Restoring a Struck-Off Company: NCLT Process

Why Companies Get Struck Off in India

A struck-off company can be restored under Section 252 of the Companies Act, 2013, by petition to the National Company Law Tribunal (NCLT) — the sole authority with jurisdiction to order restoration. Companies, members, creditors, and workmen have up to 20 years from the date the strike-off notice was published in the Official Gazette to apply (the Registrar of Companies has 3 years), and the petition itself is filed in Form NCLT-9.

Restoration first requires understanding why the company was struck off. Under Section 248 of the Companies Act, 2013, the RoC can initiate strike-off proceedings in two situations:

Suo Motu Strike-Off by RoC (Section 248(1))

Section 248(1) sets out the grounds on which the Registrar may act, and only these. The Registrar must have reasonable cause to believe that:

• Clause (a): the company has failed to commence its business within one year of its incorporation
• Clause (c): the company is not carrying on any business or operation for two immediately preceding financial years and has not applied within that period for the status of a dormant company under Section 455
• Clause (d): the subscribers to the memorandum have not paid the subscription they undertook to pay at the time of incorporation, and the declaration under Section 10A has not been filed within 180 days of incorporation
• Clause (e): the company is not carrying on any business or operations, as revealed after a physical verification carried out under Section 12(9)

Clause (b) was omitted in 2015; clauses (d) and (e) were inserted by the Companies (Amendment) Act, 2019 with effect from 2 November 2018. Note what is not on the list: failure to file AOC-4 or MGT-7 is not itself a statutory ground for strike-off. In practice a filing default is the evidence the Registrar relies on to conclude that a company is not carrying on business under clause (c) — and it is separately what triggers director disqualification under Section 164(2).

Before striking off, the RoC sends a notice to the company and publishes the name in the Official Gazette, giving 30 days for objections.

Voluntary Strike-Off (Section 248(2))

A company can voluntarily apply for strike-off through Form STK-2 if it has ceased operations and wishes to close. This requires a special resolution from shareholders, nil assets and liabilities, and all pending filings brought current. For foreign-owned companies, this route is commonly used when a wholly owned subsidiary has been dormant and the parent company wants to formally close it.

Consequences of Being Struck Off

When a company is struck off:

• The company ceases to exist as a legal entity — it cannot enter contracts, sue, or be sued (though existing liabilities survive)
• Where the strike-off followed a three-year filing default, the directors are separately disqualified under Section 164(2)(a) for five years — the disqualification flows from the non-filing, not from the strike-off itself
• The MCA flags the Director Identification Numbers (DINs) of disqualified directors and blocks them from signing filings
• Bank accounts may be frozen or closed by the bank
• Assets left in a dissolved company can pass to the government as bona vacantia under general law — the Companies Act contains no express vesting provision for a Section 248 dissolution; what Section 248(6) actually requires is that the Registrar first satisfy himself that sufficient provision has been made for realising all amounts due to the company and for discharging its liabilities
• The liability of directors, managers, and officers continues despite the strike-off under Section 248(7)

For foreign investors, a struck-off subsidiary creates serious complications: the FDI investment is effectively trapped, the Indian resident director faces disqualification (preventing them from serving on other company boards), and any property or receivables owned by the company become inaccessible.

Legal Framework for Restoration: Section 252

Section 252 of the Companies Act, 2013, provides the legal mechanism for restoring a struck-off company. The National Company Law Tribunal (NCLT) is the sole authority with jurisdiction to order restoration.

Who Can File for Restoration

The following persons can apply to the NCLT for restoration:

• The company itself (through its former directors or authorised representatives)
• Any member (shareholder) of the company — including the foreign parent company
• Any creditor of the company — including banks, vendors, and employees with unpaid dues
• Any workman of the company — employees who were on the rolls at the time of strike-off
• The Registrar of Companies — under the second proviso to Section 252(1), where the Registrar is satisfied that the name was struck off inadvertently or on the basis of incorrect information furnished by the company or its directors

For foreign-owned companies, the application is typically filed by the foreign parent company (as member/shareholder) or by the Indian directors.

Time Limits for Filing

The 20-year window is long. However, delay in filing will require a more compelling justification and may result in the NCLT imposing stricter conditions for restoration.

