REVIVAL OF COMPANIES UNDER SECTION 252 OF THE COMPANIES ACT, 2013

REVIVAL OF COMPANIES under Section 252 of the Companies Act, 2013

 ~ By CS Manish Gupta, manish@rmgcs.com

The Registrar of Companies (ROC) all across India have initiated the process to close all those Companies which are not complying with the provisions of the Companies Act, 2013 particularly w.r.t filing of Annual Returns and Balance Sheet.

As per the provisions of section 248(1) of Companies Act, 2013 w.r.t power of Registrar to remove name of the company from register of companies, all ROC’s across India have issued show cause notices to the Companies falling u/s 248(1)(c). An opportunity was given to all such companies & their directors to respond to the said notice within 30 days and ROC was empowered to take action against the Company and its Directors in case of any failure to comply.

ROC office has removed the name / struck off almost 100,000 (One Lakh) Companies from its record. List of Companies struck off from record’s of ROC are available on MCA portal.

Consequently all such Companies shall stand dissolved and it shall on and from the date mentioned in the notice by the concerned Registrar of Companies, Ministry of Corporate Affairs, Government of India shall cease to operate as a Company (i.e. it is not a legal entity any more) and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date.

As the name of all such companies are available in public domain, following can be the possible Consequences:

• Bank’s might freeze all banking transaction with immediate effect for all such Companies. 
• The working companies and / or companies having some immovable assets, will be the most impacted.
• All existing Directors of these Companies shall continue to be liable for all liabilities under Section 248 (7) of the Companies Act, 2013.

Revival of Companies – Legal Background

Provisions with regard to the Revival of Companies or restoration of Name of Companies are provided under Section 252 of the Companies Act, 2013 read with the National Company Law Tribunal (Amendment) Rules, 2017. The relevant extract of the provisions are as under:

“Section 252(3): If a Company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section(5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.”

Procedure to be followed for filing an application with NCLT:

Detailed procedure of filing an application for restoration of Company, which has been struck off from the records of the ROC, has been provided in Section 252(3) read with rule 87A of National Company Law Tribunal (Amendment) Rules, 2017. These Rules were notified on 05-07-2017. The procedure which is required to be followed is as under:

1. According to the provisions of Section 252(3) of Companies Act, 2013, Company, any member, creditor or workmen can file applicationin NCLT for restoration of name of Company in the records of the ROC.

2. An application / appeal shall be filed in Form No. NCLT – 9 (on Legal Paper) with NCLT Bench having jurisdiction as per the Registered Office Address of the Company.

3. Applicant has to serve an advance copy of the application on the Registrar of Companies (Speed Post + Physical Submission through a covering letter as well) and on such other persons as the Tribunal may direct, not less than 14 days before the date fixed for hearing of the application.

4. An application must be accompanied with the following documents:

1. a) Detailed reasons for such restoration along with the evidence and proofs;
2. b) Affidavit verifying the petition, duly notorized;
3. c) Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi”for payment of fee of Rs. 1,000/- (Rupees One Thousand Only);
4. d) Copy of MOA & AOA;
5. e) Copy of Notice as issued by the concerned ROC for striking off of the Company;
6. f) Copy of Board Resolution for restoration of Name, Filing of an Application with NCLT, Authorisation in favour of any director and appointment of Professional to appear on behalf of the Company;
7. g) Memorandum of appearance with copy of the Board Resolution or the vakalatnama, as the case may be;
8. h) Latest audited financials;
9. i) Proof of service of application on ROC;
10. i) Any other documents in support of the case.

5. Upon hearing the appeal or the application or any adjourned hearing thereof, the Tribunal may pass appropriate order, as it deems fit. Where the Tribunal makes an order restoring the name of a company in the register of companies, the order shall direct that-

1. a) the appellant or applicant shall deliver a certified copy to the Registrar of Companies within thirty days from the date of the order;
2. b) on such delivery, the Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette;
3. c) the appellant or applicant do pay to the Registrar of Companies his costs of, and occasioned by, the appeal or application, unless the Tribunal directs otherwise; and
4. d) the company shall file pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013 and rules made thereunder within such time as may be directed by the Tribunal.

