NCLT Allahabad Directs Restoration Of ACDI VOCA's Name Wrongly Struck Off Under FTE Scheme

The Allahabad Bench of the National Company Law Tribunal (NCLT) has ordered restoration of ACDI VOCA Social Development Organisation's name to the Register of Companies after finding that it had been struck off under the Fast Track Exit (FTE) Scheme despite being a Section 25 company. A Section 25 company is a not-for-profit company formed for specified public-benefit purposes under the Companies Act, 1956.

Judicial Member Praveen Gupta and Technical Member Ashish Verma held:

“It is evident from the materials placed on record that the facts provided by the company were not correct and therefore, wrongfully resulted in permitting the company to get struck off under Fast Track Exit Scheme, even though the Company, being a Section 25 Company under the Companies Act, 1956, was not permitted to apply for Fast Track Exit as per the Circular of the Ministry of Corporate Affairs.”

ACDI VOCA Social Development Organisation was incorporated on 28 September 2010 under Section 25 of the Companies Act, 1956 to promote economic growth, civil society development, agricultural initiatives and food security.

In May 2013, the company's Board resolved to apply for strike-off, stating that it had remained non-operational since incorporation. The company filed an application in June 2013 under the FTE scheme. The Registrar of Companies (RoC) subsequently struck off its name and published the notice in the official gazette on 25 September 2014.

However, Circular No. 36/2011 issued by the Ministry of Corporate Affairs expressly excluded Section 25 companies from the FTE scheme. After the error was detected, the Ministry of Corporate Affairs and the Regional Director, Northern Region directed the RoC to file an application seeking restoration of the company's name.

The directors admitted that they had overlooked the exclusion clause while applying for strike-off. They contended that the company had remained non-operational since incorporation, had no outstanding liabilities and that restoring its name after more than a decade would serve no purpose and cause hardship.

The Tribunal Bench held that the company's non-operation and absence of liabilities could not cure the illegality in the strike-off, as Section 25 companies were not eligible under the FTE scheme.

Accordingly, the NCLT directed the RoC, Uttar Pradesh, Kanpur to restore ACDI VOCA Social Development Organisation's name to the Register of Companies and change its status from “struck off” to “active”.

For Applicants: Advocate Krishna Dev Vyas

For Respondents: Advocates Rakesh Kumar with Preeti Kashyap & Ankit Sharma