TaxTMI 
TaxTMI 
2024 (5) TMI 998
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....rate Debtor) for the resolution of an amount of Rs. 18,34,120.93/- has been dismissed because the name of the Corporate Debtor had already been struck off by the Registrar of Companies (in short 'RoC') from the register maintained by him. 2. In brief, the Appellant, namely, Fedex Express Transportation and Supply Chain Services (India) Pvt. Ltd. is a provider for integrated and turnkey services in shipping, logistics, supply chain management and project. 3. The Corporate Debtor, namely, M/s Zipker Online Services Pvt. Ltd., availed shipping and logistics services from the Appellant. 4. In lieu of the service, the Appellant raised certain invoices from 07.05.2019 to 08.10.2019 but the Corporate Debtor failed to honour the same and thus the Operational Creditor sent a demand notice, under Section 8 of the Code, for payment of Rs. 18,34,120.93/- with interest but did not receive any response from the Corporate Debtor and hence, filed the application under Section 9 of the Code for the resolution of the aforesaid amount mentioned in the demand notice. 5. The application, filed under Section 9 of the Code, by the Appellant has been dismissed by the Adjudicating Authority, vi....
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.... a company incorporated under this Act or under any previous company law, therefore, the company has to be in existence for the purpose of admitting the application filed either under Section 7 or 9 of the Code to initiate CIRP under the Code but in the present case, the company ceased to exist in terms of Section 248 (5) of the Act as its name was struck off from the register of the RoC. 11. It is further submitted that the effect of company, notified as dissolved in Section 250 of the Act and right to sue in respect of the liability of the Company under Section 248(7)&(8) and exception in Section 250 has nothing to do with the filing of Section 9 of the Code which is not meant for the recovery proceedings but for the resolution. He has further submitted that with the filing of application under Section 7 of the Code the company will not be automatically restored in terms of Section 252(3) rather the order passed by the RoC under Section 248(5) has to be specifically challenged by way of an appeal provided under Section 252(3) to prove before the Adjudicating Authority that at the time when its name was struck off, the company was carrying on business or was in operation or oth....
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....ration] from each of the subscribers to the memorandum and from persons named as the first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief ; (d) the address for correspondence till its registered office is established ; (e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed ; (f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Numb....
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.... company or by any fraudulent action, the Tribunal may, on an application made to it, on being satisfied that the situation so warrants , - (a) pass such orders, as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or (b) direct that liability of the members shall be unlimited; or (c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or (e) pass such other orders as it may deem fit: Provided that before making any order under this subsection,- (i) the company shall be given a reasonable opportunity of being heard in the matter; and (ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability." 19. According to the aforesaid provision, for the purpose of incorporation of a company, certain documents and information are filed with the Registrar, mentioned in Section 7(1)....
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....its business within one year of its incorporation;[or] * * * * * (c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under [ section 455 ; or ] [(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under subsection (1) of section 10A; or (e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.] he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. (2) Without prejudice to the provisions of sub-section (1), a company may, af....
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.... company the name of which has been struck off from the register of companies." 26. As per Section 248(1) of the Act, the Registrar should have reasonable cause to believe four aspects for taking action to remove the name of the Company from the RoC which are mentioned in Section 248(1)(a)to(e) of the Act and in this regard, is required to send a notice to the company and all the directors of the company, requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. 27. Section 248(2) of the Act deals with the right of company itself to get its name removed from the Register. 28. As per Section 248(4) of the Act, the Registrar is required to publish the notice, issued under Section 248(1)and(2) of the Act, in the prescribed manner in the Official Gazette for the information of the general public and as per Section 248(5) of the Act, the Registrar, until some cause is shown to the contrary, after the expiry of time mentioned in the notice, strike off the name of the company from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publi....
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.... the realisation of the amount either due to the company and for the payment or discharge of the liabilities or obligation of the Company. 31. Whenever, an order under Section 248(5) is passed by the Registrar, a right of appeal is provided under Section 252 of the Act before the Adjudicating Authority to challenge the same. Section 252 of the Act is reproduced as under:- "252. Appeal to Tribunal.-(1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies: Provided that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned: Provided further that if the Regi....
