A division bench of the National Company Law Tribunal (NCLT) Ahmedabad has directed the Registrar of Companies (RoC) Gujarat to restore a Surat-based diamond company, which was delisted over insolvency proceedings, on its registry.
According to the appeal filed by Vinod Tarachand Agrawal, liquidator of JR Diamonds Pvt Ltd, the company came to know in October 2018 from the web portal of the Ministry of Corporate Affairs (MCA) that its name was struck off on August 6, 2018.
The insolvency proceedings commenced on February 2018 and Agrawal submitted before the tribunal that at the time of the company’s deregistration from RoC, payment recovery worth Rs 4.5 crore from another company — Peacock Jewellery — was due.
A petition filed by Agrawal before the NCLT Bengaluru bench on August 10, 2018, is pending. Agrawal, represented by advocates Vishal Dave and Nipun Singhvi, contended that owing to the pending proceedings, the company should not have been delisted and if not restored, stakeholders may be affected.
The RoC argued that the company was de-registered after it failed in filing its financial statements and statutory annual returns from financial year 2013-14 and annual returns from 2014-15, as is stipulated under the Companies Act.
In its order dated November 6, the tribunal held that though the RoC submitted that the de-registration was due to the company not filing statutory returns, when the order on striking off the name of the company was passed, it was under CIRP (Corporate Insolvency Resolution Process) and later went into liquidation process by an order dated 1.10.2018 of the NCLT. The liquidator took over the charge of the assets of the corporate-debtor-company.
“...Hence, such impugned action cannot be treated a legally valid and just action on the part of the ROC to strike off the name of the company...,” it said.
The tribunal relied on precedents set by the Delhi High Court in its judgments that when there is litigation pending by or against a company before any competent court of law, “in such peculiar facts and circumstances, striking off the name of the company by the RoC is not justified”.
The Ahmedabad bench of the tribunal also held that such action was also not in conformity with the provisions of the Insolvency and Bankruptcy Code. The RoC’s order was quashed and set aside and the RoC Gujarat was directed to restore the company’s name in its register.
However, the tribunal also imposed conditions on JR Diamond Pvt Ltd, where the liquidator has been directed to file all overdue statutory returns on behalf of the company along with penalty, if imposed.