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Restoration-of-Struck-Off-Companies-under-Section-of-the-Companies-Act
Restoration of Struck-Off Companies under Section 252 of the Companies Act, 2013
| Section | Key Aspect | Details |
|---|---|---|
| Introduction | Objective | Section 252 of the Companies Act, 2013 provides a mechanism for restoring companies that have been struck off the Register of Companies. It aims to safeguard genuine businesses impacted due to non-compliance or inadvertent errors. |
| Reason for Striking Off |
Companies may be struck off for reasons such as: Failure to commence business Non-filing of statutory returns for two consecutive financial years Voluntary strike-off application |
|
| Remedy |
Section 252 offers a remedial process to restore such companies either via: Tribunal (NCLT) Registrar of Companies (ROC) |
Modes of Restoration under Section 252
| Mode | Provision | Eligibility & Timeline | Authorities Involved | Key Requirements |
|---|---|---|---|---|
| Tribunal-based Restoration | Section 252(1) & (3) | Application to NCLT within 3 years of strike-off | NCLT (National Company Law Tribunal) |
Filed by the Company, Member, Creditor, or Workman Proof of business activities at time of strike-off Payment of penalties and fees Affidavit and documentary evidence |
| ROC-based Restoration | Section 252(2) | Application within 3 years from the publication of notice under Section 248 | ROC (Registrar of Companies) |
Filed by the Company or its Members Demonstrate ongoing business or operational activities Filing of overdue documents and returns |
Governing Rules and Regulatory Framework
| Legislation / Rules | Scope | Highlights |
|---|---|---|
| Companies Act, 2013 - Section 248 | Striking off companies | Allows ROC to remove a company from the register for non-compliance like failure to file financials for 2 years or non-commencement of business within 1 year. |
| Section 252 | Restoration of companies | Provides appeal rights to aggrieved parties and the company for restoration through Tribunal or ROC. |
| Companies (Removal of Names of Companies) Rules, 2016 | Procedure for restoration |
Details format, method, and documents required Mandates compliance filings before restoration |
| NCLT Rules, 2016 | Procedural rules for Tribunal |
Petition must be in Form NCLT-9 Accompanied by affidavits, supporting evidence, and court fee Opportunity for hearing |
Required Documents for Restoration
| Document | Purpose |
|---|---|
| Form NCLT-9 / ROC application | Application to initiate restoration process |
| Memorandum of Petition & Affidavit | Legal verification and justification for revival |
| Copy of Strike-Off Notice | Proof of ROC’s strike-off action |
| Bank Statements | Evidence of ongoing business transactions |
| Financial Statements & Annual Returns | Proof of business activity and regulatory compliance |
| Court Fee & Proof of Payment | As mandated by NCLT or ROC |
| Income Tax Returns (if any) | Further substantiation of company’s operations |
Judicial Precedent
| Case | Facts | Judgment | Significance |
|---|---|---|---|
| Kaynet Finance Ltd. v. ROC (NCLAT, 2018) | Company struck off for non-filing of returns; it submitted proof of business operations | NCLAT ruled in favour of the company and directed its restoration, subject to filing of pending documents and penalties | Reinforced that non-filing alone does not imply cessation of business; companies must be given a chance to rectify non-compliance |
Conclusion & Key Takeaways
| Aspect | Details |
|---|---|
| Purpose | Section 252 acts as a protective remedy for companies unjustly removed due to procedural defaults, ensuring continuity of genuine businesses. |
| Responsibility | The onus lies on the applicant to justify operations and compliance, supported by documentary evidence. |
| Legal Guidance | Professional support (Company Secretaries or Legal Experts) is advisable due to the legal complexities involved in restoration. |
| Compliance First | Maintaining regular compliance with ROC filings is the best strategy to avoid legal burden and restoration efforts. |
Disclaimer
This write-up is intended for informational purposes only and reflects the legal position as of the date of drafting. It does not constitute legal advice or substitute professional consultation. Affluence Advisory disclaims any liability for actions taken based on this information. Readers are advised to refer to the original legislation and seek professional guidance for case-specific requirements.