Strike Off of Companies & LLPs in India: Detailed Article with Case Laws

Introduction

The concept of strike off refers to the removal of a company’s or LLP’s name from the Register of Companies maintained by the Registrar. It is an administrative process distinct from liquidation or winding up, intended for entities that are defunct or inactive. While strike off simplifies exit procedures, it does not absolve directors or officers of liabilities prior to dissolution.

This article provides a comprehensive overview of strike off provisions under the Companies Act, 2013 and the LLP Act, 2008, accompanied by important case law references that shape the jurisprudence.

Legal Framework

A) For Companies

• Companies Act, 2013 (Sections 248–252): Governs removal of names from the register.

• Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016: Prescribes procedural rules and filing requirements.

Key provisions:

• Section 248(1): Registrar’s power to strike off in cases like non?commencement of business or inactivity for 2 years.

• Section 248(2): Voluntary application for strike off through Form STK 2.

• Section 249: Restrictions on filing strike off applications (e.g., recent name change, ongoing legal proceedings, investigations, etc.).

• Section 250: Effect of strike off – company ceases to exist, but liability of directors/officers continues.

• Section 251: Penalties for fraudulent applications.

• Section 252: Restoration of companies by NCLT.

B) For LLPs

• Section 75 of LLP Act, 2008 read with Rule 37 of LLP Rules, 2009.

• Registrar can strike off defunct LLPs, and voluntary strike off is through Form 24.

Modes of Strike Off

1. Voluntary Strike Off (By Company/LLP)

• Applicable when the company/LLP has ceased operations, has no liabilities, and has completed statutory filings.

• Requires filing of:

  • Special Resolution / 75% member consent.

  • Indemnity Bonds (Form STK 3/3A) and Affidavits (Form STK 4) from directors.

  • Statement of Accounts (CA certified, not older than 30 days).

  • Proof of closure of bank accounts, cancellation of registrations (GST, PF, etc.).

• Application filed in Form STK 2 with a fee of ?10,000.

• Registrar publishes notices (STK 5/STK 6), and after objections (if any), finalizes dissolution via STK 7.

2. Registrar Initiated Strike Off (Suo Motu)

• Registrar may issue notice (STK 1) where:

  • Company fails to commence business within 1 year of incorporation.

  • Company inactive for 2 consecutive financial years without dormant status.

  • Subscribers have not paid share subscription.

  • Persistent non filing of financial statements or returns.

• Registrar provides opportunity to respond, then issues STK 7 for dissolution.

3. LLP Strike Off

• LLP may apply in Form 24 with:

  • Partners’ consent.

  • Affidavit & indemnity.

  • Statement of Accounts (CA?certified).

  • Proof of closure of business and registrations.

• Registrar publishes notice and dissolves the LLP.

Restoration of Name (Section 252)

Timelines:

• Appeal by aggrieved person: Within 3 years from the ROC’s order.

• Application by ROC: Within 3 years if strike off was inadvertent.

• Application by company/member/creditor/workman: Within 20 years from the Gazette notification.

Grounds for Restoration:

• Company was carrying on business at the time of strike off.

• Company possessed assets (immovable property, IP, receivables) requiring protection.

• It is otherwise just and equitable in public interest or for creditors.

Conditions imposed by NCLT: Filing of pending returns, payment of fees/penalties, and costs to ROC.

Case Laws on Strike Off & Restoration

1. R. P. Casting (P.) Ltd. v. ROC, NCT of Delhi & Haryana (SC, 2024)

   • Principle: Registrar’s strike off power must be exercised judiciously. Where the company proves operational existence, strike off cannot be sustained. Restoration allowed with costs.

2. Hiffco Farming Ltd. v. ROC, West Bengal (NCLAT)

   • Principle: The 20?year limitation under Section 252(3) applies. Restoration is warranted where companies own substantial assets, to prevent irreparable loss.

3. Dhirendra Pratap Singh & Anr. v. Dook Consulting Pvt. Ltd. (NCLT, 2025)

   • Principle: NCLT cannot restore suo motu; a proper application under Section 252 is mandatory. Restoration granted where operations were evidenced.

4. Other NCLT/NCLAT decisions (2023–2025)

   • Restoration depends on proving either business activity or that restoration is just and equitable.

   • Costs and compliance conditions are standard.

Practical Considerations

• Liability continues: Even after strike off, directors/officers remain liable for past acts.

• Regulated entities: NBFCs, insurance companies, intermediaries require prior regulator NOC.

• Outstanding litigation: Strike off not advisable; winding up or resolution preferred.

• Books & records: Should be preserved for at least 8 years after dissolution.

• Avoid pitfalls: Ensure closure of bank accounts, cancellation of GST, DIN/KYC compliance, and no pending prosecutions.

Conclusion

Strike off offers a cost?effective exit mechanism for defunct entities. However, directors and officers must exercise caution, ensuring compliance with statutory requirements and disclosure of liabilities. Case laws illustrate that courts favor restoration where companies show operational activity, asset ownership, or public interest concerns. Thus, strike off should be approached with diligence, and restoration remains a safeguard against inadvertent or unjust removals.