NCLT Dismisses Insolvency Plea Against Struck-Off Company Under IBC
UPSC / SSC current affairs note · Polity
Why in news
The Mumbai NCLT dismissed a ₹11.73 crore insolvency petition against a company whose name was struck off by the RoC, reinforcing that IBC proceedings cannot be initiated against dissolved companies. This clarifies the legal position on corporate debtor status and the need for restoration before filing.
Background
Adamji Investments filed a Section 7 petition under IBC against M Cons Media Marketing for alleged default. The respondent company was struck off by RoC in April 2022 under Sections 248/250 of Companies Act, 2013. The creditor did not seek restoration of the company's name before filing the plea.
Key facts
Mumbai NCLT dismissed Adamji Investments' ₹11.73 crore insolvency petition against M Cons Media Marketing.
The respondent company's name was struck off by RoC on April 7, 2022 via Form STK-7 after a public notice in December 2021.
NCLT held that a struck-off company ceases to be a 'Corporate Debtor' under IBC, 2016.
Service of notice on a non-existent entity violates principles of natural justice and is invalid.
The creditor had not sought restoration of the company's name under Sections 248(8) or 252(3) of Companies Act before filing the plea.
The petition was filed under Section 7 of IBC for alleged default of ₹11.73 crore (₹2.18 crore principal + ₹9.55 crore interest).
NCLT relied on precedents: Starlog Enterprises Ltd. v. ICICI Bank Ltd. (NCLAT) and Maruti Suzuki (Supreme Court) regarding service on dissolved companies.
The order cited the Fedex judgment on legal position of struck-off companies.
Prelims pointers
- NCLT: National Company Law Tribunal
- IBC: Insolvency and Bankruptcy Code, 2016
- Section 7 of IBC: Initiation of CIRP by financial creditor
- CIRP: Corporate Insolvency Resolution Process
- RoC: Registrar of Companies
- Sections 248 and 250 of Companies Act, 2013: Power to strike off company name
- Form STK-7: Notice of striking off and dissolution
- Sections 248(8) and 252(3) of Companies Act: Restoration of struck-off company
- NCLAT: National Company Law Appellate Tribunal
Mains angles
- Discuss the legal position on initiation of insolvency proceedings against a dissolved/struck-off company under IBC.
- Examine the interplay between the Companies Act, 2013 (striking off provisions) and the IBC, 2016.
- Critically analyze the requirement of restoration of company name before filing insolvency petition.