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2023 Supreme(Cal) 1185
IN THE HIGH COURT AT CALCUTTA
SABYASACHI BHATTACHARYYA, J.
Cressanda Solutions Limited & Anr. – Petitioners
Versus
Union of India & Ors. – Respondents
W.P.A. No. 16947 of 2023
Decided On : 02-08-2023
For the Petitioners: Mr. Ratnanko Banerjee, Mr. D.N. Sharma, Mr. Ratnesh Kumar Rai, Mr. A. Rai, Mr. S.N. Pandey, Mr. Sayantan Das.
For the Respondents: Mr. Swatarup Banerjee, Mr. Sailendra Kumar Tiwari.
Struck off companies cannot be investigated by the ROC for share transactions. The petitioners can challenge the revival of struck off companies before the NCLAT. The SEBI and the Ministry of Corporate Affairs can investigate complaints of fraudulent share transactions by struck off companies.
Headnote:
STRUCK OFF COMPANIES - SHARE TRANSACTIONS - SECTION 248, 250, 252 COMPANIES ACT, 2013 - RULE 25B COMPANIES (INCORPORATION) RULES, 2014 - Struck off companies cannot be investigated by ROC for share transactions - Petitioners can challenge revival of struck off companies before NCLAT - SEBI and Ministry of Corporate Affairs to investigate complaints of fraudulent share transactions by struck off companies.
Fact of the Case:
Petitioners alleged that shell companies, which were struck off the register of companies but later revived, were transacting shares of the petitioner company, adversely affecting its commercial interests. The petitioners complained to the respondent authorities, including the Registrar of Companies (ROC), but no action was taken.
Finding of the Court:
The ROC's role is limited to striking off companies under Section 248 of the Companies Act, 2013, and it has no power to inquire into the activities of dissolved companies. The petitioners can challenge the revival of struck off companies before the National Company Law Appellate Tribunal (NCLAT) under Section 252 of the Act. The Securities Exchange Board of India (SEBI) is the appropriate authority to investigate fraudulent and illegal share transactions.
Issues: 1. Whether the ROC can investigate struck off companies for share transactions? 2. Whether the petitioners can challenge the revival of struck off companies before the NCLAT? 3. Whether the SEBI and the Ministry of Corporate Affairs can investigate complaints of fraudulent share transactions by struck off companies?
Ratio Decidendi: 1. The ROC's role is limited to striking off companies under Section 248 of the Companies Act, 2013, and it has no power to inquire into the activities of dissolved companies. 2. The petitioners can challenge the revival of struck off companies before the NCLAT under Section 252 of the Act. 3. The SEBI is the appropriate authority to investigate fraudulent and illegal share transactions.
Final Decision: The writ petition is disposed of by granting liberty to the petitioners to file fresh complaints to the Ministry of Corporate Affairs and the SEBI. The authorities shall act on the complaints and, if necessary, hold an appropriate inquiry. If substance is found in the allegations, the authorities shall initiate proper investigation and take corrective steps.
JUDGMENT :
(Sabyasachi Bhattacharyya, J.) :
1. The respondent-companies, being shell companies having no real function and/or existence, were struck off from the register of companies. Some of them were revived later. All of them were shareholders of the petitioner no. 1-company.
2. The grievance of the petitioners is that despite having been struck off, the shell companies have been transacting with shares of the petitioner no.1, thereby adversely affecting the commercial interests of the petitioner no.1-Company, which amounts to financial fraud and corporate offence.
3. Despite the petitioners having complained repeatedly to the respondent-Authorities, no action has been taken on such behalf.
4. At the time of hearing, only the Registrar of Companies (ROC) is represented through counsel and the other respondents choose not to appear, despite service.
5. The ROC argues that its role, in the present context, is limited to Section 248 of the Companies Act, 2013 (hereinafter referred to as, “the 2013 Act”), pertaining to striking off companies after the enquiry as contemplated therein. Section 252 provides for a challenge to the National Company Law Tribunal (NCLT) against such striking off. If successful, such challenge culminates in a revival of the striking off company.
6. Learned counsel for the ROC contends that if the petitioners are aggrieved by the revival of some of the shell companies, the remedy lies in a challenge against the order of revival before the appropriate forum.
7. However, it is beyond the charter of the ROC to enquire as to whether the already struck off companies are further transacting business de hors the law.
8. Learned counsel for the petitioner places reliance on Rule 25B of the Companies (Incorporation) Rules, 2014 (for short, “the 2014 Rules”) to assert that it is the duty of the ROC also to check the registered offices of the companies concerned, and to take steps in the matter.
9. A perusal of Section 248 of the 2013 Act indicates that the same merely extends up to the striking off of a company if it is not carrying on any business or operation for a period as stipulated in Section 248(1). Upon taking the steps as contemplated in sub-sections (1) to (4) of Section 248, the Registrar, under sub-section (5) thereof, may strike off the name of the company from the Register of Companies and publish a notice in the Official Gazette, upon which the company stands dissolved.
10. However, there is nothing in the provisions of the 2013 Act which empowers the ROC to enquire into the antecedents and activities of a dissolved company. Section 250 of the 2013 Act provides that where a company stands dissolved under Section 248, it shall, from such date, cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from the said date, except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.
11. Section 252 provides for an appeal to the Tribunal. If the Tribunal is of the opinion that the removal is not justified in view of the absence of any grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies. Such an order is appealable before the appropriate appellate forum, that is, the National Company Law Appellate Tribunal (NCLAT).
12. The argument of the petitioners, that the petitioners cannot go on filing repeated appeals against the revival orders, is not acceptable, since it is the aggrieved party who has to prefer such an appeal.
13. In the event the petitioners feel that they are aggrieved in any manner with the revival of any of the previously struck off companies which are the shareholders of the petitioner no. 1-company, it is open for the petitioners to prefer a challenge before the NCLAT. However, it is not for the petitioners to route their own grievances through other agencies,
