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NCLAT in a recent case threw light on the maintainability of insolvency proceedings against a company. The core issue was whether insolvency proceedings will be legally tenable if the Company has been struck off the List of Companies.
The appellant in the instant case Elektrans Shipping Pvt Ltd sumbmitted before the Court that the Company was struck off the list of companies on 12th September 2018 according to the mandate of Section 248 of the Companies Act 2013. Section 248 empowers the Registar to remove a company from the list of companies if the said company has committed a ground for removal under Section 248. Thus the appellant submitted that a suit for initiation of insolvency proceedings under Section 9 would be inapplicable in the present case.
The respondent submitted that Section-250 of the Companies Act, 2013 will be applicable in the instant case and pressed for initiation of insolvency proceedings against the appellant.
The NLCAT relied upon the case of Mr. Hemang Phophalia vs. The Greater Bombay Co-operative Bank Limited and Anr. - Company Appeal (AT) (Insolvency) No. 765 of 2019 decided on 5th September, 2019. Deriving from the judgement and after a careful perusal of Section 248 of the Act the Court held that
“From sub-section (8) of Section 248, it is clear that Section 248 in no manner will affect the power of the Tribunal to wind up a company, the name of which has been struck off from the Register of Companies”
After a reading Section 250 of the Companies Act the Court further held that
“Therefore, it is clear that after removal of the name of the Company from the Register of the Company for the purpose of right of realization of all amount due to the Company and for the purpose of payment or discharge of its liabilities or obligations of Company continues.”
Thus the Court found no grounds in the merit of arguments raised by the appellant and dismissed the petition for appeal.
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