Appeal for restoration of Co.’s name can’t be maintained by one whose status as its director is disputed: SC

Case Details: Nirendra Nath Kar v. Gopal Navin Bhai Dave - [2022] 142 taxmann.com 563 (SC)

Judiciary and Counsel Details

• • Ajay Rastogi & B.V. Nagarathna, JJ.

Facts of the Case

In the instant case, an appeal was filed against the order passed by the High Court of Calcutta setting aside the order of the Registrar of Companies (RoC) striking off the name of the company from the register of RoC u/s 560(5) of the Companies Act, 1956.

The name of the company – Basanti Cotton Mills (1998) Private Limited was struck off by the RoC in terms of section 560(5) of the Companies Act, 1956. The RoC alleged that the company was not functioning properly and not carrying out any business and the last annual return was filed for the year 2002-2003.

Aggrieved by the order of ROC, a complaint was filed by the appellant – one of the directors of the company, in the year 2010 before the High Court u/s 560(6) of the Companies Act, 1956. The High Court allowed the application on the ground that the procedure as prescribed u/s 560 of the Companies Act, 1956 was not followed before striking off the name of the company from the register of RoC and thus restored the name of the company.

Thereafter, an appeal was made to the Supreme Court against the order passed by the High Court.

Supreme Court Held

The Supreme Court held that an appeal for restoration of the name of the company struck off by RoC as defunct cannot be maintained by one whose status as director of the defunct company was disputed and not evident from documents filed with RoC when the company’s name was borne out on records of RoC.

The Supreme Court, further held that the filings of the individual as a director after the company’s name is struck off cannot give the individual the right to file/maintain an appeal for restoration of the name of the company until the dispute as to his status was decided in his favour by the civil court. Accordingly, the appeal was to be dismissed.