Viswanath Agarwal Vs. The Registrar of Companies , West Bengal - Court Judgment

SooperKanoon Citationsooperkanoon.com/60860
CourtKolkata High Court
Decided OnJul-21-2015
JudgeSanjib Banerjee
AppellantViswanath Agarwal
RespondentThe Registrar of Companies , West Bengal
Excerpt:
od-88 ca no.423 of 2015 cp no.936 of 2014 in the high court at calcutta original jurisdiction in the matter : meghdoot services ltd.-andin the matter of : viswanath agarwal -vsthe registrar of companies , west bengal before: the hon'ble justice sanjib banerjee date : 21st july, 2015. appearance: mr.s.n. mookerji, sr.adv.mr.ratnanko banerji, sr.adv.mr.kuldeep mallick, adv.the court : the application is for recalling of an order passed on a petition under section 560(6) of the companies act, 1956, by which a company whose name had been struck off was permitted to be revived. the primary ground urged by the applicant is that the petition under section 560(6) of the act was not filed by a creditor or a shareholder of the concerned company or by the company itself and, as such, it could not have been received by the court. it is the further grievance of the applicant that the applicant had no notice or knowledge of such petition. the name of the company was not struck off for any apparent default on the part of the company to file its documents or submit its return in accordance with the said act with the registrar of companies. this was not a case of the registrar finding the company to be non-functional and issuing a notice under section 560(2) of the act before striking off the company’s name. the company’s name was struck off pursuant to an application admittedly made by the company under a simplified exit scheme of 2005 introduced by the central government giving an option to non-functional companies to exit and have their names struck off and, thus, the officers of such non-functional companies to be absolved of their obligations under the said act. pursuant to such scheme, the company applied to the registrar on its representation that it did not have any business or worthwhile assets. in terms of the simplified system under the relevant scheme, the registrar accepted the application and the declaration accompanying the same and the company’s name was struck off. such striking off took place in or about the year 2007. in 2014 a petition under section 560(6) of the act was carried by one viswanath agarwal claiming to be a director or erstwhile director of the company on the basis of the alleged consent of one or more other erstwhile directors of the company. it was not as if the petition did not disclose that the company’s name had been struck off pursuant to the company’s application under the said scheme; but it does not appear from the order dated november 13,2014 that such matter was expressly brought to the attention of the company court at the time that the order was made. the present application is resisted by the company in its new avatar with viswanath agarwal nowhere in the scene. indeed, the petition under section 560(6) of the act had indicated that a person not connected with the company was desirous of continuing with the business of the company and some of the erstwhile directors of the company had entered into an arrangement with the outsider for the revival of the company and the outsider taking over the business of the company upon its revival. in opposing the present application, it is asserted that the present applicant cannot be aggrieved by the order reviving the company since the applicant, as a shareholder of the company, only stands to gain by its revival. it is also contended that since the registrar was represented before the company court when the order dated november 13,2014 was passed, it is apparent that the registrar did not have any objection to the revival of the company and, even if the petitioner did not bring it to the notice of the company court that the name of the company had been struck off on the company’s application, the registrar ought to have brought such fact to the notice of the court. the company insists that the present application has been made with ulterior motive and for oblique purpose upon the applicant herein discovering in cours.of proceedings instituted under sections 397 and 398 of the said act against the applicant that the company now stands revived. in support of the defence to the application, the judgments reported at 1970 (1)wlr343and 14 ch.d458have been cited : the firs.to demonstrate that a successor-in-interest or heir of a shareholder would have a right to apply under section 560(6) of the said act; and, the other for the definition of the expression “person aggrieved”. the several issues that have been raised by the company in seeking to defend the application need not be gone into at this stage in view of the limited scope of the application. there is a distinction between an application for recalling an order and an application for review of an order. an application for recalling an order, though the same may not be specifically provided for in the code of civil procedure, 1908, is received under section 151 of the code and is generally entertained when a person ought to have had notice or been represented at the time that the order sought to be recalled was made, but was not. all that the applicant has to demonstrate is that the applicant had a right to have notice of the proceedings on which the order was made or a right to be represented in court and such opportunity had been denied to the applicant. in some cases, the applicant may also have to demonstrate how the applicant was adversely