Restoration costs under Rule 87A(4)(c) must be proportionate to costs actually occasioned by the proceedings.

Ganton Projects Private Limited, originally incorporated as Ganton Aviation Private Limited on 7 September 2011, was subsequently renamed. Its name was struck off the Register of Companies on 7 June 2017 for persistent statutory non-compliance, including failure to file financial statements, annual returns and income-tax returns from incorporation.

The company contended that it possessed rights in immovable property and that execution proceedings arising from a Delhi High Court settlement involving a liability of ₹1 crore were pending against it; therefore, restoration was necessary to enable it to participate in the litigation.

The NCLT restored the company’s name under Section 252(3) of the Companies Act, 2013, but directed payment of exemplary costs of ₹10,00,000 to the Registrar of Companies because of the company’s prolonged statutory defaults.

The company appealed to the NCLAT, challenging only the quantum and legality of the costs.

Whether the NCLT was justified in imposing costs while restoring the company’s name under Section 252(3) of the Companies Act, 2013 read with Rule 87A(4)(c) of the NCLT Rules, 2016?

Whether the costs of ₹10,00,000 imposed on the company were proportionate and supported by a determination of the actual costs occasioned by the restoration proceedings?

Whether the company’s name was liable to be restored to enable it to defend and participate in pending execution proceedings?

The Tribunal applied Section 252(3) of the Companies Act, 2013, which empowers the Tribunal to restore a company’s name where restoration is just, together with Rule 87A(4) of the NCLT Rules, 2016, particularly clause (c), which permits the Tribunal, while ordering restoration, to direct the applicant to pay the Registrar’s costs incurred in or occasioned by the appeal or application, unless otherwise directed.

The Tribunal held that such costs must bear a rational and proportionate relationship to the costs actually occasioned by the proceedings and cannot be imposed arbitrarily or merely as an exemplary penalty.

It also applied the principle that restoration is ordinarily appropriate where litigation is pending by or against the struck-off company and restoration is necessary for effective adjudication of that litigation.

The NCLAT accepted that the company’s failure to file financial statements, annual returns and income-tax returns since incorporation constituted a serious statutory lapse; the plea of inadvertence or ignorance of law was rejected.

Nevertheless, the pending execution proceedings arising from the Delhi High Court’s order and the company’s status as a judgment debtor justified restoration so that the proceedings could continue effectively.

Although Rule 87A(4)(c) authorised an order for costs, the NCLT had not undertaken any determination or computation of the actual costs incurred in the restoration proceedings.

The imposition of ₹10,00,000 was therefore found disproportionate, lacking a rational basis and unsupported by adequate reasoning.

The NCLAT consequently interfered only with the quantum of costs, while upholding the restoration order.

The NCLAT upheld restoration of Ganton Projects Private Limited’s name in the Register of Companies, holding that restoration was necessary because execution proceedings were pending against the company.

However, the cost imposed by the NCLT was reduced from ₹10,00,000 to ₹5,00,000 as being disproportionate and without a rational determination of actual costs.

Since ₹2,00,000 had already been deposited pursuant to the interim order dated 21 May 2026, the company was directed to deposit the balance ₹3,00,000.

All interlocutory applications were closed.