Realisation of Debt due by Company is possible even if company stands dissolved u/s 250 of the Companies Act: DRAT

The Delhi bench of the Debts Recovery Appellate Tribunal (DRAT) has observed that even if the company stands dissolved under Section 250 of the Companies Act, it remains alive for realization of the amount due to the company for the payment and discharge of the liability of the obligation of the company.

The defendant, Mr. Alok Aggarwal under Order 7 Rule 11 CPC and section 19(25) and 22 of the RDB Act for rejection of the OA. It has been submitted by the D2 that the applicant bank has filed the OA no. 06/2012 for recovery of Rs. 13,49,06,646/- from the defendant company. It has been submitted that the OA was decreed expatte against the defendants.

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The D2 has moved an application for setting aside the exparte order which was allowed by the Tribunal. It is submitted that the D2 upon consultation with his chartered accountant found that the defendant company which was already struck off and dissolved by the ROC as per notification dated 08.08.2018 cannot be sued except in the manner as provided under Companies Act 2013.

As the company has already been dissolved al/ the proceedings are void ab initio and cannot proceed. It is submitted that the applicant bank has concealed the fact from the Tribunal and therefore, it has been prayed that the OA of the applicant may be rejected as no proceedings can be considered by the courts and tribunals and adjudicated in violation of the express provisions of law.

The counsel of the applicant bank has opposed the application and has submitted that ample opportunities have been given to the D2 to file WS but the D2 has failed to file WS within stipulated time. Therefore, the defendants cannot file the objections and WS after expiry of the period of 45 days. It is submitted that under Order 7 Rule Il the plaint can be rejected only on the grounds of statements made in the plaint. It is submitted that the application may be dismissed.

From the perusal of the record it is clear that the D2 has moved this application for rejection of the OA under Order 7 Rule 11 on the ground that the defendant company has already been dissolved before the institution of the OA. Therefore, the OA cannot proceed.

From perusal of the Order 7 Rule 11 it is clear that the plaint may be rejected where the suit appears from the statement in the plaint to be barred by any law Therefore, the plaint can be rejected in the cases where the suit is barred by any law which is disclosed from the statement made in the plaint itself. On the basis of the averments made by the defendants in the reply, the plaint cannot be rejected. Under Order 7 Rule 11, the courts cannot consider the evidence filed by the defendants.

Whether the company was dissolved before the institution of the OA or not is a question of fact and cannot be decided at this stage. The counsel of the D2 has submitted that in light of the OA the applicant is liable to be rejected. Relying on various case laws , the Tribunal held that the application of the D2 cannot be allowed.

Order and dismissed the application.

It is submitted by the Counsel that since the company stands dissolved it cannot defend itself unless it is registered and revived upon. Counsel for the appellant prayed for stay of the proceeding of the O A. No. 1407/2018 pending before Ld. DRT-II, Delhi till the company is registered.

Counsel for respondent submitted that the order passed by the DRT is in accordance with law for the reason that for the purpose of considering the application under Order 7 Rule 11, the DRT has only to see the pleadings and documents filed along with it and need not look into the defence or documents produced by the respondent, since that can only be considered at the appropriate stage when the evidence is led.

Counsel for the respondent has submitted that even if the company stands dissolved under Section 250 of the Companies Act, it remains alive for realization of the amount due to the company for the payment and discharge of the liability of the obligation of the company.

Justice Briiesh Sethi viewed that whether the company was dissolved before the institution of the OA and, therefore, OA is not maintainable is a question which cannot be decided in an application under Order 7 Rule 11 of CPC.

Since in case of rejection of plaint, the grounds for rejection can only be passed on the basis of the contents of the OA and documents filed along with it and as discussed earlier, the OA or the documents filed along with it do not fall under any of the clauses mentioned in Order 7 Rule 11 CPC, the Ld. DRT, therefore, rightly rejected the IA filed by the appellant before it.

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