affected by the order that is sought to be recalled; but that is not a mandatory criterion in every case. in a petition for review, on the other hand, the applicant has to demonstrate how the applicant is adversely affected by the impugned order for such person to be regarded as a person aggrieved thereby. the applicant herein was a shareholder of the company whose name had been struck off. the applicant is deemed to have been aware of the name of the company being struck off. since the applicant did not seek the revival of the company despite its name remaining struck off for a number of years.it may be inferred that the applicant accepted the company’s name being struck off. if the company were to be revived, the applicant ought to have had notice thereof or, at any rate, the court should have ascertained whether the applicant or other shareholders were interested in the same. what the applicant now demonstrates is that the order dated november 13,2014 was passed without the court issuing notice to any creditor or shareholder of the company whose name had been struck off and entertaining a petition at the behest of a person who was not qualified to apply under sub-section (6) of the relevant provision. it must be said at this stage that the every day petition that is received under section 560(6) of the said act is to revive a company whose name has been struck off on its default to submit its returns or documents or upon its failure to respond to the registrar’s notice issued under sub-section (2) thereof. in recent times, a practice has developed in this court for such companies being revived upon payment of the filing fees, penalty and interest to the central government upon a computation chart in such regard being produced by the registrar of companies. it will be evident from the order dated november 13,2014 passed on the relevant petition that the court may have been under the impression that this company was one of the companies whose name had been struck off for the default on its part to submit its returns or documents with the registrar. it is true that in the body of the petition the circumstances in which the name of the company was struck off had been clearly indicated. but it is a reality that given the pressure of the sheer number of matters under which courts function now, it is not possible for a judge to go through a petition with a tooth-comb without relying primarily on the submission made at the bar in cours.of the hearing of a matter. it is evident that the order dated november 13,2014 was passed without the court’s attention being drawn to the fact that the name of the company in this case had been struck off at the company’s behest and not due to any default on its part as discovered by the registrar of companies. the judgments cited by the company to resist the application are not of much relevance at the present juncture since the consideration here is limited to whether the company should have been revived on the application of a person who did not qualify under sub-section (6) of the relevant provision and without notice to the others who may have been interested in the company. as to the company’s contention that the present application has been filed with ulterior motive, it does not matter if the applicant is guided by some other motive once it is demonstrated that the applicant had an interest in the matter pertaining to the order which is sought to be recalled and the applicant had no notice of the proceedings at the relevant point of time. since it was the company which had applied to have its name struck off under the relevant scheme, the company could not have applied under section 560(6) of the act unless such application was made within a short time of its name being struck off and an obvious mistake on the part of the company to apply under the scheme was demonstrated. though the company seeks to assert that the word “company” in section 560(6) of the act has to be given a wider meaning, it is not possible to accept that a company whose name had been struck off on its invitation six or seven years back would be permitted to apply under such provision for the striking-off to be undone. in such a situation, it would be only a creditor or a shareholder of the company who may apply within 20 years of the company’s name being struck off for its revival. in any event, the petition under section 560(6) of the act was not filed by the company. since neither a shareholder nor a creditor of the company applied for its revival upon the company’s name being struck off on the company’s application, and a shareholder of the company is in court today seeking the order of revival to be recalled, no ground is made out to resist the same. ca423of 2015 is allowed by recalling the order dated november 13,2014 by which the name of the company was restored to the list of active companies. as a consequence, the company’s name remains struck off and the company has no legal existence since the day its name was struck off in 2007. the applicant will be entitled to the costs of this application assessed at 1500 gm to be paid by the principal person named in cp no.936 of 2014 who took over control of the company upon its revival. urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities. (sanjib banerjee, j.) kc/s.chandra
Judgment:

OD-88 CA No.423 of 2015 CP No.936 of 2014 IN THE HIGH COURT AT CALCUTTA ORIGINAL JURISDICTION IN THE MATTER : MEGHDOOT SERVICES LTD.-ANDIN THE MATTER OF : VISWANATH AGARWAL -VSTHE REGISTRAR OF COMPANIES , WEST BENGAL BEFORE: The Hon'ble JUSTICE SANJIB BANERJEE Date : 21st July, 2015.

