Restoration of Company

When a company is struck off the Register of Companies by the Registrar of Companies (ROC) — whether suo motu or on application — it ceases to exist as a legal entity. However, the Companies Act, 2013 provides a remedy through Section 252, which allows aggrieved parties to apply to the NCLT for restoration of the company's name to the Register. Restoration effectively reverses the strike off and reinstates the company as if it had never been removed, preserving the rights of members, creditors, and the company itself.

Grounds for Restoration

An application for restoration under Section 252 can be made on several grounds. The primary ground is that the company was carrying on business or was in operation at the time of striking off, making the ROC's action unjustified. Additionally, a member, creditor, or workman who is aggrieved by the striking off may apply on the ground that they have a legitimate interest in the company's restoration — for instance, pending claims, ongoing contracts, or properties held in the company's name.

The NCLT may also consider restoration where the company was struck off due to non-filing of annual returns or financial statements, and the applicant demonstrates willingness to comply with all statutory requirements. If the company has tangible assets, ongoing liabilities, or pending litigation, these factors weigh heavily in favour of restoration.

Who Can Apply?

Under Section 252(1), any of the following persons may make an application: the company itself (through its authorised representative), any member of the company, any creditor of the company, or any workman of the company. The term "member" includes both registered shareholders and beneficial owners. Creditors may include financial creditors, operational creditors, and even government departments (such as the Income Tax Department) with outstanding demands against the company.

Filing Procedure

The application for restoration is filed before the NCLT bench having territorial jurisdiction over the registered office of the company. The application must be accompanied by the prescribed fee and supported by an affidavit setting out the grounds for restoration. Key documents include: a copy of the Gazette notification of strike off, proof that the company was carrying on business, all pending annual returns and financial statements, proof of payment of all filing fees and penalties, and a no-objection certificate from the Income Tax Department (or proof of application for the same).

The NCLT typically directs notice to the ROC and other interested parties before hearing the matter. The ROC may file a reply, and the Tribunal will consider all circumstances before passing an order.

Time Limits

Under Section 252(3), an application for restoration must be made within twenty years from the date on which the name of the company was struck off from the Register. This is a significant window, but applicants should act promptly as delays may prejudice their case. The Tribunal may question unexplained delays and the applicant should be prepared to explain why restoration is being sought after a considerable period. Additionally, longer delays often mean greater difficulty in obtaining compliance documents and clearing outstanding statutory dues.

Effect of Restoration

Upon the NCLT passing an order for restoration, the company is deemed to have continued in existence as if its name had not been struck off. This means all assets, liabilities, contracts, and legal proceedings of the company are restored to their original status. The officers of the company are restored to their positions, though the NCLT may impose conditions such as mandatory compliance with pending statutory filings, payment of all outstanding penalties, and updated filing of all annual returns within a specified timeframe.