BASANTI COTTON MILLS Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) Section 560 of the Companies Act, 1956 is involved in this case. It provides that if the Registrar of Companies has reasonable cause to believe that a company is not carrying on business or the company is not in operation, he can strike off its name from the register. A challenge to that decision lies to the High Court under Section 560 (6) of the Act. This appeal may be preferred by the company or by any member or creditor thereof. The company whose name was struck off by the above process was Basanti Cotton Mills (1998) Pvt. Ltd.

(2.) This matter stood consideration before me on an earlier occasion. The name of this company had been struck off the register by an order of the Registrar of Companies, West Bengal, on 27 th January 2006. The applicant had challenged that decision in 2010. The Central Government filed an affidavit in that application to the effect that the procedure under Section 560 of the Act had not been followed by them. On this admission by them, by an order dated 6 th October, 2010 this Court set aside the decision of the Registrar but reserved to him the right to take fresh action in the future in accordance with law.

(3.) Mr. Gopal Navinhhai Dave, Mr. Nikhil Vasantalal Merchant and Mr. Paresh Vasantalal Merchant made an application for vacation of that order. They claimed themselves to have been the directors, principal shareholders and persons in control of the company before its being declared defunct. It was numbered as C.A. No. 95 of 2011. It came up before me for consideration. On 22 nd March, 2011 the application was disposed of. The entire matter was referred to the Registrar for reconsideration. The Company's name would remain to be struck off. But if the Registrar while deciding whether it was doing any business or not found that determination of this question involved substantial oral and documentary evidence, he would have to relegate the parties to a suit in a court of law. In such event, he could only do so upon restoring the name of the company in the register. The order dated 6 th October, 2010 was set aside.