Restoring a Struck-Off Company: Procedure before the NCLT

A company whose name has been struck off the register by the Registrar of Companies ceases to exist as a company. Its bank accounts are usually frozen, its directors may find their DIN deactivated and themselves disqualified, and it cannot enforce contracts or hold property in its own name. Restoration reverses this, but only through the National Company Law Tribunal, and only where the grounds are made out.

This article explains when restoration is possible, the procedure before the NCLT, and what follows after the order, with reference to companies in Kerala. Voluntary closure is covered in striking off a company.

Why companies are struck off

• The Registrar strikes off a company under section 248(1) when it has not commenced business within one year of incorporation, has not carried on business or operation for two immediately preceding financial years and has not applied for dormant status, or has not filed the declaration of commencement of business (INC-20A).
• In practice, most companies are struck off for not filing financial statements and annual returns for several years, which the Registrar treats as evidence of not carrying on business.
• A company may also have been struck off on its own application under section 248(2).

Two routes to restoration

Route	Who can apply	Time limit	Ground
Appeal against the Registrar’s order (section 252(1))	The company, a member, a creditor or a workman aggrieved by the order	Within three years of the Registrar’s order	The order striking off was not justified
Application for restoration (section 252(3))	The company, a member, a creditor or a workman who feels aggrieved	Before the expiry of twenty years from publication of the strike-off notice in the Official Gazette	The company was carrying on business or was in operation at the time of strike-off, or it is otherwise just that it be restored

For companies in Kerala, the application is made to the NCLT Kochi Bench. The Registrar of Companies, Ernakulam, is a necessary party and files a report on the company’s record.

Procedure

• Collect evidence of operation: bank statements showing transactions, GST and income tax returns, invoices, contracts, salary records, and property documents for the period around the strike-off. This is the heart of the case.
• Prepare the petition in the form prescribed under the NCLT Rules, with the grounds, a chronology, details of the defaults, the evidence, and the relief sought, verified by affidavit.
• Serve notice on the Registrar of Companies, and on others as the Tribunal directs.
• Registrar’s report: the Registrar files a report on the company’s filings and the circumstances of the strike-off. The Registrar often does not object where the company undertakes to file all pending returns and pay the additional fees and costs.
• Hearing and order: the Tribunal hears the petitioner and the Registrar and, if satisfied, orders restoration, usually on conditions such as filing all overdue documents within a fixed time and paying costs.
• File the order with the Registrar within 30 days of receiving the certified copy, in Form INC-28. The company is restored on the Registrar’s records only after this filing.

After restoration

• File all overdue financial statements, annual returns and other forms within the time allowed by the order, with additional fees.
• Get the DIN of directors reactivated and any disqualification arising from the defaults addressed, as provided in the order or by separate application where needed.
• Inform banks, tax authorities and others, and get bank accounts unfrozen on the basis of the order.
• Address any penalties or offences arising from the past defaults, by adjudication or compounding as applicable. See compounding of offences.
• Put in place a compliance calendar, so that the same defaults do not recur. See the annual compliance calendar.

On restoration, the company is treated as having continued in existence as if its name had not been struck off. Contracts, property and liabilities are restored to it.

Points that decide the outcome

• Proof of business: under the twenty-year route, the petitioner must show that the company was carrying on business or was in operation when it was struck off, or that restoration is otherwise just, for example where the company holds property or has claims to pursue.
• Delay: the petition should explain the delay in seeking restoration. Long, unexplained delay weakens the case even within the time limit.
• Willingness to comply: the Tribunal usually expects a clear undertaking to file all overdue returns and pay costs.
• Third-party interest: where a creditor, landlord or other party has an interest, the petition should deal with it.

Strike-off, restoration or a fresh start?

Where a company has no assets, no business and no claims to pursue, it may be cheaper to leave it struck off and, if needed, form a new company. Restoration is worth pursuing where the company holds property or bank balances, has a valuable name, licences or contracts, or where directors need to remove the consequences of the strike-off. See strike off vs dormant company.

Frequently asked questions

How long after strike-off can a company be restored?

An appeal against the Registrar’s order lies within three years. An application on the ground that the company was carrying on business, or that restoration is just, can be made before the expiry of twenty years from the publication of the strike-off notice.

Can a struck-off company’s bank account be operated?

Generally no. Banks freeze the accounts of struck-off companies. The account is restored for operation on the basis of the NCLT order and its filing with the Registrar.

Will the directors’ disqualification be removed?

The disqualification arising from the defaults is typically addressed in the restoration order or by a separate application, and the DIN is reactivated once the order is given effect.

ചുരുക്കം (Summary in Malayalam)

ROC പേര് നീക്കം ചെയ്ത (strike off) കമ്പനിയെ NCLT വഴി മാത്രമേ പുനഃസ്ഥാപിക്കാൻ കഴിയൂ. ROC-യുടെ ഉത്തരവിനെതിരെ മൂന്ന് വർഷത്തിനകം അപ്പീൽ നൽകാം; കമ്പനി ബിസിനസ് നടത്തിയിരുന്നുവെന്നോ പുനഃസ്ഥാപിക്കുന്നത് ന്യായമാണെന്നോ കാണിച്ച് ഗസറ്റ് വിജ്ഞാപനം മുതൽ ഇരുപത് വർഷത്തിനകം അപേക്ഷിക്കാം. കേരളത്തിലെ കമ്പനികൾക്ക് NCLT കൊച്ചി ബെഞ്ചിലാണ് അപേക്ഷ നൽകേണ്ടത്. ഉത്തരവ് ലഭിച്ച ശേഷം 30 ദിവസത്തിനകം INC-28 ഫയൽ ചെയ്യുകയും മുടങ്ങിയ എല്ലാ റിട്ടേണുകളും ഫയൽ ചെയ്യുകയും വേണം.

This article gives a general overview of restoration of struck-off companies under the Companies Act, 2013. Procedures and practice are revised from time to time; for accurate and current requirements, refer to the Act, the NCLT Rules and the MCA portal. The article is not advice on any particular case.