2019 (11) TMI 126 - AT - IBC

Tribunal Confirms Authority's Power to Restore Struck-off Company Names for CIRP; Appeal Dismissed Without Costs.

Elektrans Shipping Pte Ltd. Versus Pierre D’silva And M/s. Elektrans Shipping Private Limited through Manishkumar Patel Resolution Professional of Elektrans Shipping Pvt. Ltd.

The NCLT concluded that the Adjudicating Authority has the power to restore a company's name for initiating the Corporate Insolvency Resolution Process ... Admissibility of application - initiation of CIRP - Restoration of non-existent Company (Corporate Debtor) - the name of M/s. Elektrans Shipping Private Limited (Corporate Debtor) was struck off by the Registrar of Companies on 12th September, 2018 in exercise of powers conferred by Section 248 of the Companies Act, 2013 - Section 9 of the I&B Code - HELD THAT:- Similar issue decided in the case of MR. HEMANG PHOPHALIA VERSUS THE GREATER BOMBAY CO-OPERATIVE BANK LIMITED AND M/S. PENGUIN UMBRELLA WORKS PRIVATE LIMITED [2019 (9) TMI 893 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL NEW DELHI] where it was held that The name of the Company having been struck-off, the Corporate Person cannot file an application under Section 59 for Voluntary Liquidation. In such a case and in view of the provisions of Section 250 (3) read with Section 248 (7) and (8), we hold that the application under Sections 7 and 9 will be maintainable against the ‘Corporate Debtor’, even if the name of a ‘Corporate Debtor’ has been struck-off. Appeal dismissed. Issues Involved:1. Maintainability of the application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against a company whose name was struck off by the Registrar of Companies.2. Interpretation of Sections 248, 250, and 252 of the Companies Act, 2013 concerning the striking off and dissolution of a company.3. The power of the Adjudicating Authority (National Company Law Tribunal) to restore the name of a company for the purposes of initiating Corporate Insolvency Resolution Process (CIRP).Detailed Analysis:1. Maintainability of the Application under Section 9 of the I&B Code:The appellant argued that the application under Section 9 of the Insolvency and Bankruptcy Code (I&B Code) was not maintainable because the name of the corporate debtor, M/s. Elektrans Shipping Private Limited, was struck off by the Registrar of Companies on 12th September 2018. The appellant contended that the Adjudicating Authority erred in admitting the application without considering the status of the corporate debtor as on the date of admission.2. Interpretation of Sections 248, 250, and 252 of the Companies Act, 2013:The Tribunal referred to the relevant provisions of the Companies Act, 2013, specifically Section 248, which empowers the Registrar to remove the name of a company from the register of companies under certain conditions. Sub-section (6) of Section 248 requires the Registrar to ensure that sufficient provision has been made for the realization of all amounts due to the company and for the payment or discharge of its liabilities and obligations before passing an order to strike off the company's name. The Tribunal also noted that the assets of the company must be made available for the payment or discharge of its liabilities even after the company is struck off.Section 250 of the Companies Act specifies that a company shall cease to operate as a company from the date mentioned in the notice of dissolution, except for the purpose of realizing the amount due to the company and for the payment or discharge of its liabilities or obligations.Section 252 provides for an appeal to the Tribunal against the order of the Registrar notifying a company as dissolved. Sub-section (3) of Section 252 allows the Tribunal to restore the name of the company to the register of companies if it is satisfied that the company was carrying on business at the time of its name being struck off or if it is just to restore the name.3. Power of the Adjudicating Authority to Restore the Name of a Company:The Tribunal emphasized that the Adjudicating Authority, in terms of Section 60(1) of the I&B Code, acts as both the Adjudicating Authority under the I&B Code and the Tribunal under the Companies Act. Therefore, the Adjudicating Authority has the power to restore the name of the company and all other persons in their respective positions for the purpose of initiating the Corporate Insolvency Resolution Process (CIRP) under Sections 7 and 9 of the I&B Code, based on an application filed by a creditor or workman within twenty years from the date the name of the company is struck off.The Tribunal referred to its decision in Mr. Hemang Phophalia vs. The Greater Bombay Co-operative Bank Limited and Anr., where it was held that the application under Sections 7 and 9 of the I&B Code is maintainable against a corporate debtor even if the name of the corporate debtor has been struck off.Conclusion:The Tribunal concluded that the Adjudicating Authority is empowered to restore the name of the company for the purpose of initiating CIRP under Sections 7 and 9 of the I&B Code. The application under Section 9 was deemed maintainable, and the appeal challenging the order of admission dated 10th April 2019 was dismissed. The Tribunal found no merit in the appeal and dismissed it without costs.