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....s the power to the Registrar to file an appeal itself within a period of three years, if he comes to the conclusion that the name of the company has been inadvertently struck off on the basis of an incorrect information furnished by the Company or its directors. 33. Section 252(3) of the Act is an another form of a right of appeal which is provided to a company, or any member or creditor or workman if they feel aggrieved against the striking off the name of the company from the register of companies. The said application can be filed before the expiry of twenty years from the publication in the Official Gazette of the notice issued under subsection 248(5) and in order to succeed in the said application, the Applicant/Appellant has to satisfy that (a) the company, at the time when its name was struck off, was carrying on business (b) was in operation (c) otherwise it is just that the name of the company be restored to the register of companies. The power has been bestowed upon the Tribunal to pass an order for the restoration of the company and placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off ....
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....the Corporate Debtor which means a corporate person who owes a debt to any person. Since, we have to deal with the contention of the Respondent that the Application under Section 7 or 9 can be filed only against a corporate debtor and an application under Section 10 can be filed by the Corporate Debtor, therefore, the definition of Corporate Debtor assumes importance and significance. In this definition, three words have been used (a) corporate person (b) debt (c) person. 39. Corporate Person is defined in Section 3(7) of the Code which means a company as defined in clause (20) of section 2 of the Companies Act, 2013. Debt is defined under Section 2(11) of the Code which means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. Person is defined under Section 2(23) of the Code which read as under:- ""person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute, and includes a person resident outside India;" 40. Since, there is a reference of claim in ....
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....ovision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" 42. The Code is divided into various chapters in which chapter II deals with CIRP. Section 6 of the Code defines the person who may initiate the CIRP and the said section is reproduced as under:- "6. Where any corporate debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter." 43. Since, it is an application filed under Section 9 of the Code, therefore, it is relevant to refer to Section 8 of the Code under which the operational creditor, on the occurrence of default is required to deliver a demand notice of the unpaid operational debt to the Corporate Debtor. Section 8 is reproduced as under : - "8. (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment o....
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.... be specified. (4) An operational creditor initiating a corporate insolvency resolution process under this section, may propose a resolution professional to act as an interim resolution professional. (5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order- (i) admit the application and communicate such decision to the operational creditor and the corporate debtor if,- (a) the application made under sub-section (2) is complete; (b) there is no repayment of the unpaid operational debt; (c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if- (a) the application made under sub-section (2) is incomplete; (....
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....d further also allot to the company a corporate identity number. The incorporation of the company comes to an end with the publication of notice by the Registrar in terms of Section 248(5) of the Act and the effect of the company so dissolved under Section 248(5) of the Act is in Section 250 of the Act as per which the company cease to operate as a company and the certificate of incorporation issued to it is deemed to be cancelled from the such date. Section 252(1) is a right of appeal to any person who is aggrieved against the order of RoC passed under Section 248 of the Act with a caveat of limitation of three years and Section 252(3) is right of appeal to a company or any member or creditor or workmen with a caveat of filing the appeal within a period of 20 years from the date of publication under Section 248(5) of the Act subject to the condition that it shall satisfy the Adjudicating Authority (NCLT) that the company was, at the time of its name was struck off, carrying on business or was in operation or otherwise it is just that the name of the company be restored to the register of the RoC. 47. These are the factual aspects which have to be pleaded and proved before the A....
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....revival and rehabilitation of the 'Corporate Debtor'/ Company by way of 'Resolution' and maximization of the value of assets of the 'Corporate Debtor' and balancing the interest of all the stakeholders." Yet it has been held that "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." Finally, it has been held that if the application under Section 7 or 9 of the Code is filed then the name of the company which is struck off from the register of RoC is deemed to be restored in terms of Section 252(3) and in this regard a finding has been recorded in para 23 which is reproduced as under:- "23. In view of the aforesaid provision, we hold that the Adjudicating Authority who is also the Tribunal is empowered to restore the name of the Company and all other persons in their respective position for the purpose of initiation of 'Corporate Insolvency Resolution Process' under Sections 7 and 9 of the I&B Code based on the application, if filed by the 'Creditor' ('Financial Cr....
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....s shareholders. The winding up of a company can be initiated voluntarily by the company's shareholders by passing a resolution and appointing liquidator to oversee the process and winding up can also be by an order of the Court wherein the Court appoints the liquidator and the process is governed by the Rules set up in the Act and other applicable laws. This process is initiated when the company is unable to pay its debts or when it is just and equitable to do so. The circumstances under which a company may be wound up by the Tribunal includes (a) if the company has by special resolution resolved that it be would up by the Tribunal (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting (c) if the company does not commence its business within a year from its incorporation or suspends its business for a whole year (d) if the company is unable to pay its debts (e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up. In the definition of winding up under Section 2(94) winding up means winding up under the Act or liquidation under the Code as applicable. 56. Thus, the mechanism of ....