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2016 Supreme(AP) 263
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
S.V. BHATT, J.
Velamati Chandrasekhara Janardan Rao – Petitioner
Versus
M/s. Sree Raja Rajeswari Paper Mills Limited & Another – Respondents
Company Petition No. 250 of 2015
Decided On : 01-07-2016
For the Petitioner:S. Ravi, Advocate.
Headnote:
Corporate Law – Companies Act, 1956 – Section 560 (6) – Share Holder – Sought for cancel the striking off name of respondent company – Petitioner alleges that he was a shareholder of company – Company was set up in Hanuman Junction, Krishna District to manufacture and do business in paper boards. On Managing Director Sri A.S.V.R.G.K. Prasad passed away – According to petitioner, these two Directors acted to detriment of company. Directors did not enjoy the confidence of majority of shareholders of the company – Company Law Board, with the expiry of the term of these two Directors appointed Chairman to conduct meeting of shareholders of company – In meeting convened by Chairman, new Board of Directors of company was constituted – Erstwhile Directors after ceasing to be the Directors of company have continued to hold books and vital documents of company – Retention of books and documents resulted in filing of a complaint under Section 630 of Act by company in the Court of Special Judge for Economic Offences, City Criminal Court vide STC – Further stated that STC ended in dismissal, for the company failed to prove that the said Directors continued to hold documents or records of the company – Held, Court with striking off the name of company, the legal and corporate entity enjoyed by the company under the Act is completely denuded – Therefore, for all purposes, it became dead or non-existing in eye of law – Either to claim the assets of company or answer the claims of third parties against company, restoration of company in the register of companies is otherwise just – Therefore, this Court holds that the petitioner, though was not aggrieved on the day when the application was made, but with the acquisition of subsequent knowledge or information about assets of company, the petitioner being the ex-chairman/shareholder of the company is a person aggrieved against the striking off the name of company from the register and can apply for cancelling the striking off and restoring the name in the register – Hence, a case is made out that otherwise it is just and proper to restore the name of the company in register – For the above reasons, the company petition is ordered, striking off name of the company is cancelled and the Registrar is directed to restore the name of M/s Sree Raja Rajeswari Paper Mills Limited in register maintained by ROC – The petitioner is directed to take such other or further steps as are required under the Act to formalize restoration of company – Company Petition is ordered.
One Velamti Chandrasekhara Janardan Rao is the petitioner.
The petition is filed under Section 560 (6) of the Companies Act, 1956 (for short ‘the Act’) to cancel the striking off name of respondent company/M/s. Sree Raja Rajeswari Paper Mills Limited (for short ‘the company’) pursuant to application dated 09.03.2011 and to restore the name of company in the register maintained by the Registrar of Companies (ROC).
Heard Mr. S. Ravi for petitioner.
Petitioner alleges that he was a shareholder of the company. The company was set up in Hanuman Junction, Krishna District to manufacture and do business in paper boards. On 17.07.1999, the Managing Director Sri A.S.V.R.G.K. Prasad passed away. Thereafter, the Board comprised of Dr. V.V. Gopala Krishna and Sri V.V.R.B. Prasad. According to petitioner, these two Directors acted to the detriment of the company. Directors did not enjoy the confidence of majority of shareholders of the company. The Company Law Board, with the expiry of the term of these two Directors appointed Chairman to conduct meeting of shareholders of the company.
In the meeting convened by the Chairman, new Board of Directors of the company was constituted. The erstwhile Directors after ceasing to be the Directors of the company have continued to hold books and vital documents of the company. The retention of books and documents resulted in filing of a complaint under Section 630 of the Act by the company in the Court of Special Judge for Economic Offences, City Criminal Court, Nampally, Hyderabad vide STC No. 24 of 2000. It is further stated that the STC ended in dismissal, for the company failed to prove that the said Directors continued to hold documents or records of the company. The petitioner having been left with no option, on 25.04,2011, applied under Section 560 of the Act to strike off the name of the company. The ROC struck off the name of company on 30.04.2011. The copies of request and the striking off order of ROC are placed on record as Annexures P1 and P2.
It is further averred that the landed property of the company was not in the knowledge of the petitioner though he was the Chairman. Therefore, even without selling the available assets and distributing the sale proceeds to the shareholders, request for striking off the name of the company from the register was made and was accepted in routine course. The petitioner categorically alleged that the restoration of name of company in the register of the ROC is mandatory to deal with the available, but undisclosed, assets of the company. Therefore, he prays for striking off the cancellation order and restoration of the name of the company in the register of ROC. The restoration does not prejudice the cause of any one, on the other hand, enables the legal entity to protect the property and if necessary realize consideration by sale of these properties.
Mr. Ravi has substantially reiterated the averments referred to above and contends that the request to cancel the name of the company in the register of ROC was made in bona fide belief that the company had no asset and liability, the shareholders have no objection for striking off the name of the company and accordingly the application dated 25.04.2011 was made. Now, from the material available on record, it is contended that there is necessity in law and fact to restore the name of company in the register maintained by the ROC, for according to learned counsel if the company is not restored and the entity is not revived, the properties of the company either will be lost or taken over by persons who cannot and could not claim title from the company. Further, the shareholders of the company did not get money from the assets of the company. Therefore, restoration of name in register is in the interest of one and all. He further contends that even if 3rd parties have any claim enforceable in law against the company, unless and until the entity is restored, they cannot proceed against a non-existing compan
