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2015 Supreme(MP) 541
MADHYA PRADESH HIGH COURT AT GWALIOR BENCH
Sujoy Paul, J.
Shree Mohan Sugar Mills Ltd. - Appellant
Versus
Registrar of Companies and Ors. - Respondent
Company Petition No. 2-2012
Decided On : 08-06-2015
For the Petitioner:Praveen N. Surange, Advocate.
For the Respondents:Vivek Khedkar, Advocate.
The deeming provision of Section 3(4) of the Companies Act, 1956 applies automatically, and restoration of a company deemed defunct under this provision would be against the legislative mandate of the Act.
Headnote:
Companies Act - Restoration of Company - Section 560(6)
Fact of the Case:
The petitioner company sought restoration under Section 560(6) of the Companies Act, 1956 after its name was struck off from the statutory register by the Registrar of Companies (ROC). The company claimed to be carrying on business and sought exemption from filing annual returns and balance sheets for past years.
Finding of the Court:
The court found that the company became defunct under Section 3(4) of the Act due to its failure to enhance its paid-up capital within the specified time. The court held that the deeming provision of Section 3(4) applied automatically, and restoration of the company would be against the legislative mandate of the Act.
Issues: The core issue was whether a company deemed defunct under Section 3(4) could be restored under Section 560(6) of the Act. The court also addressed the company's claim of carrying on business and the objections raised by the respondents regarding the company's status and the locus standi of certain parties.
Ratio Decidendi: The court held that the deeming provision of Section 3(4) applied automatically, and restoration of the company would be against the legislative mandate of the Act. The court also emphasized that the company's failure to fulfill the requirement of Section 3 of the Act was a special reason depriving the company from restoration.
Final Decision: The petition for restoration was dismissed by the court, and no costs were awarded.
JUDGMENT :
Sujoy Paul, J.
1. This petition is filed under Section 560(6) of Companies Act, 1956 (the Act) for restoration of company "Shree Mohan Sugar Mills Limited".
2. Facts as narrated in the petition are that the company was doing its business as per the object clause but it could not get profitable business. The repeated efforts to fetch good profit could not succeed. Since Company was not profit making company, it could not file the annual return and balance sheet with the Registrar of Companies (ROC). In 2011, company intended to file some documents on the website of Ministry of Corporate Affairs. On perusal of the site, it appeared that name of company is struck off from the statutory register. It is pleaded that in response to the enquiry made by the petitioner-company, it is learnt that in the year 2007 suo motu action for struck off the name was taken by the ROC. Name of company was finally struck of on 28.01.2008. The ROC informed the petitioner that if petitioner wants to restore the name of company, it should approach this court under section 560(6) of the Act. The company obtained the copy of letter of ROC which is Annexure P/2. The company has filed the balance sheet to show the assets and liabilities as on 31.02.2011 (Annexure P/3). It is also stated that company is trying to setup project to start the activity as per main object of Memorandum of Association (M of A) of the company. It is believed that income of company would be started very soon. It is prayed that company be exempted from filing annual returns and balance sheets of past years.
3. The ROC has filed its return. In turn, the parties filed rejoinder, application for taking additional facts and documents, reply to application for filing additional facts and document and additional return etc. On 13.05.2015 learned counsel for the parties prayed for reserving this matter for order with the request that matter may be decided on the basis of written submissions. Written submission and additional written submission are filed by the parties.
Written Submissions on behalf of the company :--
4. The petitioner has relied on language of sub-section 6 of Section 560 of the Act to contend that this Court may direct restoration of company if it thinks that it is just that company be restored to the relevant register. It is contended that petitioner company is carrying on business which is reflected from the balance sheet dated 31.03.1999 (Annexure P-5) and rejoinder to reply filed by the respondent No. 1 (ROC). The balance sheet dated 31.03.2011 (Annexure P/3) and 31.03.2010 (Annexure P-11) show that company was not only in operation but also carrying out business and was not the defunct company at relevant point of time. By placing reliance on Annexure P/3, it is urged that company was making "sale of agriculture product". Balance sheet shows the cost of goods sold. The expenses are also shown in the balance sheet. This demonstrates that company was functional and in operation at the relevant time. For the same purpose, reliance is placed on Annexure P-11 annexed with reply to application for filing additional facts and documents and rejoinder to reply filed by the respondent No. 2.
5. The petitioner has relied on judgment passed by District Judge, Hoshangabad dated 30.01.1990. It is contended that said judgment of District Judge was put to test in FA No. 112/1991 which was dismissed on 16.08.2013. The finding given by this Court in said FA (para 43) is heavily relied upon to contend that prolong litigation under the Ceiling Act prevented the company to invest sufficient fund. This reason is germane for the purpose of present litigation also. It is contended that the intervener/private respondent herein was a party to the said judgment decided by the District Judge. It is argued that Mr. Kailash Dadhia was duly appointed as director of the Company w.e.f. 02.07.1984. The statutory form 32 was filed with Registrar of Companies which was taken on record by the ROC (A
