NCLAT Cuts ₹10 Lakh Cost Imposed For Company's Statutory Defaults To ₹5 Lakhs, Holds It Disproportionate

The National Company Law Appellate Tribunal (NCLAT) at Delhi has cut from ₹10 lakh to ₹5 lakh the cost imposed on a company while restoring its name to the Register of Companies.

It held that the higher amount was disproportionate and was not supported by any determination of the actual costs incurred in the appeal or application.

The bench of Judicial Member Justice Sharad Kumar Sharma and Technical members Indevar Pandey and Arun Baroka, observed that there was no computation showing how the NCLT had arrived at the ₹10 lakh figure.

“...imposition of cost of ₹10,00,000 seems to be disproportionate and without any logical reasons, nor it reflects an application of mind showing that a computation was ever ventured to determine the actual cost to be levied in the light of the actual cost that has been incurred in the Appeal or the application.”

The case concerned Ganton Projects Pvt. Ltd., originally incorporated as Ganton Aviation Pvt. Ltd. The company's name was struck off the Register of Companies on June 7, 2017.

The NCLAT noted that the company had not filed income tax returns since its incorporation and had also failed to file balance sheets and annual returns. It had approached the NCLT for restoration because execution proceedings involving the company were still pending.

The NCLT restored the company's name by an order dated March 11, 2026, but imposed an exemplary cost of ₹10 lakh for the aggregate years of default since its incorporation. The appellants challenged the cost before the NCLAT.

The appellants argued that additional fees for delayed filings had already been paid and that the further exemplary cost was disproportionate. They also contended that the cost was inconsistent with the objective of the Companies Compliance Facilitation Scheme, 2026, introduced by the Ministry of Corporate Affairs.

The NCLAT examined Rule 87A of the NCLT Amendment Rules, 2017, which sets out requirements applicable when a company's name is restored. Under sub-rule (4)(c), the tribunal can direct the appellant or applicant to pay the Registrar of Companies the costs “of, and occasioned by, the appeal or application."

The appellate tribunal held that there must be a rational correlation between the cost imposed and the cost actually incurred in the appeal or application. The amount therefore had to be determined with reference to the costs occasioned by those proceedings.

The bench rejected the company's plea that its failure to file financial statements was due to inadvertence and oversight. It observed that a company created and registered under statute cannot plead lack of awareness of its statutory duties and treated the lapse as serious.

The NCLAT, however, upheld the restoration because the company needed to participate effectively in the pending execution proceedings. It observed that where litigation involving a company is pending, restoration may be necessary to enable the company and its directors to pursue the proceedings.

The bench found no computation showing how the NCLT had determined the ₹10 lakh cost. It held that the amount lacked a rational basis and was disproportionate because there was no determination of the actual cost incurred in the appeal or application.

The NCLAT therefore reduced the cost from ₹10 lakh to ₹5 lakh, while leaving the restoration of the company's name undisturbed.

An interim order passed on May 21, 2026, had required a ₹2 lakh deposit, which had already been made. The amount will be adjusted against the ₹5 lakh cost, leaving ₹3 lakh to be deposited.

The appeal was partly allowed to this extent, and all interlocutory applications were closed.