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M/S Auto Kashyap India Private Limited Vs Registrar Of Companies (2010) : Striking Off Proceedings Cannot Be Initiated For Statutory Non-Compliance

Ashwitaa Shetty ,
  13 October 2021       Share Bookmark

Court :
Delhi High Court
Brief :

Citation :
Company Petition No. 166 of 2009

Date Of Judgement:
7thApril, 2010

Bench:
Justice Sudershan Kumar Misra

Parties:
Petitioner – M/S Auto Kashyap India Private
Respondent – Registrar Of Companies

Subject

This case involved striking off proceedings initiated against the petitioner for default in complying with statutory compliances. The main question before the High Court was whether striking off proceedings can be ordered by the Registrar of Companies on the ground of non-compliance of statutory requirements.

Legal Provisions

Section 560 of Companies Act, 1956 – Section 560 authorises Registrar of Companies to strike off defunct companies from the register. The registrar initiates striking off proceedings if it has reasonable ground to believe that the company or business is not in operation. Section 560 (6) authorises members or creditors on being aggrieved that the company is struck off, may make an application to the Court.

Overview

  • The petitioner, M/S Auto Kashyap India Private Limited was engaged in the business of automobile and vehicle trading and related services.
  • A petition was filed under Section 560(6) of the Companies Act, 1956, seeking restoration of the name of the petitioner on the Register of Companies.
  • The respondent i.e. Registrar of Companies initiated striking off proceedings against the petitioner under Section 560(5) of the Companies Act,1956 for failing to comply with statutory compliances, namely filing annual returns and balance sheet.
  • The counsel for petitioner contended that the company has been active since incorporation and has been duly complying with statutory requirements such as filing balance sheet and annual returns.
  • The counsel for petitioner stated that they received no show cause notice for such non-compliance and were not given an opportunity of being heard. The petitioners confirmed that there has been failure to file annual returns and balance sheets as the said firm engaged defaulted in performing their duties.
  • The counsel for the respondent stated that they do not have any objections on the revival of the company provided the additional fees are paid and statutory compliances are filed.

Issues

  • Can the Registrar of Companies initiate striking off proceedings for failing to comply with statutory compliances ?
  • Does the petitioner have any remedy under Companies Act to prevent striking off the name of the company from the Register of Companies?

Judgement Analysis

  • The court, after hearing the contention of both the parties at length, cited the case of Purushottamdas & Anr (Bulakidas Mohta Co P. Ltd) v. Registrar of Companies and stated that the petition deserved to be allowed.
  • The court further added that the petitioner should have exercised greater degree of care to ensure compliance of statutory requirements.
  • The court setting aside the order of striking off the name of the company directed the respondent to restore the name of company, its members and directors and further directed the petitioner to pay the respondent a sum of rupees 22,000/ - as costs payable and any additional fees on account of default of statutory compliances.
  • Further, the court granted liberties to the respondent to proceed with other actions against the petitioner on account of default in compliance with Section 162 of Companies Act, 1956.

Conclusion

Section 560 (6) authorises the person aggrieved by striking off to make an application in the court of law. The petitioner was an active company which defaulted in statutory compliances and therefore striking off proceedings could not be maintained. Justice Sudershan Kumar Misradirected the Registrar of Companies to set aside the order of striking off and allowed the respondent to proceed with other actions which may be initiated for non-compliance under Section 162 of Companies Act,1956.

Click here to download the original copy of the judgement

 
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