NCLAT upheld the restoration of Ganton Projects but reduced the ₹10 lakh cost imposed to ₹5 lakh, holding the original amount to be disproportionate under Rule 87A of the Companies Rules.
NCLAT Reduces Restoration Cost to ₹5 Lakh in Ganton Projects Case
The National Company Law Appellate Tribunal (NCLAT) upheld the restoration of struck-off company Ganton Projects Ltd. but reduced the cost imposed from ₹10 lakh to ₹5 lakh, observing that the higher amount was disproportionate and unreasonable under Rule 87A of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2017.
The tribunal noted that while regulatory deterrence is important, penalties must remain commensurate with the nature of non-compliance. The reduction was justified on grounds that the exorbitant cost could impede access to justice and operate harshly against companies seeking restoration due to procedural lapses rather than mala fide conduct.
Implications for Practitioners
The ruling reinforces judicial restraint in imposing financial costs during restoration proceedings. Legal practitioners should assess proportionality when advising clients on restoration applications, ensuring that costs do not become punitive. It also signals NCLAT’s willingness to intervene where administrative sanctions appear excessive.
