The New Delhi Bench of the National Company Law Tribunal (NCLT) ruled that an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) cannot be initiated against a struck-off company.
The application was jointly filed by Mr. Satyabrata Mitra & 145 other home buyers (Applicants) under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate Corporate Insolvency Resolution Process in respect of M/s Earth Towne Infrastructure Limited (Corporate Debtor) for defaulting in payment of financial debt amounting Rs. 28,64,48,786/- .
The applicants further submitted that a “Development Agreement‟ dated 09.09.20210 was entered into between M/s. Earth Towne Infrastructure Private Limited and M/s. Earth Infrastructure Limited (EIL), wherein the EIL was to develop the project land. According to the said Agreement, the Corporate Debtor shall remain the lease right holders of the project land and EIL shall have the permission to enter into the project land for carrying out the construction activities as a Licensee. The GNIDA issued sanction letter dated 30.09.2014 in favour of EIL for the development of the project land.
It was further submitted that the Adjudicating Authority vide order dated 06.06.2018 had initiated Corporate Insolvency Resolution Process against Earth Infrastructure Limited and Mr. Surinder Singh was appointed as the Interim Resolution Professional and subsequently Shri Akash Singhal was appointed as Resolution Professional. Accordingly, the applicants pray for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.
The Two-Member Bench of the Tribunal comprising Manni Sankariah Shanmuga Sundaram (Judicial Member) and Dr Binod Kumar Sinha (Technical Member) obserevd that “According to the provisions of Section 248(8) of the Companies Act, 2013, the Tribunal may order winding up of a Company, the name of which has been struck off, but no power can be exercised by the Tribunal for Insolvency Resolution under the Insolvency and Bankruptcy Code, 2016, unless the name of the Company is restored to the Register of Company in terms of procedure laid down under Section 252 of the Companies Act, 2013.”
“The power of the Tribunal to restore the name of a struck off company under Section 252 of the Companies Act, 2013 is not a suo motu power, but is to be exercised either on the basis of an appeal filed by any aggrieved person under Section 252 (1) or to be exercised on an application filed by the Companies, its members or creditors or workmen aggrieved by the order of striking off under Section 252(3) of the Companies Act, 2013. Secondly, such power of restoration is to be exercised under the powers confined to this Tribunal under the Companies Act, 2013 whereas the instant proceedings are initiated under the provisions of the I&B Code, 2016 before us being the Adjudicating Authority under the Code, 2016” the Bench concluded.
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