Facts
The Appellant, a shareholder of Thirupur Sri Mahaganapathy Apparels Private Limited, appealed against an order of the National Company Law Tribunal (NCLT) which rejected an application filed under Section 252 of the Companies Act, 2013, for the restoration of the company’s name
Source reference: p. 1-2The company had been struck off by the Registrar of Companies (ROC) on 29.03.2012 under the provisions of the Companies Act
Source reference: p. 7, 8The Appellant contended that the company was active, had obtained credit facilities from the United Bank of India, and possessed immovable assets purchased in 2014
Source reference: p. 3The NCLT rejected the restoration on the grounds that the company failed to prove it was "carrying on business" or "in operation" at the time of being struck off and had not provided justifiable reasons for restoration under Section 252(3)
Source reference: p. 4-5Issues
1. Whether the parameters for restoration under Section 252(3) of the Companies Act, 2013, were correctly applied by the NCLT in rejecting the revival of the company
Source reference: p. 1-2, 42. Whether the company was in an operational condition and active in business at the time its name was struck off from the Register
Source reference: p. 6Law Applied
Section 252(3) of the Companies Act, 2013, which empowers the Tribunal to restore a company's name if it was carrying on business, was in operation, or if it is otherwise "just" to do so
Source reference: p. 4Section 248 of the 2013 Act (and the corresponding Section 560 of the 1956 Act) regarding the ROC's power to strike off companies
Source reference: p. 2, 5Judicial principle established in CA (AT) (CH) No. 66 / 2023, which posits that the court's endeavor should be to support the revival of a company rather than its dissolution
Source reference: p. 7-8Reasoning
The NCLAT found that the NCLT had misinterpreted the company's operational status.
Source reference: p. 6The NCLT had dismissed the Appellant's balance sheets—which purportedly showed business activity—merely because they were not endorsed by a Chartered Accountant
Source reference: p. 6The Appellate Tribunal characterized the NCLT’s findings as "vague" and a "misinterpretation" of the facts, noting that the company possessed assets and was involved in settlement proposals with creditors, which evidenced functional existence
Source reference: p. 3, 7The NCLAT further observed that the ROC’s objections regarding the company’s inactivity were in contradiction to the evidence provided by the Appellant
Source reference: p. 7It emphasized that technicalities, such as the lack of a CA's endorsement on balance sheets, should not summarily result in the denial of restoration if other evidence suggests the company was operational
Source reference: p. 6-7Holding
The NCLAT quashed the impugned order and remitted the matter back to the NCLT for fresh consideration
The Tribunal held that judicial efforts should lean toward the revival of a company
Source reference: p. 7The NCLT was directed to reconsider the application for restoration after properly evaluating the documents on record to determine if the company was in operation as of the date it was struck off
Source reference: p. 8Original Court PDF
V SundarvsThe Registrar Of Companies
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