Appearance: Mr.S.N.

Mookerji, Sr.Adv.Mr.Ratnanko Banerji, Sr.Adv.Mr.Kuldeep Mallick, Adv.The Court : The application is for recalling of an order passed on a petition under Section 560(6) of the Companies Act, 1956, by which a company whose name had been struck off was permitted to be revived.

The primary ground urged by the applicant is that the petition under Section 560(6) of the Act was not filed by a creditor or a shareholder of the concerned company or by the company itself and, as such, it could not have been received by the Court.

It is the further grievance of the applicant that the applicant had no notice or knowledge of such petition.

The name of the company was not struck off for any apparent default on the part of the company to file its documents or submit its return in accordance with the said Act with the Registrar of Companies.

This was not a case of the Registrar finding the company to be non-functional and issuing a notice under Section 560(2) of the Act before striking off the company’s name.

The company’s name was struck off pursuant to an application admittedly made by the company under a simplified exit scheme of 2005 introduced by the Central Government giving an option to non-functional companies to exit and have their names struck off and, thus, the officers of such non-functional companies to be absolved of their obligations under the said Act.

Pursuant to such scheme, the company applied to the Registrar on its representation that it did not have any business or worthwhile assets.

In terms of the simplified system under the relevant scheme, the Registrar accepted the application and the declaration accompanying the same and the company’s name was struck off.

Such striking off took place in or about the year 2007.

In 2014 a petition under Section 560(6) of the Act was carried by one Viswanath Agarwal claiming to be a director or erstwhile director of the company on the basis of the alleged consent of one or more other erstwhile directors of the company.

It was not as if the petition did not disclose that the company’s name had been struck off pursuant to the company’s application under the said scheme; but it does not appear from the order dated November 13,2014 that such matter was expressly brought to the attention of the Company Court at the time that the order was made.

The present application is resisted by the company in its new avatar with Viswanath Agarwal nowhere in the scene.

Indeed, the petition under Section 560(6) of the Act had indicated that a person not connected with the company was desirous of continuing with the business of the company and some of the erstwhile directors of the company had entered into an arrangement with the outsider for the revival of the company and the outsider taking over the business of the company upon its revival.

In opposing the present application, it is asserted that the present applicant cannot be aggrieved by the order reviving the company since the applicant, as a shareholder of the company, only stands to gain by its revival.

It is also contended that since the Registrar was represented before the Company Court when the order dated November 13,2014 was passed, it is apparent that the Registrar did not have any objection to the revival of the company and, even if the petitioner did not bring it to the notice of the Company Court that the name of the company had been struck off on the company’s application, the Registrar ought to have brought such fact to the notice of the Court.

The company insists that the present application has been made with ulterior motive and for oblique purpose upon the applicant herein discovering in couRs.of proceedings instituted under Sections 397 and 398 of the said Act against the applicant that the company now stands revived.

In support of the defence to the application, the judgments reported at 1970 (1)WLR343and 14 Ch.D458have been cited : the fiRs.to demonstrate that a successor-in-interest or heir of a shareholder would have a right to apply under Section 560(6) of the said Act; and, the other for the definition of the expression “person aggrieved”.

The several issues that have been raised by the company in seeking to defend the application need not be gone into at this stage in view of the limited scope of the application.

There is a distinction between an application for recalling an order and an application for review of an order.

An application for recalling an order, though the same may not be specifically provided for in the Code of Civil Procedure, 1908, is received under Section 151 of the Code and is generally entertained when a person ought to have had notice or been represented at the time that the order sought to be recalled was made, but was not.

