Section 9 application rejected against struck-off company as CIRP aims at revival not debt recovery

The NCLAT dismissed an appeal challenging rejection of a Section 9 application filed against a corporate debtor whose name was struck off by RoC. The court clarified that winding up is a debt recovery mechanism involving company dissolution and asset liquidation, while CIRP under the Code aims at corporate revival, not debt recovery. The court distinguished between these processes, noting CIRP protects corporate debtors and focuses on revival rather than liquidation. The tribunal held that striking off a company's name doesn't automatically restore it upon filing insolvency applications, and Section 252(3) provides separate appeal rights for challenging RoC orders, requiring proper pleadings and evidence.

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Issues Involved:
1. Whether an application u/s 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) can be maintained against a Corporate Debtor whose name has been struck off by the Registrar of Companies (RoC).
2. Interpretation of relevant provisions of the Companies Act, 2013 and the IBC regarding the dissolution and restoration of a company.

Summary:

Issue 1: Maintainability of Application u/s 9 of IBC Against Struck-Off Corporate Debtor
The Appellant, an Operational Creditor, filed an application u/s 9 of the IBC against the Corporate Debtor for the resolution of an amount of Rs. 18,34,120.93/-. The application was dismissed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench) on the ground that the Corporate Debtor's name had already been struck off by the RoC. The Appellant contended that striking off the name of the Corporate Debtor does not bar the initiation of the Corporate Insolvency Resolution Process (CIRP) and relied on previous decisions (Hemang Phophalia Vs. The Greater Bombay Co-Operative Bank Ltd. & Anr., and Elektrans Shipping Pte. Ltd. Vs. Pierre D'Silva) to support their argument.

Issue 2: Interpretation of Relevant Provisions
The Tribunal examined various provisions of the Companies Act, 2013, and the IBC. It was noted that:
- Section 248 of the Companies Act empowers the RoC to remove the name of a company from the register if it has not been carrying on business or operations.
- Section 250 states that a company shall cease to operate as a company and its certificate of incorporation shall be deemed canceled from the date of publication of the notice.
- Section 252 provides the right of appeal against the order of the RoC, allowing restoration of the company's name if it was carrying on business or it is just to restore it.

The Tribunal also discussed the purpose of the IBC, which is to ensure the revival and continuation of the Corporate Debtor by protecting it from its own management and from liquidation. It was emphasized that the IBC is not a debt recovery mechanism but a means to revive a company in debt.

Conclusion:
The Tribunal concluded that the previous judgments relied upon by the Appellant (Hemang Phophalia and Elektrans Shipping) were per incuriam as they did not consider the relevant provisions of the Companies Act and the IBC in their true sense. It was held that an application u/s 9 of the IBC is not maintainable against a Corporate Debtor whose name has been struck off by the RoC. The appeal was dismissed, affirming that the Adjudicating Authority's order was correct and did not require interference.

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