Case Law Details
Short Summary:
In this flash editorial author discusses the provisions of liability of directors after strike off of Company or winding up of Company by tribunal after Struck off in the record of Registrar of Companies.
Legal Provision:
Companies Act, 2013-
Liability of Directors & Members: Section 248(7) – The Liability, if any, of every Director, Manager or other officer who was exercising any power of management, and of Every Member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.
Undertaking by Managing Director, Director or other person in charge of the management of the Company: – Section 248(6) – In respect of realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company
Tribunal Power: Section 248(8) –Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of Companies.
Effect of company notified as dissolved: Section 250 – After strike off u/s 248 share certificate shall be cancelled from such date except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.
LIABILITY OF COMPANY – AFTER STRIKE OFF
Before conversation on the liability of directors, we should be aware of that Strike off of Company doesn’t mean dissolution of Company. As specifically mentioned in Section 250 that;
Where a company stands dissolved under section 248, it shall on and from the date mentioned in the notice under sub-section (5) of that section
- cease to operate as a company; and
- the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date
- except for the purpose of realizing the amount due to the company and for the payment or discharge of the liabilities or obligations of the company
Note* After reading section 250 one can opine that even after the strike off Company u/s 248, Company is liable to pay debts, obligation, liabilities etc of if any. After reading this statement a question arise who is liable on behalf of Company for realization of all these liabilities, debts, responsibilities etc.
LIABILITY OF DIRECTORS
Combined reading of Section 248 (6), (7) and section 250 states that:
i. 248(7):- Liability of Directors, Members shall continue even after notice of strike off u/s 248(5) as company has not be dissolved.
ii. 248(6):- Directors shall give an “Undertaking” In respect of realization of all amounts due to the company and for the payment or discharge of its liabilities.
iii. 250:- already discussed above.
Note*After combined reading above mentioned provisions one can opine that Directors of the Struck off Company are personally liable for the payment of dues of the Company, discharge of Liabilities or Obligations of Company.
Hence, it is crystal clear from the above mentioned provisiosn that even after the Strike off of Company Directors are liable for liabilities or obligations of the Company.
WINDING UP OF COMPANY – AFTER STRIKE OFF
Tribunal Power: Section 248(8) –Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of Companies.
Note* As per provisions of Section 248(8) it is clear that Even after struck off Tribunal have power to order Winding up of Company. Similar provisions are also available in Companies Act, 1956 being section 560 and section 560(5).
This has been decided by Hon’ble High Court Bombay in the case of Real Time Interactive Media (P.) Ltd V/s Metro Mumbai Infradeveloper (P.) Ltd Dated January 12, 2018, Company Petition No. 382 of 2015
FACTS OF THE CASE:
i. This petition is filed for winding up of respondent company – Metro Mumbai Infradeveloper Pvt. Ltd. on the ground that respondent is indebted to petitioner, is unable to discharge its debts and is commercially insolvent.
ii. Counsel for petitioner states that the recent MCA website extract indicates the status of the company as “Strike Off”
iii. Question to be considered is whether the company, which is struck off the register, can be wound up
iv. As per section 248(5) {mentioned above) it is clear that just because the name of the company is struck off the register under Section 248 of the Companies Act, 2013, that will not come in the way of the Court to pass an order winding up of company
DECISION OF HON’BLE HIGH COURT
In the circumstances, there is no bar in winding up the company. It should be noted that the company has not filed any affidavit in reply opposing the petition. Therefore, the averments in the petition are not controverter. Even to the statutory notice, no reply has been filed. It is settled law that where no response to a statutory notice has been made, the court may pass a winding up order on the basis that amount claimed has not been denied by the company and there is a presumption of inability to pay by the company
Where no response has been made to the statutory notice, the respondent-company runs a risk of winding up petition being allowed. By virtue of Section 434 of the Companies Act 1956 a presumption of the indebtedness can be legitimately drawn by the court where no reply to the statutory notice is forthcoming.
to take steps immediately without waiting for notification. I am satisfied that the company is indebted to petitioner, is unable to discharge its debts, is commercially insolvent and requires to be wound up. Official Liquidator to take steps immediately without waiting for notification.
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(Author can be reached at csdiveshgoyal@gmail.com )
Author Bio
In one of my case the co is said to be dissolved as per section 248 and it is striken by ROC , now I am of the view that the co shall handover all the assets left over to Unsecured Loan creditors along with contracts and other intangible assets and the creditors agree to absorb all the losses shown on asset side of balance sheet . Can we prepare an agreement between co or directors or shareholders to handover all the assets and contracts including intangilbe assets like franchise fees which is not expired and just stop the operation in the name of Co and the creditors shall continue to form a new entity with a new PAN and Bank Account and run the business.?