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HomeLawNCLAT Fortnightly: Important orders on IBC (May 15 – May 31, 2024)

NCLAT Fortnightly: Important orders on IBC (May 15 – May 31, 2024)

5. In Protima Arora v. Maya Gupta & Ors. (Company Appeal (AT) (Insolvency) No. 72 of 2024), one of the questions before a three-judge Bench of the NCLAT was – whether a CIRP petition was maintainable against a corporate debtor which was in existence when the CIRP application was filed but whose name was subsequently struck off prior to the date of admission. Upholding the maintainability of such a petition, the NCLAT took note of the fact that the admission order was never challenged on the ground that the company was struck off and also the fact that the company was very much in existence when the application was initially filed. The NCLAT also took note of sub-section (7) of Section 248 of the Companies Act, 2013 (“2013 Act”), which allows the continuation of proceedings for recovery of liability against a company whose name has been struck-off. The NCLAT reasoned that if the liabilities of the company are simply washed out due to action of company for non-compliance of the 2013 Act, the easiest thing for a company would be to get struck-off to wash off all its liabilities.

It is interesting to note that, another three-judge Bench of NCLAT, in the case of Fedex Express Transportation and Supply Chain Services (India) Private Limited vs. Zipker Online Services (covered in our round up for the period May 1, 2024 to May 15, 2024), had held that no CIRP lies against a company whose name was struck off as on the date of pronouncement of admission order. The provision under sub-section (7) of Section 248 of the 2013 Act, was also noted by the NCLAT, and it was observed that as CIRP proceeding is not a recovery proceeding, the aforesaid sub-section could not justify the maintainability of a petition against a struck off company.

Considering both the decisions have been passed by Benches of equal strength and the Fedex Express decision was not considered by Bench in Protima Arora case, it would be interesting to see if someone argues the decision to be per incuriam for its failure to consider the decision of a earlier decision of co-ordinate bench of equal strength.

Source: Barandbench

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