6. On getting the order for Restoration of the Name, Company shall file the copy of order with the concerned Registrar of Companies with in a period of 30 days from the date of the order in Form INC – 28.

7. The Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette after restoration of the name of the Company in his records.

8. As per the directions of the NCLT in Point 5(d), the company shall file all pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013.

In the recent past NCLT has decided various cases filed by the Companies under the provisions of erstwhile Section 560(6) of the Companies Act, 1956. Hon’ble NCLT Benches in some of the cases have granted approval of restoration of name, have rejected few applications and have also imposed cost for restoration in some of the cases. Sharing citation with gist of the decisions given by NCLT benches in this regard:

1. R.A.P. Garments Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 24^thApril, 2017 C.P. No. 461/2014 –NCLT Special Bench, New Delhi.     

The Hon’ble tribunal states that the company is a running company and that it will be seriously prejudiced if not restored in the registrar of Registrar of Companies, the petition is allowed subject to certain conditions, i.e the petitioner company shall file all pending returns in 30 days of restoration and to Rs. 5 Lakh to ROC to defray costs and expenses.

2. Hamilton Estates Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 19th April, 2017 C.P. No. 56/2016 – Before NCLT, New Delhi

The Hon’ble tribunal states that the respondent (ROC) has failed to satisfy the Bench that all prerequisite steps as provided in Section 560(1), (2) & (3) have been taken before striking off the name of the Company. The name of the Company allowed to be restored in the registrar of Registrar of Companies, the petition is allowed subject to payment of Rs. 25,000/- to Prime Minister Relief Fund. 

3. M. G. Power System Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 18th May, 2017 C.P. No. 47/2015 – Before NCLT, New Delhi

The Hon’ble NCLT has allowed the petition, even ROC has contended that the petitioner company has not filed its statutory returns and other documents since incorporation. Thus, its giving rise to the reasonable belief that the company was not operational.  The Hon’ble NCLT states that it would be just and proper to order restoration of the name of Company in the register of the ROC The petitioner company was directed to file all pending returns in 30 days of restoration and to deposit Rs. 25,000/-  to Prime Minister Relief Fund.

4. Akash Ganga Builders Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 30th June, 2017 C.P. No. 935/2015 – Before NCLT, Principal Bench     

The Hon’ble Principal Bench of NCLT has dismissed the petition on the ground that the name of the Company was struck off because the Company had not raised its capital upto Rs. 1 Lakh as provided in the provisions of the Companies Act, 2013, however the Company has prayed that it is because of non filing of returns. Petition dismissed with the cost of Rs. 10,000/- to be paid to the Central Government.

5. Arvind Jain, Rajesh Jain, Rajnish Jain vs. Akarshan Hotel Pvt. Ltd & Registrar Of Companies, NCT of Delhi & Haryana Dated 27th June, 2017 C.P. No. 636/2016 – Before NCLT, Principal Bench

The present application for restoration was filed by the Directors & Shareholders of the Company who have brought this Company in the year 1997, however as per the last filed returns which was for the year 1991, there were different directors and shareholders and after that no document is being filed with the ROC. The petition was dismissed with a cost of Rs. 10,000/- on the ground that applicant failed to prove that they are the directors and shareholders of the Company.

Conclusion

The Companies Act provides exhaustive measures for the revival of companies and the NCLT is vested with powers to take all necessary measures for the revival of companies. One has to see the grounds, facts and to collect certain documents before filing any such application or appeal for revival of Company. As the time limit prescribed under the provisions for making an application is 20 years, applicant can choose to file the said application after arranging all such documents. It is always better to delay then getting the same rejected on ground of some discrepancy in the application. Although, it will be tough for the working companies whose name are being struck off by the ROC but I am personally looking at it as an opportunity for our Practising Company Secretaries, as they will be getting a fair opportunity to appear and present their cases before the various benches of NCLT.