Company name struck off by ROC us 560 restored by Delhi High Court for want of notice u/s 560(1)(2) and non opportunity of being heard u/s 560(5) observing that the object of section 560(6) of the Companies Act was to give a chance to the company.
ABCAUS Case Law Citation:
979 2016 (07) HC
Date/Month of Judgment: July 2016
Important Judgments Cited:
Purushottamdass and Anr. (Bulakidas Mohta Co. P. Ltd.) v. Registrar of Companies, Maharashtra, & Ors., (1986) 60 Comp Cas 154 (Bom)
Brief Facts of the Case:
This present writ petition was filed by the company under Section 560(6) of the Companies Act, 1956 praying for restoration of its name in the register of companies maintained by the Registrar of Companies (ROC) NCT of Delhi & Haryana.
The petitioner company was incorporated as a company limited by shares on 23.04.1986. The ROC initiated the proceedings under Section 560 of the Companies Act, 1956 to strike the name of the company off the register due to defaults in statutory compliances related to non-filing of Annual Returns and Balance Sheets after 2002.
Contentions of the Company:
The case of the petitioner company was that it became aware of the fact that the its name had been struck off under section 560(5) only recently from portal of Ministry of Corporate affairs and that it had not received any notices/letters/show-cause notices as required under Section 560(1) and (2) of the Companies Act, 1956, nor was it afforded any opportunity of being heard before action under Section 560(5). The company also contested no documents pertaining to Section 560 were found on the records at MCA website upon inspection of official records . It was also submitted that that there was no documents evidencing the basis on which the ROC came to the conclusion that the petitioner-company was not carrying on its business was either provided to the petitioner or was available on the records maintained with the ROC. Further, it was submitted by the company that it had been trying to maintain all its requisite documents including Annual Returns and Balance Sheets as per the provisions of the companies act, as applicable to it but owing to the inadvertent and unavoidable conditions, could not file with ROC in time.
Contentions of the ROC:
It was submitted that procedure u/s 560 was duly followed, with notices/letters as required u/s 560(1) and 560(3) were sent at the address available with the registrar as the registered office address of the company. It was further submitted that notice under Section 560(5) for striking off the name of the petitioner from the register maintained by the ROC was given and the same was published in the Official Gazette mentioning the company’s name.
Observations made by High Court:
The High Court observed that Bombay High Court has held that the object of section 560(6) of the Companies Act was to give a chance to the company, its members and creditors to revive the company which had been struck off by the RoC and to gave them an opportunity of carrying on the business only after the company judge is satisfied that such restoration was necessary in the interests of justice.
The Court opined that it was possible that the ROC had sent notices u/s 560 to the company on the old address of its registered office and the same might not have been received by the company. Consequently, the condition precedent for the initiation of proceedings to strike off the name of petitioner from the Register maintained by the ROC was not satisfied. The Court also observed the fact that the company was stated to be a running company carrying on its business since its incorporation and certified copy of its annual returns and balance sheets from the year 2003 had been placed before the Court.
However, the Court emphasized that a greater degree of care was certainly required from the company in ensuring statutory compliances. The primary responsibility for ensuring that proper returns and other statutory documents were filed, in terms of the statute and the rules, remains that of the management.
The Court granted liberty to the ROC to proceed with penal action against the company if so advised, on account of the petitioner’s alleged default in compliance with S.162 of the Companies Act, 1956.