MCA has been striking off companies for not filing its annual returns and annual financial statements for a period of 3 years consecutively. Also lately it has been issuing show cause notices to companies who have not done any business for the last two years, to strike their names off from the register of companies. While there is a provision in the companies act, 2013 in section 248 for issuing of such show cause notices, the moot question to ask is whether it is just to send show cause notices to companies just because they have no business income for the last 2 years. According to me it is grossly unfair because businesses have upturns and downturns and when there is downturn, it could last lot more years, sometimes half a decade also. When there is general recession, then businesses fail, like in the real estate industry there is a recession for so many years. Shipping industry has its worst over woes for nearly a decade or so. Businesses suffered huge setback due to the ill advised demonetisation and there was disruption in the business due to the GST rollout. Plus industry itself goes through one crises after another, there could be technological changes taking place rapidly, disruption etc. which could all affect the business in one way or another. Industries are starved of bank funds due to which they are unable to do capex or even meet working capital requirements. Therefore in light of the above, what is the justification for issuing strike off show cause notices to companies just because they have no business income for two consecutive years. Especially when the companies have been doing the compliance all properly all along - appointing auditors, filing the statutory annual forms and event based forms etc.
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