Struck-off company's assets remain liable post-insolvency. Tribunal upholds Section 7 application.

The Tribunal held that the application under Section 7 of the Insolvency and Bankruptcy Code was maintainable against a company whose name was struck off from the Register of Companies. The Tribunal emphasized that even after the name of a company is struck off, its assets remain available for the payment of liabilities. The Tribunal also rejected arguments regarding the bar of limitation and the impact of non-functionality and lack of assets on the maintainability of the application. The appeal was dismissed, and the application under Section 7 was upheld.

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Issues Involved:
1. Maintainability of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against a company whose name was struck off from the Register of Companies.
2. Bar of limitation on the application under Section 7.
3. Impact of non-functionality and lack of assets on the maintainability of the application under Section 7.

Issue-wise Detailed Analysis:

1. Maintainability of Application under Section 7 Against a Struck-off Company:

The primary issue was whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) is maintainable against a company whose name has been struck off from the Register of Companies. The Appellant contended that since the name of the 'Corporate Debtor' was struck off under Section 248 of the Companies Act, 2013, the application was not maintainable.

The Tribunal referred to the relevant provisions of the Companies Act, 2013, specifically Chapter XVIII, which deals with the removal of names of companies from the Register of Companies. Section 248 empowers the Registrar to remove the name of a company if it has failed to commence business within one year of its incorporation or is not carrying on any business for two preceding financial years.

The Tribunal emphasized that even after the name of a company is struck off, the assets of the company remain available for the payment or discharge of its liabilities and obligations. Section 250 of the Companies Act states that a dissolved company ceases to operate except for the purpose of realizing amounts due and discharging liabilities. Section 252 allows for the restoration of a company's name to the Register of Companies on an application by a creditor, member, or workman within twenty years from the publication of the notice of dissolution.

The Tribunal concluded that the Adjudicating Authority, which also functions as a Tribunal under the Companies Act, has the power to restore the name of the company for the purpose of initiating the Corporate Insolvency Resolution Process (CIRP) under Sections 7 and 9 of the I&B Code. Therefore, the application under Section 7 was maintainable even if the company's name had been struck off.

2. Bar of Limitation on the Application under Section 7:

The Appellant argued that the application under Section 7 was barred by limitation. However, the Tribunal did not find merit in this argument. The judgment did not elaborate on the specific reasons for rejecting the limitation argument, but it can be inferred that the Tribunal found the application to be within the permissible time frame for initiating CIRP.

3. Impact of Non-functionality and Lack of Assets on Maintainability:

The Appellant submitted that the company was non-functional for several years, had no employees, and no assets, and therefore, the Resolution Professional could not make the 'Corporate Debtor' a going concern. The Tribunal rejected this argument, stating that the non-functionality of the company or the absence of employees and assets cannot be grounds to reject an application under Sections 7 or 9 of the I&B Code.

The Tribunal highlighted that the objective of the I&B Code is to maximize the value of the assets of the Corporate Debtor and to promote entrepreneurship and availability of credit. The first step is to ensure a time-bound resolution process rather than immediate liquidation. The presence or absence of assets can only be determined by the Interim Resolution Professional or Resolution Professional during the CIRP.

Conclusion:

The Tribunal held that the application under Section 7 of the I&B Code was maintainable against the 'Corporate Debtor' even if its name was struck off from the Register of Companies. The Adjudicating Authority has the power to restore the name of the company for the purpose of initiating CIRP. The appeal was dismissed with no merit, and the application under Section 7 was upheld.

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