The National Company Law Appellate Tribunal (Chennai Bench) set aside the Registrar of Companies’ order striking off Sri Sai Pardha Real Estates Private Limited, holding that a defunct company possessing assets must be restored for winding up rather than dissolved, thereby clarifying the remedial scope available to shareholders and intervenors.
Background & Facts
The Dispute
The appellant, P. Venugopal, a shareholder of Sri Sai Pardha Real Estates Private Limited, challenged the order of the Registrar of Companies (RoC) dated 02 July 2018 which struck off the company’s name from the register under Section 248 of the Companies Act, 2013. The appellant sought restoration of the company to enable its eventual winding up, arguing that the company still owned a substantial land bank.
Key Facts
- The company was incorporated on 06 April 1994 to carry on real-estate business.
- From its inception the company failed to file annual returns and balance sheets with the RoC.
- The RoC initiated proceedings under Section 248 and, on 02 July 2018, struck off the company’s name and ordered dissolution under Section 248(5).
- The National Company Law Tribunal (NCLT) confirmed the RoC order on 15 June 2022.
- The appellant, a promoter, claimed the company possessed a large land bank and should be wound up, not dissolved.
- Former directors, Mr. S. Adi Reddy and Mr. K.L. Venkat, filed intervening applications IA No.1023/2025 and IA No.1789/2025 respectively, and were heard as intervenors.
- Sale deeds dated 14 May 2025 were executed by an intervenor in the name of the struck-off company, raising concerns of unauthorised asset disposal.
- The RoC records show the appellant stepped down as Managing Director on 16 May 1997 and as Director on 08 October 2001.
- Intervenors filed several opposition suits (OS Nos.120 of 2022, 38 of 2022, 97 of 2025, 503 of 2025) seeking cancellation of the alleged fraudulent sale deeds.
Procedural History
- 06 April 1994: Company registration.
- 02 July 2018: RoC order striking off the company under Section 248.
- 15 June 2022: NCLT order confirming the RoC’s strike-off.
- 2024: Appeal filed before NCLAT as Company Appeal (AT) (CH) No. 22/2024 (IA No.1789/2025).
- 2025: Intervenors filed IA No.1023/2025 and IA No.1789/2025; sale deeds executed on 14 May 2025.
- 17 August 2026: NCLAT delivered the judgment restoring the company.
Parties' Positions
- Appellant: Argued that the company, though defunct, retained valuable assets and should be restored for winding up; invoked principles of equity and the need to prevent loss of government revenue.
- Respondents (RoC and NCLT): Maintained that the company had been duly dissolved and that the appellant, having ceased to be a director, lacked locus standi to seek restoration.
- Intervenors: Contended that the appellant was selling company lands and appropriating proceeds, and that restoration would jeopardise asset protection.
Relief Sought
The appellant sought restoration of Sri Sai Pardha Real Estates Private Limited to the Register of Companies and an order directing its winding up, with all pending interlocutory applications to stand closed and no costs awarded.
The Legal Issue
Whether a company struck off the Register of Companies under Section 248 of the Companies Act, 2013 can be restored for the purpose of winding up when it continues to hold assets, and whether a former director/shareholder has locus standi to file such an appeal.
Arguments Presented
For the Appellant
The appellant relied on the equitable principle that a company possessing assets should not be dissolved outright; instead, restoration is necessary to facilitate a proper winding-up process. He highlighted the existence of a substantial land bank and the risk of revenue loss to the Government if the assets remained unaccounted for.
For the Respondents
The respondents argued that the statutory framework under Section 248 authorises dissolution after a company is struck off, and that the appellant, having stepped down as director in 1997 and 2001, lacked the requisite standing to challenge the order. They also emphasized the intervenors’ allegations of unauthorised sale of company lands.
The Court's Analysis
The Tribunal examined the purpose of Section 248, noting that its primary aim is to remove dormant entities from the register, but it does not preclude restoration where assets remain. It observed that dissolution would leave the assets ownerless, potentially causing loss of revenue and hindering creditor rights. The Court held that the appellant’s standing was not fatal, as the issue centred on the corporate entity rather than personal rights.
"We therefore consider that there is a compelling need to restore the company to the Register of Companies for its eventual winding up."
The Tribunal distinguished the present case from precedents where companies were dissolved after complete cessation of business and absence of assets. It further observed that the intervenors’ claims of fraudulent sales underscored the necessity of a formal winding-up to ensure proper asset distribution and accountability.
The Verdict
The appeal is allowed. The Tribunal restores Sri Sai Pardha Real Estates Private Limited to the Register of Companies, enabling its winding up. All pending interlocutory applications, if any, stand closed. No costs are awarded to either party.
What This Means For Similar Cases
Restoration Over Dissolution
- Courts may order restoration of a struck-off company when assets exist, even if the business is otherwise defunct.
- Restoration facilitates a structured winding-up, protecting creditor and governmental interests.
Locus Standi of Shareholders
- Former directors or shareholders can invoke the corporate entity’s interests, and lack of current directorship does not automatically bar standing.
- The focus is on the need to protect the company’s assets rather than personal claims.
Asset Protection Imperative
- Parties must ensure that any sale or transfer of assets of a struck-off company is subject to court supervision.
- Intervenors can raise fraud allegations, but the primary remedy remains restoration for orderly winding up.
