Difference B/w Provision U/s 252(1) & 252(3) – Revival of Companies

CS Divesh Goyal

Short Summary:

In this Flash editorial, the author begins by referring the provisions of section provisions of section 252(1) and Section 252(3) relating to REVIVAL OF COMPANIES STRUCK off from the record of the Registrar due to order of ROC or application of the Company. The main thrust of the article, however, is upon the ‘Difference B/w 252(1) and 252(3) of Companies Act, 2013.

This is article no. 247 of the series of editorials written by the author on corporate laws {Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.

Revival of Struck off Company

INTRODUCTION:

Two sub sections [Section 252(1) and Section 252(3)] of Companies Act, 2013 states about the provisions of “Revival of Strike Off” Company. The major question comes into mind while reading these both sections are “What is the difference between provisions of both sub-sections”.

Statutory Provisions:

A. Section 252(1):

Statutory Provisions: 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:

B. Section 252(3):

A company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for 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 from the register of companies.

both the Sub – Sections

Sub Section (1)

i. First:

This sub section start with language “Any Person aggrieved by the order of Registrar”. Here emphasis given on “Any Person”.

ii. Second:

Word use – may file an “Appeal” to the Tribunal.  The legal meaning of word ‘Appeal’ is “The complaint to a superior court of an injustice done or error committed by an inferior one, whose judgment or decision the court above is called upon to correct or reverse.”

Sub Section (3)

i. First:

This sub section starts with language “If a company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies”.

Here emphasis given on “company, or any member or creditor or workman.”

ii. Second: The Tribunal on an “Application” made. Legal meaning of work ‘Application’ is A “putting to, placing before, preferring a request or petition to or before a person. The act of making a request for something”

Analysis

By Looking at the above mentioned ‘Analysis’ and ‘Statutory Provisions’ one can interpret that:

♦ Sub Section (1) of Section 252:

If a Company is struck off by Registrar of Companies u/s 248, Any Person Aggrieved by the order of ROC may file appeal before NCLT for restoration of the name of the Company.

• Limitation Period: Appeal can be file within a period of 3 (Three) years, from the date of order of Registrar
• Who can file: Any aggrieved Person (ROC itself)
• Ground of Restoration: either inadvertently or on the basis of incorrect information furnished by the company or its directors

Further One Situation: Application by ROC for restoration of Name of Company – (Revision of order of ROC)

If the ROC himself is satisfied that its issue order of strike off of Company either inadvertently or on the basis of information furnished by Company or its directors, it can file application in NCLT within 3 (Three) year of passing of the Order.

♦  Sub Section (3) of Section 252:

If a Company is struck off from the record of the registrar, then company, or any member or creditor or workman aggrieved by the company having its name struck off may file application before NCLT for restoration of the Company.

• Limitation Period: Application can be file within a period of 20 (Twenty) years, from the date publication of notice u/s 248(5) in the Official Gazette.
• Who can file: A company, or any member or creditor or workman.
• Ground of Restoration: If Tribunal satisfy that at time of being struck off was:

– Carrying out business or

– was in operation; or

– Just the name of the Company be restored to Register of Companies.

B. As all are aware that ROC has struck off 100,000 companies from its record u/s 248(5) Suo-mot. There are many questions arise after struck off of Companies from the record of the Registrar. The major question comes into mind while reading the sections 248 to 252 are:

I. Who will be liable for discharge liabilities of the Company, as Company is separate legal entity?”

A. If Company Strike off on the Application of the Company:

As mentioned in Section 248(6) if the Company is strike off by the ROC on the application of u/s 248(2) by filing of e-form STK-2. “The Registrar, before passing an order shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company”

Hence, it is the duty of the ROC to ensure that all the liabilities has been paid by the Company, if liabilities are still there, then sufficient provisions has been made for the payment or discharge of its liabilities or obligation and if necessary can obtain undertaking form the directors of the Company.

B. If Company Strike off by the ROC on Suo-Moto:

As per the provisions of the Act, Company is separate legal entity from its members and directors. Members are liable only upto the amount of unpaid share capital of the Company.

One major question arise “What will be the status of liabilities of the Company on suo-moto strike off by ROC? Who will discharge such liabilities?, How these liabilities shall be discharge? What are the remedies are available to the Creditor against the Company etc.

II. What shall be the treatment of the properties of struck off Companies?

If a Company struck off from the register of Companies either suo-motto by ROC or on the application of the Company. The assets of the Company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.

Hence, one can interpret that a Company can be strike of even it have assets. However, the major question arise is “What will be the treatment of the assets after discharge of all the liabilities”

III. What are the right available with the creditors of the Company, if any?

They can file an appeal / application u/s 252(1) or (3) with the NCLT for restoration of name of the Company from the record of the Registrar.

Conclusion:

There are many other questions arise while reading the Section 248 to 252. Like: (i) Whether a Company can apply for winding up after removal of name of Company from the register of the ROC. (ii) Whether it is mandatory for the Company to complete annual filing before filing of application for strike off of Company. (iii) Whether directors of the company shall be personally liable for the liabilities of the Company arising after strike off of the Company.

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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