Camouflaged Existence - a tool for recovery after strike off

Question for Consideration

Whether an application under Section 7 or 9 for initiating ‘Corporate Insolvency Resolution Process’ is maintainable against a Company/ ‘Corporate Debtor’, if the name of the Company/ ‘Corporate Debtor’ is struck-off from the Register of the Companies?

• First, we need to consider the relevant provisions of the Companies Act 2013 and as also the reasons and manner in which the name of a Company is struck-off.
• The Registrar of Companies is empowered under Section 248 of Companies Act to remove the name of the Company from the Register of the Companies. Before striking off the name of the Company the Registrar has to satisfy himself that ‘sufficient provision has been made for realization of all amount due to the company and for the payment or discharge of its liabilities and obligations 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.’
• As per proviso (6) to section 248 states “the assets of the Company are to be made available for payment or discharge of its liabilities and obligations even after the date of the order removing the name of the Company from the Register of Companies.” Further even when the Company is dissolved u/s 248(5) the liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the said company shall continue and can be enforced as if the Company had not been dissolved.
• Another provision for reference which is relevant is u/s 250 of the Companies Act, 2013 relates to effect of Company notified as dissolved. The Registrar of Companies even after the removal of the name of the Company can enforce the Company for payment or discharge its liabilities and obligations.
• The Tribunal u/s 252 of the Companies Act 2013 has the power to restore the name of the Company (as if it had not been struck off) before the expiry of 20 years from the publication in the Official Gazette of the Notice of the strike off of a Company on an application made by a creditor or workman.
• A Company, whose name has been removed from the Register of the Companies can be liquidated under I&B Code as per amended definition of “winding up” Clause (94-A) of Section 2.
• The name of the ‘Corporate Debtor’ (Company) may be struck-off, but the assets may continue. In the case of reference (Hemang Phophalia ( Appellant/ Corporate Debtor)  vs The Greater Bombay Co-operative Bank Limited( Respondent / Financial Creditor ). There was a default in repayment of debt.
• Whether,  there are assets of the ‘Corporate Debtor’ or not can be looked into only by the ‘Interim Resolution Professional’/ ‘Resolution Professional. ’Since the Company is struck off the Corporate Person cannot file an application under Section 59 for Voluntary Liquidation. Hence, the application under section 7 and 9 will be maintainable against Corporate Debtor, even if the name of the Corporate Debtor has been struck off from ROC .