22 April 2024


Judgments

NATIONAL COMPANY LAW APPELLATE TRIBUNAL

Alliance Commodities Private Limited Vs. Office of Registrar of Companies-West Bengal

MANU/NL/0284/2019

09.07.2019

Company

Restoration of a Company, whose name has been struck off from the Register of Companies is possible only on satisfaction of Tribunal

Appellant is aggrieved of dismissal of its appeal preferred under Section 252 (3) of the Companies Act, 2013 against striking off of its name by the Respondent - Registrar of Companies, (ROC). The impugned order was passed by the National Company Law Tribunal, in exercise of its appellate jurisdiction after coming to conclusion that, the Appellant Company was not in operation and was not doing any business on the date of striking off of the name of the company.

The Tribunal was further influenced by the fact that the Appellant Company appeared to have engaged in advancing inter-corporate loans in violation of Section 186(1) of the Companies Act, 2013. Aggrieved by the order of Tribunal, the Appellant seeks reversal of its order passed in appeal as also setting aside of the order of striking off of its name by Respondent primarily on the ground that, the Appellant Company had assets and had filed all its income tax returns which has been ignored by the Tribunal which landed in error in holding that the Appellant Company was a Shell Company and had violated provisions of law in giving loans and advances. The issue before the Tribunal was whether the Appellant Company could justifiably be restored.

Section 252 (3) of the Companies Act, 2013 empowers the Tribunal to order restoration of a Company, whose name has been struck off from the Register of Companies, if such company, any member or creditor or workman thereof feeling aggrieved by such striking off applies before the Tribunal seeking restoration of the struck off company to the Register of Companies before the expiry of twenty years from the publication in Official Gazette of notice under Section 248(5). The exercise of such power is properly regulated and depends upon satisfaction of the Tribunal that, the Company at the time of its name being struck off was carrying on business or in operation or otherwise it is 'just' that the name of company be restored.

The term "or otherwise" has been judiciously used by the legislature to arm the Tribunal to order restoration of a struck off company within the permissible time limit to take care of situations where it would be just and fair to restore company in the interest of company and other stakeholders. Such instances can be innumerable. However, this term "or otherwise" cannot be interpreted in a manner that makes room for arbitrary exercise of power by the Tribunal when there is specific finding that the Company has not been in operation or has not been carrying on business in consonance with the objects of the Company.

A Shell Company or a Company having assets but advancing loans to sister concerns or corporate persons for siphoning of the funds, evading tax or indulging in unlawful business or not abiding by the statutory compliances cannot be allowed to invoke this expression "or otherwise" which would be a travesty of justice besides defeating the very object of the Company. Such course would neither be just nor warranted.

The Appellant has failed to make out a just ground warranting interference with the impugned order which is neither shown to be legally infirm nor are the findings recorded therein shown to be erroneous, much less perverse. Being devoid of merit the appeal is dismissed.

Tags : Name striking off Validity

Share :