Tribunal holds existence of valuable assets and contractual rights justify restoration under Section 252(3) of Companies Act, 2013; restoration granted subject to costs and compliance with pending filings.
The National Company Law Tribunal (NCLT), Mumbai Bench, in a significant ruling, allowed the appeal filed by Mr. Diipesh Lakshman Bhagtani for the restoration of the name of MDED Estates Private Limited, which had been struck off by the Registrar of Companies (RoC) Mumbai due to non-filing of statutory returns and financial statements from the financial year 2015-16 onwards.
The case arose when the RoC, exercising powers under Section 248 of the Companies Act, 2013, initiated suo motu strike-off proceedings against MDED Estates Pvt. Ltd. on grounds of prolonged non-compliance with statutory filing obligations. The company's name was officially struck off on 11th September 2018 via Gazette Notification and public notice (Form STK-7 dated 12.09.2018).
The appellant, holding 50% of the company's shares, challenged the strike-off under Section 252(3) of the Companies Act, 2013, which permits a company or its members to seek restoration of the company's name within 20 years from the date of strike-off if the company was carrying on business or if it is otherwise just to restore the name.
The appellant submitted that MDED Estates Pvt. Ltd. was not a dormant or shell company but had acquired valuable contractual rights under a registered Development Agreement dated 2nd August 2014. This agreement entitled the company to 60% of the developed area in a redevelopment project located at Bandra (West), Mumbai. The company had also paid a refundable security deposit of Rs. 3 crores to the landowners and had pending arbitration proceedings before the Bombay High Court regarding disputes arising from the agreement.
Though the company had defaulted on statutory filings owing to a downturn in the real estate market and disputes, the appellant argued that the company maintained its books of accounts and filed income tax returns up to assessment year 2017-18. The appellant further undertook to complete all pending filings and pay applicable fees promptly upon restoration.
The RoC contended that the company was rightly struck off since it had not carried on any substantial business operations, had failed to file mandatory financial statements, and that the directors' DINs were deactivated. It also argued that the arbitration disputes were private civil matters and did not justify restoration.
Upon hearing both parties, the Tribunal observed that the appellant, as a member holding 50% shares, was entitled to maintain the appeal irrespective of the deactivation of directors' DINs and absence of board resolutions. The Tribunal noted that the appeal was filed well within the 20-year limitation prescribed under Section 252(3).
The NCLT examined the material placed on record, including the registered Development Agreement, provisional financial statements, and tax returns. The Tribunal concluded that the existence of valuable assets, subsisting contractual rights, liabilities, and stakeholder interests clearly indicated that the company was not defunct at the time of strike-off. The Tribunal relied on precedents such as Tahir Vasanali Isani v. Registrar of Companies (NCLAT, 2025), which recognized restoration where valuable assets would otherwise be lost.
The Tribunal held that the non-filing of statutory returns alone does not justify strike-off if the company possesses valuable assets and enforceable rights. It further clarified that restoration under Section 252(3) is discretionary and equitable and can be granted to prevent irreparable loss and injustice.
Accordingly, the Tribunal ordered the Registrar of Companies Mumbai to restore the name of MDED Estates Pvt. Ltd. in the Register of Companies as if it had not been struck off. Restoration was subject to the payment of a cost of Rs. 3,00,000 to the Ministry of Corporate Affairs and compliance with all pending statutory filings within 60 days of restoration. The order preserves the rights of the RoC to take appropriate action for past violations.
This ruling reinforces the principle that companies with genuine business interests and assets should be given an opportunity for restoration despite procedural defaults, thereby protecting commercial rights and preventing needless loss of property.
Bottom Line:
Restoration of company name under section 252(3) of the Companies Act, 2013 can be granted if the company demonstrates the existence of valuable assets, contractual rights, or stakeholder interests, and it is just and proper to restore the company's name to prevent irreparable loss and injury.
Statutory provision(s):
Companies Act, 2013 Section 248, Section 250, Section 252(3)
