NCLT Ahmedabad Rejects Registrar Of Companies' Plea to Condon 4215-Day Delay In Restoring Struck-Off Company

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has recently rejected a plea by the Registrar of Companies, Gujarat, to condone a delay of 4215 days in seeking restoration of Maharshi Management Services Pvt. Ltd. to the register of companies.

The tribunal held that the delay was not properly explained and no sufficient cause was made out.

“Reason for long delay are not satisfactorily explained. No sufficient reason for condonation of delay.”

The bench of Judicial Member Chitra Hankare and Technical Member Dr. V.G. Venkata Chalapathy was dealing with an application filed by the ROC seeking condonation of delay in filing an appeal under Section 252(1) of the Companies Act, 2013 for the restoration of the company, which had been struck off on August 31, 2007 for failure to file statutory returns for more than two years.

The ROC contended that the strike-off was inadvertent, as charges created in favour of the Bank of India in 1991 were still reflected as “open” in the company's master data. It submitted that knowledge of the issue was received through a communication dated December 14, 2021 from the Regional Director, following which the appeal was instituted on March 16, 2022 and later pursued after curing defects in November 2023.

It further argued that non-restoration of the company would cause serious prejudice to secured creditors and that limitation rules should not defeat substantive rights.

“Limitation rules should not defeat substantive rights and refusal to condone the delay would unjustly foreclose adjudication on merits and defeat the object of ensuring proper regulation of corporate entities.”

Opposing the plea, the Bank of India submitted that all dues had been cleared more than 30 years ago and that a No Due Certificate dated February 12, 2024 had been issued. It stated that, as per its policy, records are preserved only for eight years after closure and were therefore no longer available. It also clarified that the obligation to intimate satisfaction of charge lay with the borrower and not the bank.

The tribunal noted that the delay of 4215 days was far beyond the prescribed three-year limitation period and found that the ROC's justification based on alleged subsisting charges was untenable in view of the bank's confirmation that no dues or charges remained.

“Since it was a manual system, somewhere the records were lost and the bank has filed and stated that the stated borrower account was closed more than 30 years before.”, it said.

“Hence we observe that there are no charges, and if at all either the Bank of India/ the borrower has not filed any return for removal of charge or the ROC has lost the record of documents since they are old.”, it added.

Holding that the application lacked merit, the tribunal rejected the plea for condonation of delay and disposed of the proceedings.