IN THE HIGH COURT OF JUDICATURE AT PATNA COM PET No.6 of 2008 M/S GAUTAM BUDDHA CHILDREN'S HOSPITAL PRIVATE LTD. Versus THE UNION OF INDIA ----------- For the petitioner: Mr. Mukeshwar Dayal For respondent Union of India: Mr. Dudheshwar Singh,C.G.C. --- 14 16.10.2009 Heard learned counsels for the petitioner and the Registrar of Companies. The application has been filed for quashing of the Gazette Notification No.43 dated 12.10.2007 published in the Gazette of India dated 27.10.2007, by which the name of the company, M/s. Gautam Buddha Children’s Hospital Private Limited has been struck off from the Register of Companies under Section 560 (5) of the Companies Act. M/s. Gautam Buddha Children’s Hospital Pvt. Ltd. was registered under the Companies Act on 16.11.1992 having registration No. 03-05105 of 1992-93. There were four Directors of the Company on 29.8.2000. Since disputes and differences had cropped up between the Directors and shareholders, an application was filed on 29.8.2000 by all the four Directors before the Registrar of Companies to strike off the name of the Company. Subsequently some of the Directors - 2 - decided to continue the functioning of the Company and also filed an application on 18.12.2000 before the Registrar of Companies for changing the name of the company to Gautam Buddha Hospsital and Research Institute Pvt. Ltd. which after following due procedure was allowed by order dated 13.2.2001. The company has been continuing in operation continuously as per the submissions on behalf of the petitioner- company. In support of the same the audited balance sheet and profit and loss account of the company from the financial year ending on 31.3.2003 to the financial year ending on 31.3.2008 have also been filed. It is, however, admitted that due to differences among the Directors and for other inadvertent reasons the statutory returns, etc. could not be filed before the Registrar of Companies. It is pointed out that the company has engaged renowned Doctors of the locality, who are specialized in the faculty for providing services to the Hospital on remuneration and has also employed technical and other staffs for the Hospital. Learned counsel refers to the audited balance sheets and profit and loss accounts of - 3 - the company to show that the company has been continuously carrying on its business activity and is not a defunct company. It is also pointed out that regular transactions have also been carried out with the Bank, for which the account statement from the Bank has also been annexed. However, the Registrar of Companies in exercise of power under Section 560 (5) of the Companies Act struck off the original name of the petitioner company mentioning the correct registration number, which the petitioner subsequently learnt, by the aforesaid Gazette Notification. Aggrieved by the said action, the petitioner has approached this Court for restoration of its name in the Register of Companies. It is submitted by learned counsel for the petitioner that the company was continuously functional and carrying on its activity, which is evident from the audited balance sheets and profit and loss accounts of the company as well as the statement of account of the Bank, but the name has been wrongly struck off without following the mandatory procedure laid down in Section 560 of the Companies Act. It is - 4 - contended that no notice at all was issued to the petitioner-company before its name was struck off as required under the provisions of the Companies Act. It is further urged that the Registrar of Companies has struck off the name only on the directive of the Government of India, which as a statutory authority shows complete non-application of his independent mind and thus his action is vitiated on the said ground also. Thus striking off the name of the company from the Register of the Companies is non est and fit to be set aside. It is further submitted that in any view of the matter when the company is carrying on its operation continuously since its establishment, for the sole reason that the statutory returns were not submitted in time, the name of the company could not have been struck off, as there are other provisions for non-compliance of such requirements of the Companies Act, but the same cannot lead to striking off the name of the company treating it to be a defunct company without following the statutory provisions and making necessary enquiry in terms of the explanation that may be - 5 - given by the company. Learned counsel for the Registrar of Companies, on the other hand, submits that the Company was not filing its statutory returns from the very beginning. It is submitted that all the four Directors of the Company had also filed a petition before the Registrar of Companies on 29.8.2000 to strike off the name of the company from the Register of Companies and accordingly, the Registrar of Companies has rightly strike off its name. Learned counsel also submits that an instruction has been received from the Ministry of Company Affairs by letter dated 8.11.2006 to strike off the name of such defunct company, which has not filed statutory returns for a period of three consecutive years or more and thus on considering the aforesaid petition dated 29.8.2000 along with the instructions contained in the letter dated 8.11.2006, the name of the company was struck off from the Register of Companies by notification dated 12.10.2007 in exercise of power under Section 560 (5) of the Companies Act. It is also submitted by learned counsel - 6 - that subsequent to the filing of the petition dated 29.8.2000, no further application was received withdrawing the said application for striking off the name of the company