► Head notes :

Insolvency and Bankruptcy Code, 2016 - Section 248(5) - Company is engaged in the Business of Real Estate Development and Construction and is holding valuable Leasehold Rights for a piece of land and the said Plot has been leased out by Orissa Industrial Infrastructure Development Corporation for establishment of stone crusher - Tripartite Agreement for transfer of Plot was with IDCO - Register of Company/Orissa has struck off the Company’s name from the Register due to defaults in statutory compliances, on account of which, the Registrar of Companies (ROC) has initiated action under Section 248 (5) for the purpose of striking off the name of the Company from its Register - The NCLT has observed that the Company has not filed any Income Tax Returns and the details of the bank transactions with Odisha Gramya Bank indicates that there were no business transactions in the account also the Company was not carrying any business or was on operation and that the documents submitted by the Appellant in compliance of their order shows that the Company has performed some business transactions in the year 2018 after its name was struck off by the ROC in 2017 - NCLAT - Company being in the Real Estate Development and Construction shall file all outstanding statutory documents namely, the financial statements for the financial years and also the annual returns along with the file fees and the additional fees as applicable on the date of the actual filing - Tribunal by exercising of sound discretion, deems it just and proper to restore the name of the Appellant Company, on payment of cost for the laches and omissions on part of the Appellant Company’s management - The restoration of the name of the Company is subject to filing of all the outstanding documents required by law and completion of all statutory formalities including payment of any late fee for the outstanding period and any other charges leviable by ROC and also payment of cost of Rs. 50,000/- to be paid to the ‘Prime Minister’s Relief Fund’ within two weeks - The name of the Company shall stand restored on the Register of ‘Registrar of the Companies’ as if the name of the Company was not struck off in accordance with Section 248 (5) - Appeal allowed

► Name of Judge : Justice Anant Bijay Singh Member (Judicial) & Ms. Shreesha Merla Member (Technical)

► Order:

 Ms. Shreesha Merla

Challenged in this Appeal is to the Impugned Order dated 10.12.2019 passed by the Adjudicating Authority (National Company Law  Tribunal, Cuttack Bench) in CP (Appeal)  No. 21/CTB/2019, by which Order  National Company Law Tribunal (NCLT) has dismissed the Appeal preferred by the Company M/s O.M. Builders and Developers Pvt. Ltd., consequent to which Order the name of the Company was struck off from the Register.

2.   Submissions of the Ld. Counsel appearing on behalf of the Appellant.

• • It is submitted by the Learned Counsel for the Appellant that Register of Company/Orissa has struck off the Company’s name from the Register due to defaults in statutory compliances, namely, failure to file financial statements and annual returns, which were due from the financial year ending 31.03.2014 onwards, on account of which, the Registrar of Companies (ROC) has initiated action under Section 248 (5) of the Companies Act, 2013 for the purpose of striking off the name of the Company from its Register.
  • Learned Counsel for the Appellant drew our attention to the copy of Certificate of Incorporation, Memorandum  of  Article  of  Association,  copy of the Company Master Data, the Financial Statements,  the  Banks Statements and the Board Resolutions.
  • The NCLT has observed that the Company has not filed any Income Tax Returns; that the details of the bank transactions with Odisha Gramya Bank indicates that there were no business transactions in the account; that the Company was not a going concern; that the Company was not carrying any business or was on operation and that the documents submitted by the Appellant in compliance of their order shows that the Company has performed some business transactions in the year 2018 after its name was struck off by the ROC in 2017.
  • Learned Counsel for the Appellant submitted that the Company is engaged in the Business of Real Estate Development and Construction and is holding valuable Leasehold Rights for a piece of land situated at IDCO, Plot No. 39 & 40, admeasuring 2.05 acres, Industrial Estate, Bhagabanpur, Dist. Khurda, Odisha during the period 1st  April 2013 to 31st March, 2016 and the said Plot No. 39 has been leased out by Orissa Industrial Infrastructure Development Corporation (IDCO) for a period of 90 years effective from 11.05.1983 up to 10.05.2073 and Plot No. 40 for a period of 90 years effective from 31.05.1983 up to 30.05.2073 for establishment of stone crusher. It is further submitted that a Tripartite Agreement for transfer of Plot No. 39 on 29.04.1997 with IDCO was and drew our attention to the Tripartite Agreement filed before us with respect to both the Plot Nos. 39 & 40.
  • It is seen from the record that the Company continues to pay the lease rent and has paid lease rent of Rs. 49,839/- for land leased out by IDCO for Plot Nos. 39 & 40 as seen from the payment slip dated 07.11.2016 issued by Axis Bank and money receipt dated 14.11.2016  issued  by IDCO. The said payments include arrears  of  Rs.  33,979/-. It  is  seen from the record that the Company has convened its Board meetings and audited its financial statements after the year 2016. On a query from the Bench, Learned Counsel for the Appellant submitted that the Balance Sheet for the Financial Years 2013 to 2016 could not be filed before the ROC on account of lack of knowledge and lack of funds but, the said financial statements were filed as a part of the Company Petition before the NCLT. The Company had not applied under Section 455 of the Companies Act, 2013 to take benefit of being a Dormant Company. It is seen from the record that the Audited  Balance Sheet for the Financial year  2018-2019 were  filed   before   the   NCLT.   A   secured   loan   of Rs. 10,79,988/- from LIC Housing Finance Ltd. and sundry creditors of Rs. 5,88,907/- is seen from the financial statements. It is an admitted fact that the Company had developed ‘Jhunjhunwala Complex’  in  the year 1994 but could not execute the sale deeds in favour of the buyers/customers due to pendency of litigation between the Jhunjhunwala family members over the said land. The project could not be completed which resulted in huge financial loss. The family members of the Jhunjhunwala family have been embroiled in the long drawn litigation for partition of family properties which at this stage is pending before the Hon’ble Supreme Court.

