The Two Routes
Section 248(1) permits the ROC to strike off a company’s name on its own motion where: the company has failed to commence business within one year of incorporation; the company has not carried on business for two immediately preceding financial years and has not applied for dormant status; or the company is not carrying on business and is not required to be wound up. Section 248(2) permits a voluntary strike-off application by the company after extinguishing its liabilities.
The Notice and Objection
The ROC must issue a notice to the company and to the directors, giving them an opportunity to show cause. The company may object on the ground that it is carrying on business, that it has assets or liabilities, or that the strike-off would prejudice creditors. The ROC must consider the objection before passing the order.
The Creditor Protection
The ROC must satisfy itself that the company has no assets or liabilities, or that the creditors have consented. A strike-off that conceals a creditor is vulnerable to challenge and to restoration. The ROC’s order does not extinguish the company’s liabilities; it only removes the company from the register.
The Consequence
A struck-off company ceases to exist as a legal entity. The directors’ liabilities for the company’s obligations may continue. The company’s name can be restored by the NCLT under Section 252.
Call to Action: For Section 248 notice response, strike-off objection, or restoration strategy, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.