2023 (7) TMI 441 - HC - Companies Law

Continuation of suit / legal proceedings against the company where the name of the company has been struck off from the records of ROC - Respondent sought decree for rendition of accounts, directing the defendant to render a true and proper accounts for the usage of the software Program of the plaintiff in the various branches of the defendant - HELD THAT - The provisions of Sections 248 and 250 of the Companies Act, 2013, make it very clear that even if the name of the Company is struck off from the Register of Companies maintained by the Registrar of Companies, its registration shall be deemed to have been cancelled from such date. However, there is no embargo for the suit to be filed or to be continued for the purpose of realising the amounts due to the Company and for the payment or discharge of the liabilities or obligations of the Company. In other words, the Company, whose name has been struck off from the Register of Companies maintained by the Register of Companies, cannot carry on any business - there is no case made out for striking off the plaint, merely because the name of the Company has been struck off from the Register of Companies maintained by the Registrar of Companies. That apart, Order VI Rule 16 of C.P.C., deals with specific instances when a plaint can be struck off. Similarly, there are instances under Order IX of C.P.C., when a suit can be dismissed. In any event, it stands confirmed that the petitioner has also filed an application under Order VII Rule 11 of C.P.C. If advised, the petitioner may choose to pray for a relief in the said I.A. on merits if the facts so warrant. A reading of the impugned order also indicates that I.A.No.577 of 2021 filed under Order VII Rule 11 of C.P.C. is pending. I.A.No.577 of 2021 filed under Order VII Rule 11 of C.P.C. shall be disposed on merits and in accordance with law keeping in mind the observations made herein. There are no merit in the present Civil Revision Petition. The Civil Revision Petition is therefore liable to be dismissed - petition dismissed.

Summary

Issues involved:
The issues involved in the judgment are whether a suit can be proceeded with when the plaintiff company has been struck off from the Register of Companies, and the legal implications of such striking off on the pending suit.

Issue 1: Striking off of plaintiff company from the Register of Companies

The petitioner argued that the suit filed by the plaintiff company cannot be proceeded with as the company has been struck off from the Register of Companies under Section 248 of the Companies Act, 2013. The petitioner contended that the plaintiff company does not exist as a legal entity, and therefore, the plaint should be struck off. The petitioner filed a Memo stating that the plaintiff company's legal and corporate entity under the Companies Act was denuded when its name was struck off. The petitioner sought the dismissal of the suit based on the non-existence of the plaintiff company.

Issue 2: Legality of proceeding with the suit after striking off the plaintiff company

The court considered the arguments presented by both parties and observed that the provisions of Sections 248 and 250 of the Companies Act, 2013, allow for the continuation of proceedings even if a company's name has been struck off from the Register of Companies. The court noted that while a struck-off company cannot carry on business, legal actions for realizing amounts due to the company and discharging its liabilities can still proceed. The court emphasized that there was no legal basis for striking off the plaint solely based on the company's name being removed from the Register of Companies. The court also highlighted the specific instances under Order VI Rule 16 and Order IX of the Civil Procedure Code when a plaint can be struck off or a suit can be dismissed. Additionally, the court mentioned that an application under Order VII Rule 11 of the Civil Procedure Code was pending and should be disposed of on its merits.

Conclusion:
The court concluded that there was no merit in the petitioner's argument to dismiss the suit solely based on the plaintiff company being struck off from the Register of Companies. The court emphasized that legal proceedings for realizing amounts due to the company and discharging its liabilities could continue even after the company's name was removed from the Register. The court dismissed the Civil Revision Petition and directed the pending application under Order VII Rule 11 of the Civil Procedure Code to be disposed of on its merits.