9911796707
TMI Blog2024 (5) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of Rs. 18,34,120.93/- has been dismissed because the name of the Corporate Debtor had already been struck off by the Registrar of Companies (in short 'RoC') from the register maintained by him. 2. In brief, the Appellant, namely, Fedex Express Transportation and Supply Chain Services (India) Pvt. Ltd. is a provider for integrated and turnkey services in shipping, logistics, supply chain management and project. 3. The Corporate Debtor, namely, M/s Zipker Online Services Pvt. Ltd., availed shipping and logistics services from the Appellant. 4. In lieu of the service, the Appellant raised certain invoices from 07.05.2019 to 08.10.2019 but the Corporate Debtor failed to honour the same and thus the Operational Creditor sent a demand notice, under Section 8 of the Code, for payment of Rs. 18,34,120.93/- with interest but did not receive any response from the Corporate Debtor and hence, filed the application under Section 9 of the Code for the resolution of the aforesaid amount mentioned in the demand notice. 5. The application, filed under Section 9 of the Code, by the Appellant has been dismissed by the Adjudicating Authority, vide its order dated 05.09.2023, on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious company law, therefore, the company has to be in existence for the purpose of admitting the application filed either under Section 7 or 9 of the Code to initiate CIRP under the Code but in the present case, the company ceased to exist in terms of Section 248 (5) of the Act as its name was struck off from the register of the RoC. 11. It is further submitted that the effect of company, notified as dissolved in Section 250 of the Act and right to sue in respect of the liability of the Company under Section 248(7)&(8) and exception in Section 250 has nothing to do with the filing of Section 9 of the Code which is not meant for the recovery proceedings but for the resolution. He has further submitted that with the filing of application under Section 7 of the Code the company will not be automatically restored in terms of Section 252(3) rather the order passed by the RoC under Section 248(5) has to be specifically challenged by way of an appeal provided under Section 252(3) to prove before the Adjudicating Authority that at the time when its name was struck off, the company was carrying on business or was in operation or otherwise it is just that the name of the company be restored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief ; (d) the address for correspondence till its registered office is established ; (e) the particulars of name, including surname or family name, residential address, nationality and such other particulars of every subscriber to the memorandum along with proof of identity, as may be prescribed, and in the case of a subscriber being a body corporate, such particulars as may be prescribed ; (f) the particulars of the persons mentioned in the articles as the first directors of the company, their names, including surnames or family names, the Director Identification Number, residential address, nationality and such other particulars including proof of identity as may be prescribed ; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as it may think fit, for regulation of the management of the company including changes, if any, in its memorandum and articles, in public interest or in the interest of the company and its members and creditors; or (b) direct that liability of the members shall be unlimited; or (c) direct removal of the name of the company from the register of companies; or (d) pass an order for the winding up of the company; or (e) pass such other orders as it may deem fit: Provided that before making any order under this subsection,- (i) the company shall be given a reasonable opportunity of being heard in the matter; and (ii) the Tribunal shall take into consideration the transactions entered into by the company, including the obligations, if any, contracted or payment of any liability." 19. According to the aforesaid provision, for the purpose of incorporation of a company, certain documents and information are filed with the Registrar, mentioned in Section 7(1)(a)to(g). 20. The Registrar, on the basis of the documents and information, filed under sub-section 7(1), shall register all the documents and information received, in the register and issue a certificate of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obtaining the status of a dormant company under [ section 455 ; or ] [(d) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within one hundred and eighty days of its incorporation under subsection (1) of section 10A; or (e) the company is not carrying on any business or operations, as revealed after the physical verification carried out under sub-section (9) of section 12.] he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. (2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard, is required to send a notice to the company and all the directors of the company, requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice. 27. Section 248(2) of the Act deals with the right of company itself to get its name removed from the Register. 28. As per Section 248(4) of the Act, the Registrar is required to publish the notice, issued under Section 248(1)and(2) of the Act, in the prescribed manner in the Official Gazette for the information of the general public and as per Section 248(5) of the Act, the Registrar, until some cause is shown to the contrary, after the expiry of time mentioned in the notice, strike off the name of the company from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of the notice, the company shall stand dissolved. However, as per Section 248(6) of the Act, the Registrar, before passing an order under sub-section 248(5), has to satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 252 of the Act is reproduced as under:- "252. Appeal to Tribunal.-(1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies: Provided that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned: Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on the basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny member or creditor or workman if they feel aggrieved against the striking off the name of the company from the register of companies. The said application can be filed before the expiry of twenty years from the publication in the Official Gazette of the notice issued under subsection 248(5) and in order to succeed in the said application, the Applicant/Appellant has to satisfy that (a) the company, at the time when its name was struck off, was carrying on business (b) was in operation (c) otherwise it is just that the name of the company be restored to the register of companies. The power has been bestowed upon the Tribunal to pass an order for the restoration of the company and 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 from the register of companies. 