Bhogilal Chimanlal v. Registrar, Joint Stock Companies, Madhya Bharat Gwalior
1953-10-30
NEWASKAR
body1953
DigiLaw.ai
ORDER : 1. This is a petition under S. 247(6), Indian Companies Act for an order directing restoration of the name of 'Kalyan Corporation Limited' to the Register of Companies made by petitioner Bhogilal s/o Chinjanlal Shah, Gujrati of Bombay who claimed to be a creditor of the said company and alleged that he had obtained decree against the said company a day before the publication of a notification by the Registrar of Joint Stock Companies regarding the removal of the company from the register. 2. The petition is made impleading Registrar and the directors of the said Company as the respondents. The grounds on which the petition is founded are that the directors of the said company, on being asked by the Registrar, informed him by a letter dated 18-10-1950 that the Company was not in operation and had ceased to exist. On a further query by the Registrar one of the directors Respondent No. 3 Seth Kalyanmal Tongia informed him by a letter dated 19-1-1951 that they had no objection to the removal of company's name from the register of companies and both these letters were sent to the Registrar in view of 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 directors. It was alleged in the petition that the respondents Nos. 2, 3 and 4, directors of the company, fraudulently manoeuvred to get the name of the company struck off the register of companies and that the petitioner was unaware of these facts regarding gazette publications. 3. The petitioner further revealed that the entire share capital of the company was not called 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 raised were that the petitioner is presumed to know the two gazette publications referred to above and that the decree obtained by him on 24-12-1952 was against a defunct company as the order was passed by the Registrar for the removal of company's name on 19-12-1952. He also referred to provisions of S. 247(5) which keeps the liability of directors intact in spite of removal of the name of the company from the register which results in its dissolution.
He also referred to provisions of S. 247(5) which keeps the liability of directors intact in spite of removal of the name of the company from the register which results in its dissolution. It was also averred that he ceased to be a director sometime in 1947. Other two directors did not submit any reply. 5. Section 247(6), Indian Companies Act provides : "If a company or any member or creditor thereof 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 if operation, or otherwise that it is just that the company be restored to the register, order the name of the company to be restored to the register, and thereupon the company shall be deemed to have continued in existence as if its name 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 position as nearly as may be as if the name of the company had not been struck off." From the wordings of this Section, it is clear that the Court can order restoration of the name of the company if it finds that it was, at the time of the order, doing business or was in operation or on the ground that it just to do so. 6. In this case Mr. Chaphekar for the petitioner contended, firstly that on the date of the order the company should be deemed to be in operation as it was actually contesting a suit before the Civil Judge at least at the time when information was sought by the Registrar whether it was in operation in 1950 and 1951. Secondly even if it be not held to be in operation it was just that its name be restored to the register of companies as the company did not discharge all its obligations and the entire share capital limiting the liability of the shareholders was not called and subscribed. He relied upon - Surjan Das v. Chabba Cotton Co.', AIR 1925 Lah 443 (A) and Halsbury's Laws of England, Vol.
He relied upon - Surjan Das v. Chabba Cotton Co.', AIR 1925 Lah 443 (A) and Halsbury's Laws of England, Vol. 6, Art. 887 to contend that mere cessation of business does not mean that the company was not in operation. It would on authorities, appear that even after the closure of business, if the proceedings of winding up are going on, it is deemed to be in operation. There is no reason then to suppose that it was not in operation when it was actually contesting a suit as an existing company. 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, though 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, S. 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 Ch D 479 (B)). 9.
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 Ch D 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., C 19, S. 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 S. 247(6). The petitioner will be entitled to costs of this petition. Counsel's fee to be taxed at Rs. 25/-. Restoration ordered.