and thus, the Registrar of Companies has rightly acted in the matter. On a consideration of the aforesaid facts and submissions of learned counsels for the parties, this Court is of the view that the action of the Registrar of Companies is wholly unjustified being contrary to the mandatory provisions of Section 560 of the Companies Act. It is evident that before exercising the power to strike off the name of the company under sub- section (5) of Section 560 of the Companies Act, the Registrar must have reasonable cause to believe that the Company is not carrying on business or in operation and for the said purpose he is required under sub-section (1) of the said Section to send to the company by post a letter enquiring whether the company is carrying on business or is in operation. If the Registrar does not within one month of the sending of the said letter receive any answer thereto then he is required to send to the - 7 - company by registered post a letter referring to the first letter and stating that no answer thereto has been received and further warning the company that if no reply is received within one month from the date thereof then a notice will be published in the Official Gazette with a view to striking off the name of the company from the Register. Only thereafter, if the answer is received in the affirmative that the company is not carrying on business or in operation or does not within one month after sending the second letter receive any answer, the Registrar of Companies may publish in the Official Gazette and send to the Company by registered post a further notice that if no satisfactory show cause is received within three months, then the name of the company shall be struck off from the Register of Companies and the Company will be dissolved. Thereafter, if no cause is shown to the contrary then at the expiry of three months period mentioned in the notice under sub- section (3), the Registrar may act under sub-section (5) of Section 560 of the Act and strike off the name of the company from the Register of Companies, whereupon the Company - 8 - shall stand dissolved. No reply at all has been given by the Registrar in his counter affidavit to the specific contention raised on behalf of the petitioner that the procedure under Section 560 of the Companies Act has not been complied with, as no notice was ever sent to the petitioner as provided by Section 560 of the Act. This Court provided another opportunity to the Registrar of Companies to file a supplementary counter affidavit answering the said point but even in the supplementary counter affidavit filed, the said fact has not been answered and other issues regarding the filing of the earlier application for striking off the name of the Company have been raised. It is, thus, evident that the fact regarding non-sending of notice under the provisions of Section 560 of the Act has been admitted by the Registrar of Companies. In the said circumstances, the action of the Registrar of Companies is contrary to the mandate of Section 560 of the Act and the same has to be treated as illegal and non est. For the said reasons the notification No.43 dated 12.10.2007 published in the Gazette - 9 - of India dated 27.10.2007 is fit to be quashed. This Court is also of the opinion that in view of the audit reports of accounts submitted by the petitioner-company and the statements of the Bank annexed that the company has been carrying on its business and is in operation continuously and it is certainly not a defunct Company. Had the Registrar taken care by following the mandatory provisions prescribed under the Act, he would have discovered that the company was not defunct and its name could not have been struck off by the Registrar of Companies in exercise of his power under Section 560 (5) of the Act. The Registrar of Companies has further shown non- application of mind to the fact that subsequent to the filing of the application dated 29.8.2000 by the Directors for striking off the name of the company, an application was filed on 18.12.2000 for change of the name of the petitioner from Gautam Buddha Children’s Hospital Pvt.Ltd. to Gautam Buddha Hospital and Research Institute Private Limited, which application for changing the name of the company was allowed by order dated 13.2.2001. Thus, the - 10 - very filing of the subsequent application for change of name of the petitioner-company, which was allowed by the Registrar, would show that the earlier application dated 29.8.2000 was impliedly withdrawn by the said action of the Directors of the Company and the plea taken by the Registrar in his reply that no such letter of withdrawal was filed is without any basis. This Court also finds that there was further non- application of mind to the aforesaid facts because the name of the petitioner company having been changed from Gautam Buddha Children Hospital Ptd. Ltd. to Gautam Budha Hospital and Research Institute Pvt. Ltd., it could not have been struck off from the Register of Companies in its original name of Gautam Buddha Children’s Hospital Pvt. Ltd. as the said name became non-existent in the eye of law once the name of petitioner-company was permitted to be changed after following the due procedure. For all the aforesaid reasons, this Court is of the view that striking off the name of the company from the Register of Companies is illegal and non est. It is, accordingly - 11 - quashed. Consequently, the name of the company being Gautam Buddha Hospital and Research Institute Pvt. Ltd. shall continue to remain in the Register of Companies, as though the notification dated 12.10.2007 published in the Gazette dated 27.10.2007 had never existed. VPS ( Ramesh Kumar Datta, J. )