The Hon’ble National Company Law Appellate Tribunal (“NCLAT”) has held that the Corporate Insolvency Resolution Process (“CIRP”) can be initiated against a company whose name has been struck off by the Registrar of Companies (“ROC”) on an application filed under section 7 or section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) by any creditor or workman of such company.
This came into the light in appeals filed before the Hon’ble NCLAT in two similar matters i.e. Mr. Hemang Phophalia vs. The Greater Bombay Co-operative Bank Limited and Anr. and Elektrans Shipping Private Limited vs. Pierre D’silva and Anr. on 05th September 2019 and 06th September 2019 respectively.
In the recent judgement passed on 06th September 2019, the corporate debtor submitted before the Hon’ble NCLAT that since the name of the corporate debtor was struck off by the ROC on 12th September 2018, in exercise of powers conferred by Section 248 of the Companies Act, 2013, therefore an application under section 9 of IBC was not maintainable and the Hon’ble National Company Law Tribunal, Mumbai Bench (“NCLT”) erred in admitting the application without considering the status of the corporate debtor as on the date of admission.
The Hon’ble NCLAT dismissed the appeal filed by the corporate debtor and restored the corporate debtor and its directors, officers, etc. in terms of section 252(3) of the Companies Act. While passing the order, the Hon’ble NCLAT placed reliance on its earlier decision (passed on 05th september 2019) and the provisions of section 248, 250, 252 of the Companies Act, 2013 along with Section 60 of the IBC, wherein it observed and held as under: –
- The ROC before passing an order of removal of the name of the company from the Register of Companies has to satisfy himself that sufficient provision has been made for realization of all amount due to the company and for the payment or discharge of its liabilities and obligations within a reasonable time;
- The obligations of the company to discharge its liabilities and realization of outstanding dues continues even after the removal of the name of the company from the ROC;
- The company’s assets are to be made available for the purposes of payment or discharge of its liabilities and obligations even after the date of the order removing the name of the company from the ROC;
- The liability, if any, of every director, manager or other officer exercising any power of management, and of every member of the company dissolved shall continue and may be enforced as if the company had not been dissolved;
- No employee working, or the shareholder(s) or director(s) ceased to be shareholder(s) or director(s) cannot be a ground to reject an application filed under section 7 or 9 of the IBC;
- The removal of a company from the register will, in no manner, affect the power of the adjudicating authority to wind up a company;
- A company dissolved under section 248 shall cease to operate as a company except for the purposes of realizing the amount due to the company and the payment or discharge of the liabilities or obligations of the company;
- The company whose name has been struck off from the ROC can be liquidated under the IBC;
- The procedure of CIRP is to be followed (except for voluntary liquidation of a company), if a proceeding is initiated under section 7 or 9 of the IBC, wherein whether the corporate debtor has assets or not is to be looked into only by the interim resolution professional or the resolution professional.
In view of the above, it was held by the Hon’ble NCLAT that the “adjudicating authority” under the IBC and “tribunal” under the Companies Act has the power to restore the name of the company and all other persons in their respective position, if an application is filed by any creditor or workman before the expiry of twenty years from the date the name of the company is struck-off from the ROC under sub-section (5) of Section 248.