The National Company Law Appellate Tribunal (NCLAT) has held that a creditor can file an application requiring the restoration of the name of a dissolved/struck-off company in the register of companies for initiating a Corporate Insolvency Resolution Process (“CIRP”) against the said company.
In the instant case titled Mr Hemang Phophalia v. The Greater Bombay Co-operative Bank Limited and Another the issue that was raised before the NCLAT was:
Whether an application under Section 7 or 9 under IBC for initiating CIRP is maintainable against a Corporate Debtor if the name of the Corporate Debtor is struck-off from the register of companies?
NCLAT held that, if a creditor (whether a financial or operational creditor) or a worker (the operational creditor) files an application before the twenty-year period has expired, the adjudicating authority may give such directions and make such provisions as it deems just for restoring the company's name and placing all other persons in the same position as if the company's name had not been struck off. The name of the Corporate Debtor may be removed from the records, but the assets may remain. In this case, the NCLAT concluded that the application under Sections 7 and 9 of the IBC will be maintainable against a defendant under the Companies Act.
The Tribunal categorically held that:
“As per Section 252(3) of the Companies Act, if a company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of Section 248, may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies and the tribunal may give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off. The NCLAT held that the tribunal is the adjudicating authority in terms of Section 60(1) of the IBC. Hence, on one side it plays the role of adjudicating authority and on the other, tribunal, under the Companies Act”.
Hence, the adjudicating authority, which is also the tribunal, has the authority to restore the name of a company and all other persons in their respective positions for the purpose of initiating CIRP under Sections 7 and 9 of the IBC based on an application filed by creditors or workers within twenty years of the date specified under the Companies Act. The application under Section 7 was granted in this matter, and the Corporate Debtor, as well as its directors, officers, and other officers, were held to have been restored.