2022 (10) TMI 698 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether CIRP should be initiated against the Corporate Debtor or not can only be decided after deciding the maintainability of the present Section 7 application? - HELD THAT - As per Section 250 of Companies Act, 2013, the company which is struck off has been given an exception by the Legislature to not to be treated as dissolved in two circumstances i.e., (a) for the purpose of realising the amount due to the company and; (b) for the payment or discharge of the liabilities or obligations of the company. The Corporate Debtor, cannot be considered as dissolved for the purpose of realizing its unpaid dues through the present proceedings - the present Application filed against the Struck off Company is maintainable.

Summary

Issues:
- Maintainability of Section 7 application against a struck-off company under the Insolvency and Bankruptcy Code, 2016.
- Interpretation of Section 250 of the Companies Act, 2013 regarding companies struck off from the register.

Analysis:
1. The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against a company for alleged default. However, it was noted during the proceedings that the company's name had been struck off from the register of companies. The tribunal needed to determine the maintainability of the application against a struck-off company.

2. The applicant relied on a judgment by the NCLAT in a similar matter, emphasizing that even if a company's name has been struck off, applications under Sections 7 and 9 of the I&B Code could still be maintainable against the corporate debtor. The NCLAT highlighted the role of the Adjudicating Authority in restoring the name of the company for the purpose of initiating the CIRP, based on the application filed by the creditor within a specified period.

3. Another judgment by the NCLAT reiterated the view that a company whose name has been removed from the register of companies can be liquidated under the I&B Code. The tribunal plays a dual role as the Adjudicating Authority and the Tribunal under the Companies Act, allowing for directions to restore the company's name and position as if it had not been struck off.

4. Section 250 of the Companies Act, 2013 was referenced, indicating that a struck-off company does not cease to operate entirely, especially for the purpose of realizing unpaid dues or discharging liabilities. The tribunal concluded that the struck-off company could not be considered dissolved solely for the purpose of the ongoing insolvency proceedings.

5. Considering the provisions of the Companies Act and the precedents set by the NCLAT, the tribunal held that the application against the struck-off company was maintainable. The legislative exception and judicial interpretations supported the continuation of the insolvency process against a company whose name had been struck off from the register.

In conclusion, the tribunal determined that the application for CIRP against the struck-off company was maintainable based on the relevant provisions of the Insolvency and Bankruptcy Code, 2016, the Companies Act, 2013, and the interpretations provided by the NCLAT in similar cases. The judgments emphasized the authority of the tribunal to restore the company's position for the purpose of insolvency proceedings, ensuring that creditors can pursue resolution processes even when the company's name has been struck off.