All that the applicant has to demonstrate is that the applicant had a right to have notice of the proceedings on which the order was made or a right to be represented in Court and such opportunity had been denied to the applicant.

In some cases, the applicant may also have to demonstrate how the applicant was adversely affected by the order that is sought to be recalled; but that is not a mandatory criterion in every case.

In a petition for review, on the other hand, the applicant has to demonstrate how the applicant is adversely affected by the impugned order for such person to be regarded as a person aggrieved thereby.

The applicant herein was a shareholder of the company whose name had been struck off.

The applicant is deemed to have been aware of the name of the company being struck off.

Since the applicant did not seek the revival of the company despite its name remaining struck off for a number of yeaRs.it may be inferred that the applicant accepted the company’s name being struck off.

If the company were to be revived, the applicant ought to have had notice thereof or, at any rate, the Court should have ascertained whether the applicant or other shareholders were interested in the same.

What the applicant now demonstrates is that the order dated November 13,2014 was passed without the Court issuing notice to any creditor or shareholder of the company whose name had been struck off and entertaining a petition at the behest of a person who was not qualified to apply under sub-section (6) of the relevant provision.

It must be said at this stage that the every day petition that is received under Section 560(6) of the said Act is to revive a company whose name has been struck off on its default to submit its returns or documents or upon its failure to respond to the Registrar’s notice issued under sub-section (2) thereof.

In recent times, a practice has developed in this Court for such companies being revived upon payment of the filing fees, penalty and interest to the Central Government upon a computation chart in such regard being produced by the Registrar of Companies.

It will be evident from the order dated November 13,2014 passed on the relevant petition that the Court may have been under the impression that this company was one of the companies whose name had been struck off for the default on its part to submit its returns or documents with the Registrar.

It is true that in the body of the petition the circumstances in which the name of the company was struck off had been clearly indicated.

But it is a reality that given the pressure of the sheer number of matters under which Courts function now, it is not possible for a Judge to go through a petition with a tooth-comb without relying primarily on the submission made at the Bar in couRs.of the hearing of a matter.

It is evident that the order dated November 13,2014 was passed without the Court’s attention being drawn to the fact that the name of the company in this case had been struck off at the company’s behest and not due to any default on its part as discovered by the Registrar of Companies.

The judgments cited by the company to resist the application are not of much relevance at the present juncture since the consideration here is limited to whether the company should have been revived on the application of a person who did not qualify under sub-section (6) of the relevant provision and without notice to the others who may have been interested in the company.

As to the company’s contention that the present application has been filed with ulterior motive, it does not matter if the applicant is guided by some other motive once it is demonstrated that the applicant had an interest in the matter pertaining to the order which is sought to be recalled and the applicant had no notice of the proceedings at the relevant point of time.

Since it was the company which had applied to have its name struck off under the relevant scheme, the company could not have applied under Section 560(6) of the Act unless such application was made within a short time of its name being struck off and an obvious mistake on the part of the company to apply under the scheme was demonstrated.

Though the company seeks to assert that the word “company” in Section 560(6) of the Act has to be given a wider meaning, it is not possible to accept that a company whose name had been struck off on its invitation six or seven years back would be permitted to apply under such provision for the striking-off to be undone.

In such a situation, it would be only a creditor or a shareholder of the company who may apply within 20 years of the company’s name being struck off for its revival.

In any event, the petition under Section 560(6) of the Act was not filed by the company.

Since neither a shareholder nor a creditor of the company applied for its revival upon the company’s name being struck off on the company’s application, and a shareholder of the company is in Court today seeking the order of revival to be recalled, no ground is made out to resist the same.

CA423of 2015 is allowed by recalling the order dated November 13,2014 by which the name of the company was restored to the list of active companies.

As a consequence, the company’s name remains struck off and the company has no legal existence since the day its name was struck off in 2007.

The applicant will be entitled to the costs of this application assessed at 1500 GM to be paid by the principal person named in CP No.936 of 2014 who took over control of the company upon its revival.

Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.

(SANJIB BANERJEE, J.) Kc/S.Chandra