Acts/Rules/Orders: Companies Act, 1880 - Section 7, Companies Act, 1880 - Section 7(5), Companies Act, 1880 - Section 247(5), Companies Act, 1880 - Section 247(6)
Cases Referred: In re : Outlay Assurance Society (1887) 34 Ch D 479 (B); In re : Carpenter's Patent Davit Boat Lowering and Detaching Gear Co. (1888) 1 Meg 26 (C)
Citing Reference: Discussed 1Mentioned 1
Case Note:Company - Restoration of name - Petition under Section 247(6) of Indian Companies Act for direction to restore name of 'Kalyan Corporation Limited' to Register of Companies - Held, Court had jurisdiction under Companies Act, 1880, Section 7(5) of Companies Act, 1880 to restore to register of Joint Stock Cos name of company which had been struck off by Registrar under provisions of that Section - Registrar of Joint Stock Companies directed to restore name of Company in question to Registrar of Companies in exercise of powers under Section 247(6) of Indian Companies Act.
ORDER
V.R. Nevaskar, J.
1. This is a petition under Section 247(6) Indian Companies Act for an order directing (sic) ration of the name of 'Kalyan Corporation Limited' to the Register of Companies made by Petitioner Bhogilal Son of Chimanlal Shah, Gujrati (sic) Bombay who claimed to be a creditor of the (sic) company and alleged that he had obtained decree (sic) against the said company a day before the publication (sic) of a notification by the Registrar of Joint Stock Companies regarding the removal of company from the register.
2. The petition is made impleading Register and the directors of the said Company as Respondents. The grounds on which Peti(sic) the is founded are that the directors of the said company, on being asked by the Registrar, inform (sic) him by a letter dated 18-10-1950 that the Company was not in operation and had ceased to exist (sic) a further query by the Registrar one of the debtors (sic) Respondent No. 3 Seth Kalyanmal Tor (sic) informed him by a letter dated 19-1-1951 that had no objection to the removal of company name from the register of companies and (sic) these letters were sent to the Registrar in the fact that the Civil Suit filed by the Petitioner against the company was pending in the Court of Civil Judge, Indore to the knowledge of the (sic) directors. It was alleged in the petition that Respondents Nos. 2, 3 and 4, directors of the, company, fraudulently manoeuvred to get the of the (sic) of the company struck off the register of companies and that the Petitioner was unaware (sic) these facts regarding gazette publications.
3. The Petitioner further revealed that the tire share capital of the company was not coll(sic) and that uncalled share capital would be sufficient to satisfy his decree.
4. In the reply submitted on behalf of Respondent No. 4 the principal grounds of contention rais(sic) were that the Petitioner is presumed to know the (sic) gazette publication referred to above and that (sic) the decree obtained by him on 24-12-1952 was (sic) against a defunct company as the order was passes (sic) by the Registrar for the removal of company's name (sic) on 19-12-1952. He also referred to provisions of Section 247(5) which keeps the liability of directors fact in spite of removal of the name of the company from the register which results in its dissolution (sic). It was also averred that, he ceased to be a fetor sometime in 1947. Other two directors did (sic) submit any reply.
5. Section 247(6), Indian Companies Act procedes:
If a company or any member or creditor there of feels aggrieved by the company having been struck off the register, the Court, on the application of the company or member or creditor, may, if satisfied that the company was at the time of the striking off carrying on business or in operation, or otherwise that it is just that company be restored to the register, order the name of the company to be restored to the register, and thereupon the company shall be seemed to have continued in existence as if its same had not been struck off, and the Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same (sic) tion as nearly as may be as if the name of (sic) company had not been struck off.
(sic) the wordings of this Section, it is clear that Court can order restoration of the name of (sic) company if it finds that it was, at the time the (sic) order, doing business or was in operation (sic) the ground that it just to do so.
In this case Mr. Chaphekar for the Petitioner contended firstly that on the date of the (sic) the company should be deemed to be in (sic) as it was actually contesting a suit be- (sic) the Civil Judge at least at the time when exmation (sic)was sought by the Registrar whether (sic) in operation in 1950 and 1951. Secondly (sic) if it be not held to be in operation it was (sic) that its name be restored to the register companies as the company did not discharge (sic) obligations and the entire share capital (sic) the liability of the shareholders was not (sic) and subscribed. He relied upon - Surjan (sic) Chabba Cotton Co. AIR 1925 Lah 443 (sic) Halsbury's Laws of England, Vol. 6, Article (sic) contend that mere cessation of business (sic) mean that the company was not in (sic). It would on authorities, appear that (sic) the closure of business, if the proceeding (sic) winding up are going on, it is deemed to operation (sic). There is no reason then to sup (sic) that it was not in operation when it was (sic) contesting a suit as an existing com-(sic) There is considerable force in this contention of the learned Counsel for the Petitioner. The company if it is operating as a company for doing something in relation to its past obligations or to avoid future pecuniary liability it will be deemed to be in operation.
7. But besides this it is difficult to see why it is not just to restore the name of the company to the register. The Petitioner had filed a suit for recovery of its dues. The present company is a private limited company. No steps were taken to discharge the liability which they owed to the Petitioner. The effect of the order of removal would be that the company will be deemed to be dissolved and it may be difficult for him to obtain the fruits of his decree. The conduct of the directors in not bringing the fact of pending suit to the notice of the Registrar, through attempted to be justified on the ground that they stated what the fact was as they understood and what their opinion was, cannot be said to be above board. Had the Registrar known that the company was actually defending a suit filed by the Petitioner, it is extremely unlikely that he would have ordered the name of the company to be removed from the register.
8. It was held in one case that the Court has jurisdiction under Companies Act, 1880, Section 7(5) to restore to register of Joint Stock Cos. the name of a company which has been struck off by the Registrar under the provisions of that Section although at the time of striking off, the company was carrying on business for the purpose of winding up (voluntary) Outlay Assurance Society, In re (1887) 34 ChD 479 (B).
9. In another case, the winding up of a company began in 1880 and a call was made in May 1888. The Registrar of Joint Stock Companies sent notice to the office of the company as required by 43 Vict., Clause 19, Section 7, but by accident the notice could not be delivered and was returned. In April, 1887, he struck the name of 'the company off the register. Nothing appears to have been done by the company between 1883 and 1888, but on the petition by the liquidator to have the name restored, and on production of evidence that some debts were still unpaid as also some calls, the Court directed the company's name to be restored to the register. In re, Carpenter's Patent Davit Boat Lowering and Detaching Gear Co. (1888) 1 Meg 26 (C).
10. On consideration. of the authorities cited above and on the grounds indicated by me above, I think it just to order restoration of the name of the company to the register of companies. I, therefore, direct the Registrar of Joint Stock Companies, Gwalior, to restore the name of the Company in question to the Registrar of Companies in exercise of powers under Section 247(6). The Petitioner will be entitled to costs of this petition. Counsel's fee to be taxed at Rs. 25/-.