NCLT Chennai Allows Winding Up Of Struck-Off Company To Realise Assets, Settle Liabilities

The National Company Law Tribunal (NCLT), Chennai, has ruled that a company struck off from the Register of Companies can still be wound up to realise its assets and settle outstanding liabilities.

The tribunal observed that "to ensure that the marketable securities are realized and the liabilities of the Company are settled, it is just and equitable that the Company be wound up under the enactment of the Companies Act 2013 and Rules made thereunder."

A coram comprising Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam was hearing a petition filed by Sujatha Venkateswaran, a shareholder and contributory of Jaipriya Holdings Limited. The company was struck off by the Registrar of Companies (RoC) on October 28, 2011.

The petition was filed under Sections 248(8), 271(e) and 272(1)(b) of the Companies Act, 2013, seeking winding up of the company.

While considering the petition, the tribunal referred to Section 248(8), which provides that striking off a company's name does not affect the tribunal's power to wind it up.

The provision states that “Nothing in this section shall affect the power of the Tribunal to wind up a company” whose name has been struck off from the register.

The petitioner submitted that the company's promoter-director, G. Venkateswaran, died on May 3, 2003. His death resulted in a “sudden and profound vacuum” in the company's management and administration, making it difficult for the remaining directors to complete statutory filings.

The company had continued to hold investments in equity shares of various listed companies in physical and dematerialised form. Records traced by the petitioner showed that several of these investments continued to remain in the company's name.

The petitioner told the tribunal that the company had an authorised share capital of ₹2 crore. Its issued, subscribed and paid-up share capital stood at ₹24.35 lakh.

Certain liabilities also remained outstanding. According to the company's old provisional financial records, ₹20.44 lakh was payable to shareholders as unsecured loans.

The petitioner held 23.61% of the paid-up share capital in her individual capacity. She claimed a further 71.05% as the legal heir of late G. Venkateswaran.

The tribunal also considered Section 272, which permits a contributory to present a winding-up petition. The provision allows such a petition even where the company has no assets or no surplus assets remaining after its liabilities are satisfied.

The tribunal noted that the petitioner was the company's only unsecured creditor. It also took note of the investments in listed stocks and marketable securities held by the company.

Against this backdrop, the tribunal found that winding up was necessary to enable the marketable securities to be realised and the company's liabilities to be settled. It held that winding up the company was “just and equitable” in the circumstances.

The petition was accordingly admitted. NPV Insolvency Professionals Private Limited was appointed as the provisional liquidator and directed to take charge of the company's property and effects.

The petitioner was also directed to pay ₹2 lakh towards the expenses of the winding-up proceedings, with the amount to be adjusted against assets recovered and distributed.