Name of Company Struck off as the Audited Financial Statement was “Zero Revenue”: NCLAT uphold the NCLT Order [Read Order]

The National Company Law Appellate Tribunal (NCLAT) has held that Name of the Company Struck off is valid since the Audited Financial Statement was “Zero Revenue” and upheld the order of the National Company Law Tribunal (NCLT). M/s Sanmati Agrizone Private Limited, the Appellant challenged the order passed by the National Company Law Tribunal (New Delhi Bench, Court-II) whereby and whereunder appeal filed by the Appellant for restoration of the name of the Company in the Register maintained by the Registrar of Companies (RoC), Mumbai was dismissed by the Tribunal. The Appellant-Company M/S Sanmati Agrizone Private Limited is having two directors and two shareholders and the entire business of the appellant company is being run/governed by those two directors. The appellant company is carrying out its business and is also maintaining its bank accounts and holding assets in the name of M/S Sanmati Agrizone Private Limited as shown in the master data of the appellant company on the website of the Ministry of Corporate Affairs. The appellant company is regularly carrying on its business in the name and style of M/S Sanmati Agrizone Private Limited and the appellant company being the running company is regularly filing its Income Tax Returns with the income tax department for all the assessment years between 2012-2013 to 2019-2020. Due to the financial instability of the Appellant the management of the Appellant was not able to file its financial statements and annual returns with Respondent No. l after the financial year ending on 31.03.2016. However, the appellant company being the running company is having all the financial statements from the financial years 2011-2012 to 20192020 and the same is audited by the Statutory Auditor. The Registrar of Companies strike off the name of the company chiefly on account of non-filing of annual accounts and not based on reasons that the company is not having “income from operation” Hence the objection of the Registrar of Companies taken in the report is beyond the reasons for striking off the company and the Tribunal have not considered the said ground at all while deciding the appeal as there is no finding in the order why there was a delay in filing the annual accounts it is obligatory on the part of the NCLT to provide the reasons for the same while dismissing the appeal. It was further submitted that there is no bar under the companies act and/ or income tax to earn income from “other than operation” thus not having “income from operation” itself cannot be grounds to disallow the appeal. The annual accounts of the appellant company were not qualified by the auditors that the company is not working and/or otherwise defunct. Further, the NCLT failed to appreciate that the company was regularly filing the Income Tax Returns with Income Tax Department hence the company was always interested in carrying out the business and striking off the only account of reasons for not filing the annual accounts cannot be sole reasons to dismiss the appeal, the company was incurring the cost on the employee which itself shows that the company was working company. A two-member bench comprising Justice Anant Bijay Singh, Member (Judicial) and Dr Alok Srivastava, Member (Technical) observed that the NCLT has rightly held that the Audited Financial Statements of the two immediately preceding Financial Years filed by the Appellant Company reflected “Zero revenue” from its operations and have come to the conclusion that the Appellant Company was neither in operation nor carrying out its business at the time of its name was struck off from the register of Registrar of Companies. The NCLAT upheld the impugned order passed by the National Company Law Tribunal (New Delhi Bench, Court-II). Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Name of Company Struck off as the Audited Financial Statement was “Zero Revenue”: NCLAT uphold the NCLT Order [Read Order]

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