3.  Submissions of the Ld. Counsel appearing on behalf of the Respondent

• Learned Counsel for the Respondent Mr. Kamal Kant Jha submits that a show cause notice was issued under Section 248 (1) (c) of the Companies Act, 2013 to the Company, enquiring whether the said Company was carrying on any business or was in operation, but no reply was received.
• It was published in  the  Official  Gazzette  and  Newspaper  for  information of the general public regarding striking  off the name of the  Company in Form No. STK-5/5A. After the expiry of the time line  mentioned  in  the above notice, the  name  of  the  Company  was  struck  off  on  22.07.2017 and the Company stood dissolved from 21.06.2017 onwards.
• It is submitted by the Learned Counsel for the Respondent that having regard to the facts of this case, if the Tribunal is inclined to give an opportunity to the Appellant herein a fine ought to be paid in accordance with law.
• In Re Priceland Ltd. Waltham Foresh London Borough Council  v Registrar of Companies and Ors. (1997) 1 BCLC 467, 476, 477 (Ch. D) (Companies Court), it is observed and held as under:

".....In other words, the exercise of discretion  only arises after the court has been satisfied that (a) the Company was at the time of striking off carrying on business or in operation, or (b) otherwise that it is just that the Company be restored. The first of these amounts to the court being satisfied that the registrars reasonable beliefs which were the basis for the original order striking the Company off, were not in fact correct. The second means that,  prima facie, the court has been persuaded that it is just to restore. In either case it seems to me that, absent special circumstances, restoration should follow. Exercising the discretion against restoration should be the exception, not the rule," (Page 476) Once the court has acquired jurisdiction on the basis that the new applicants interests make restoration just it would be harsh indeed to refuse the relief sought because some other third party may be inconvenienced by it. These considerations lead me to the view that the court should be very wary of refusing restoration so as to penalize a particular applicant or in a possibly futile attempt to safeguard the special interests of a single or limited class of affected persons. It would need a strong case to justify a refusal on these grounds.......

(Page 477) (emphasis supplied)."

Assessment:

4.    The material on record shows that Lease  Hold  Rights  of  the aforementioned property is still prevalent, the financial statements upto 2018- 19 has been filed along with the Petition before the NCLT, the loan taken from LIC Housing Finance Ltd. and the amount of the sundry creditors.

5.    We are of the considered view that the Company being in the Real Estate Development and Construction and having regard to the fact that the Company in this Appeal has come out with the plea that in the event of revival of the Company and the restoration of name of the Company in the Register maintained by the ROC, it shall file all outstanding  statutory  documents namely, the financial statements for the financial years and also the annual returns along with the file fees and the additional fees as applicable on the date of the actual filing, on a careful consideration of the contentions advanced by both sides, this Tribunal by exercising of sound discretion, deems it just and proper to restore the name of the Appellant Company, however, on payment of cost of Rs. 50,000/- for the laches and omissions on part of the Appellant Company’s management.

6.    Before parting of the case this Tribunal  observes  that  the  restoration  of the name of the Company is subject to filing of all the outstanding documents required by law and  completion  of  all  statutory  formalities  including  payment of any late fee for the outstanding period and any other charges leviable by ROC and also payment of cost of Rs. 50,000/- to be paid to  the  ‘Prime Minister’s Relief Fund’ within two weeks from today and produce the said receipt for verification before the Respondent.

7.   Resultantly, the name of the Company shall stand restored on  the Register of ‘Registrar of the Companies’ as if the name of the Company was not struck off in accordance with Section 248 (5) of the Companies Act, 2013.

8.  Hence, this Appeal is allowed with the aforenoted observations.

► Summery :

NCLAT, New Delhi - The restoration of the name of the Company is subject to filing of all the outstanding documents required by law and completion of all statutory formalities including payment of any late fee for the outstanding period and any other charges leviable by ROC and also payment of cost of Rs. 50,000/- to be paid to the ‘Prime Minister’s Relief Fund’ within two weeks. The name of the Company shall stand restored on the Register of ‘Registrar of the Companies’ as if the name of the Company was not struck off in accordance with Section 248 (5)