Striking off name of company us 560-ROC order set aside by Delhi High Court holding that object of section 560(6) is to give a chance to revive the company

Striking off name of company us 560-ROC order set aside 

Delhi High Court restored the name of the company by setting aside the order of ROC striking off the name of the company u/s 560 of the Companies Act, 1956 holding 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 and it was possible that notice u/s 560 was not sent to the registered office of the company.

Case Law Details:
Co. Pet. 787/2015
Bandhu Systematix Private Limited (Petitioner) vs. Registrar of Companies (Respondent)
Date of Judgment: 30/05/2016
Coram: Justice Sudershan Kumar Mishra

Important Judgments Cited:
Purushottamdass and Anr. (Bulakidas Mohta Co. P. Ltd.) v. Registrar of Companies, Maharashtra, & Ors., (1986) 60 Comp Cas 154 (Bom), Pancham Hotels Pvt. Ltd. v. Registrar of Companies, CP No. 554/2014; M/s Medtech Pharma (India) Pvt. Ltd. v. Registrar of Companies, CP No. 241/ 2009; M/s Santaclaus Toys Pvt. Ltd. v. Registrar Of Companies, CP 271/2009; M/s Deepsone Non-Ferrous Rolling Mills Pvt. Ltd. v. Registrar of Companies, NCT of Delhi and Haryana, CP No. 285/2009; M/s Kakku E and P Control Pvt. Ltd. & Anr. v. The Registrar of Companies, NCT of Delhi and Haryana, CP No. 409/2008 and M/s Sohal Agencies Pvt. Ltd. v. Registrar of Companies, NCT of Delhi and Haryana, CP No. 297/2009.

Brief Facts of the Case:
The petition was filed under Section 560(6) of the Companies Act, 1956 praying restoration of company name in the register of companies maintained by the Registrar of Companies (ROC) . The petitioner was incorporated with the ROC , NCT of Delhi & Haryana in 1984-85. The ROC initiated the proceedings u/s 560 of the Companies Act 1956 to strike the name of the petitioner company off the register treating it a defunct company due to defaults in statutory compliances, namely, non-filing of Annual Returns from 2000 to 2015, and Balance Sheets from 1998 to 2015.

Contentions of the Petitioner Company:
(1) The company did not receive any notices/letters/show-cause notices as required u/s 560(1).
(2) The company was not afforded any opportunity of being heard before action u/s 560(5).
(3) During the inspection/search of the official records of the company carried out by its authorised representative, no documents pertaining to Section 560 were found.
(4) There were no reasons/evidences with the ROC to form a conclusion that the company was not carrying on its business.
(5)  At no point of time the company stopped carrying on the business or stopped its business operations which was evidenced by copies of its annual accounts for the period 2000 to 2014 and the income tax returns for the year 2004 to 2014.
(6) the accounts of the company were prepared and audited every year.
(7) The directors of the company signed the annual accounts but because of lack of legal knowledge, inadvertence and unawareness did not comlete annual filing with ROC.
(8) None of the directors were aware that documents have not been filed by the accountant responsibility for the same.

Contentions of the Respondent:
The ROC submitted that it had no objection to the restoration of the company’s name subject to the petitioner filing annual returns from 2000 to 2015 and balance sheets as from 1998 to 2015, and other requisite documents along with filing fee and additional fee, as applicable.

Important Excerpts from High Court Judgment:

In Purushottamdass and Anr. (BulakidasMohta Co. P. Ltd.) v. Registrar of Companies, Maharashtra, &Ors., (1986) 60 Comp Cas 154 (Bom), the Bombay High Court has held, inter alia, that;

“18. 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.”

Under the facts and circumstances, it is possible that notice in respect of action under S.560 was not sent to the registered office of the company. Consequently, the condition precedent for the initiation of proceedings to strike off the name of petitioner from the Register maintained by the respondent was not satisfied. Looking to the fact that the petitioner is stated to be a running company; and that it has filed this petition within the stipulated limitation period, and to the decision of the Bombay High Court in Purushottamdass and Anr. (BulakidasMohta Co. P. Ltd.) v. Registrar of Companies, Maharashtra, & Ors. (supra); it is only proper that the impugned order of the respondent dated 23.06.2007, which struck off the name of the petitioner from the Register of Companies, be set aside. At the same time, however, there is no gainsaying the fact that a greater degree of care was certainly required from the petitioner company in ensuring statutory compliances. Looking to the fact that annual returns and balance sheets were not filed for almost seventeen years, the primary responsibility for ensuring that proper returns and other statutory documents are filed, in terms of the statute and the rules, remains that of the management. 

Striking off name of company us 560-ROC order set aside

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