34. Section 271 of the Act deals with the circumstances in which a company may be wound up by the Adjudicating Authority. The said prevision is also reproduced as under:- "271. Circumstances in which company may be wound up by Tribunal.-A company may, on a petition under section 272, be wound up by the Tribunal,- (a) if the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e words have been used (a) corporate person (b) debt (c) person. 39. Corporate Person is defined in Section 3(7) of the Code which means a company as defined in clause (20) of section 2 of the Companies Act, 2013. Debt is defined under Section 2(11) of the Code which means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. Person is defined under Section 2(23) of the Code which read as under:- ""person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a trust; (e) a partnership; (f) a limited liability partnership; and (g) any other entity established under a statute, and includes a person resident outside India;" 40. Since, there is a reference of claim in the definition of debt, therefore, it would be appropriate to refer to the definition of claim as well which is provided in Section 3(6) of the Code which is reproduced as under:- "(6) "claim" means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor, an operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter." 43. Since, it is an application filed under Section 9 of the Code, therefore, it is relevant to refer to Section 8 of the Code under which the operational creditor, on the occurrence of default is required to deliver a demand notice of the unpaid operational debt to the Corporate Debtor. Section 8 is reproduced as under : - "8. (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the repayment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or notice for payment to the corporate debtor has been delivered by the operational creditor; (d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and (e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if- (a) the application made under sub-section (2) is incomplete; (b) there has been repayment of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub- clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber or creditor or workmen with a caveat of filing the appeal within a period of 20 years from the date of publication under Section 248(5) of the Act subject to the condition that it shall satisfy the Adjudicating Authority (NCLT) that the company was, at the time of its name was struck off, carrying on business or was in operation or otherwise it is just that the name of the company be restored to the register of the RoC. 47. These are the factual aspects which have to be pleaded and proved before the Adjudicating Authority in an appeal filed under Section 252(3) and nothing is automatic that as soon as an application is filed under Section 7 or 9 by a creditor (financial creditor or operational creditor), the order of the Registrar passed under Section 248(5) is set aside and the name of the company is restored to the register of the RoC. 48. Having said that, we have two decisions of this Court passed one after the other i.e. on 05.09.2019 and 06.09.2019 by three members bench in which it has been held that even if the name of the company has been struck off, the application under Section 7 or 9 of the Code for initiation of CIRP is maintainable. 49. In the first case, name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of Section 252(3) and in this regard a finding has been recorded in para 23 which is reproduced as under:- "23. In view of the aforesaid provision, we hold that the Adjudicating Authority who is also the Tribunal is empowered to restore the name of the Company and all other persons in their respective position for the purpose of initiation of 'Corporate Insolvency Resolution Process' under Sections 7 and 9 of the I&B Code based on the application, if filed by the 'Creditor' ('Financial Creditor' or 'Operational Creditor') or workman within twenty years from the date the name of the Company is struck off under sub-section(5) of Section 248. In the present case, application under Section 7 having admitted, the 'Corporate Debtor' and its Directors, Officers, etc. deemed to have been restored in terms of Section 252(3) of the Companies Act." 50. In the second case, namely, Elektrans Shipping Pte. Ltd. (Supra) an application was filed under Section 9 by the Pierre D'Silva against Elektrans Shipping Pte. Ltd. which was admitted on 10.04.2019. The Appellant, being a shareholder filed the appeal against the order of admission. It was submitted on its behalf that the name of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trar or in holding the statutory meeting (c) if the company does not commence its business within a year from its incorporation or suspends its business for a whole year (d) if the company is unable to pay its debts (e) if the Tribunal is of the opinion that it is just and equitable that the company should be wound up. In the definition of winding up under Section 2(94) winding up means winding up under the Act or liquidation under the Code as applicable. 56. Thus, the mechanism of winding up is applied for the recovery of debt. On the other hand, it has been repeatedly held by the Hon'ble Supreme Court that the Code is not a debt recovery mechanism but a mechanism for revival of a company fallen in debt. It has been held that the Code is a beneficial legislation intended to put the corporate debtor back on its feet and is not a mere money recovery legislation. The CIRP is not intended to be adversarial to the CD but is aimed at protecting the interests of the CD. The primary focus of the legislation is thus to ensure the revival and continuation of the CD by protecting the CD from its own management and from a corporate death by liquidation. The preamble of the Code speaks of max ..... X X X X Extracts X X X X X X X X Extracts X X X X
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