The name of the appellant company was removed by the Registrar of Companies because, in accordance with Section 455 of the Companies Act of 2013, it had not been engaged in any business or operations for the two years immediately preceding that period. The NCLT examined the evidence that was presented before it and the supporting documentation before concluding that the appellant company had failed to demonstrate that it was operating or doing business when its name was struck off and dismissing the appeal that had been brought before it. The current appeal was filed in opposition to the dismissal, and the appellant makes the same allegation by citing the paperwork submitted to NCLT.
The ROC asserts in its affidavit and replies to the NCLAT that the Appellant Company failed to file financial statements for the period beginning 31.3.2004 through 31.3.2011. For the year ending 31.3.2012, the balance sheet and annual return were submitted, however, no submission was made after that, and per ROC, On 21.3.2017, an STK-1 notification was properly given to the corporation, and a copy of that notice has been submitted. The Appellant failed to react to the notice, therefore additional actions were initiated to have the firm struck off, according to the ROC. So, later, a public notice was published in accordance with Section 248(5).
In the instant case titled Kannodia Knits Pvt Ltd. v. Registrar of Companies Delhi and Haryana, the issues raised for clarification before the NCLAT were:
Whether before deciding to remove the name of the Appellant Company, had the ROC sent a notice under Section 248(5) of the 2013 Companies Act?
Whether the Appellant was in business or not?
With regard to the first issue, the NCLAT ruled that there is no dispute over the affidavit submitted by the ROC, which includes a copy of the notice dated 21.3.2017 as per STK 1, and the affidavit that states the appellant company received the notification in question in accordance with the ROC's official records. In addition to this, the appeal submitted to the NCLT itself acknowledged that the notice required by Section 248 had been published in the official gazette. Copy of the notice STK 5 also provided the appellant with the opportunity to move the ROC if it felt wronged by the proposed removal of the company name. After receiving such notification, the appellant made no attempt to approach the ROC and present its claim that it was in operation or conducting business at the time the name was struck off.
With regard to the second issue, two income tax returns for the assessment years 2016–17 and 2017–18 are among the materials submitted to NCLAT regarding the merits of the claim that the appellant was conducting business or operating. Both the income tax return for 2016–17 and the return for 2017–18 declare that the gross total income for the respective years was Rs.1473/– and Rs.504 respectively. If the invoices are viewed, the buyer is Kanodia Knit (P) Ltd and the vendor is Kanodia Hosiery Mills. If these bills' addresses are to be believed, the seller's address is 35, North Basti Harphool Singh, Sadar Thana Road, Delhi. The appellant, Kanodia Knits Pvt Ltd, also has this address. The amount of importance that should be placed on such documents is an obvious conclusion. As a result, the appellant's assertion regarding these documents does not establish the existence or operation of the corporation.
The NCLAT categorically stated that,
“The Income Tax Returns for the assessment years 2016-17 and 2017-18 put on the record reflect the Total Income for the year 2016-17 as Rs. 500 and the Tax with Interest payable as Rs. 172/-. Total Income for the assessment year 2017-18 is Rs. 1,470/- and the Tax with Interest payable is Rs. 439/- respectively. Thus there are no convincing documents on record to establish that the Company was doing business or in actual operation when its name was struck from the Register of the Registrar of Companies. Therefore, it could be said that the Company was non-operational at the relevant period of striking off its name in June 2017”.