all the outstanding statutory returns and forms within a period of two months upon restoration of the name of the company in the register of companies along with filing of fees and additional fees as per the requirements of the Act and the Rules. In view of the aforesaid circumstances, it is directed that the name of the petitioner-company Maa Tapeshwari Construction (P.) Ltd. shall stand restored to the register of companies. The company and its directors are directed to file all the statutory returns due since incorporation of the company within a period of two months from today along with all the fees and additional fees as required by the provisions of the Act and the Rules. It is further directed that rights of action existing against the petitioner-company on 7-7-2007 shall not be barred by the passage of time between the said date and the date of its restoration to the Register. The application is, accordingly, allowed with the aforesaid directions.