Grounds for Restoration

Section 252(3) gives the Tribunal two statutory limbs. It may order restoration if satisfied that the company was, at the time its name was struck off, carrying on business or in operation, or that it is otherwise just that the name be restored. Most foreign-investor petitions are built on the second limb, and the evidence that typically satisfies it is:

• The company had assets — property, bank balances, receivables, or investments — that would be lost without restoration
• There are creditors or employees with outstanding claims against the company that can only be recovered if the company is restored
• The strike-off was procedurally irregular, the company intends to resume operations, or the foreign investor needs the company restored in order to repatriate invested capital

Step-by-Step NCLT Restoration Process

Phase 1: Pre-Filing Preparation (2-4 Weeks)

Step 1: Engage professionals. Appoint a company secretary (CS) or advocate experienced in NCLT proceedings. Under Section 432 of the Companies Act, 2013 a party may appear before the Tribunal in person or authorise a chartered accountant, company secretary, cost accountant or legal practitioner — professional representation is not legally compulsory, but drafting and arguing a restoration petition without it is rarely advisable.

Step 2: Gather documents. Compile the following:

• Certificate of Incorporation of the company
• Memorandum and Articles of Association
• Copy of the RoC's strike-off notice (Form STK-7) or the Official Gazette publication
• Board resolution (if directors are filing) or shareholder resolution (if the foreign parent is filing) authorising the NCLT petition
• Audited financial statements — Balance Sheet, Profit & Loss Account, and Auditor's Report — for the years preceding the strike-off
• Bank statements showing the company's account activity (to prove business was ongoing, if applicable)
• Details of any property, assets, or receivables owned by the company
• Affidavit from the directors explaining the circumstances of the strike-off and the reasons for seeking restoration
• Power of Attorney if the foreign parent or directors are represented by an authorised representative

Step 3: Determine the correct NCLT bench. The petition must be filed with the NCLT bench that has territorial jurisdiction over the company's registered office. The NCLT sits at 15 locations — Ahmedabad, Allahabad, Amaravati, Bengaluru, Chandigarh, Chennai, Cuttack, Guwahati, Hyderabad, Indore, Jaipur, Kochi, Kolkata, Mumbai and New Delhi, where the Principal Bench also sits. Several of these locations run more than one bench.

Phase 2: Filing the Petition (1-2 Weeks)

Step 4: Prepare Form NCLT-9. The restoration petition is filed in Form NCLT-9. Rule 87A of the National Company Law Tribunal Rules, 2016 (inserted by the NCLT (Amendment) Rules, 2017) prescribes Form No. NCLT. 9 for both an appeal under Section 252(1) and an application under Section 252(3). The petition must contain:

• Name, registered office address, and CIN of the struck-off company
• Date and circumstances of the strike-off
• Grounds for seeking restoration (with supporting evidence)
• Details of the petitioner and their locus standi (why they have standing to file)
• Relief sought — specifically, restoration of the company's name to the Register of Companies
• Any interim relief sought (e.g., directions to the RoC to permit filing of pending returns)

Step 5: File supporting documents. Along with Form NCLT-9, file:

• Affidavit in Form NCLT-6 verifying the contents of the petition
• Memorandum of appearance
• All annexures (documents listed in Step 2)
• The filing fee prescribed by the Schedule of Fees to the NCLT Rules, 2016 for a Section 252 application (INR 1,000) — confirm the current entry with the Registry before filing

Step 6: Serve notice. After filing, serve copies of the petition on:

• The Registrar of Companies (jurisdictional)
• The Regional Director, Ministry of Corporate Affairs
• Any other respondent directed by the NCLT

Phase 3: NCLT Hearing and Order (2-4 Months)

Step 7: Admission hearing. The NCLT examines the petition for completeness and prima facie merit. If satisfied, it admits the petition and issues notice to the RoC and Regional Director, directing them to file their response within a specified timeline (typically 4-6 weeks).

Step 8: RoC and Regional Director response. The RoC typically responds with details of the strike-off proceedings, the company's compliance history, and any objections to restoration. The Regional Director reviews the petition from a regulatory compliance perspective.

Step 9: Final hearing. The NCLT hears arguments from the petitioner, the RoC, and any other parties. The Tribunal considers:

• Whether the grounds for restoration are established
• Whether the company can comply with all pending statutory requirements post-restoration
• Whether restoration would prejudice any creditor, shareholder, or third party
• Whether the directors have demonstrated bona fide intent to revive the company

Step 10: NCLT order. If satisfied, the NCLT passes an order directing the RoC to restore the company's name to the Register. The order typically includes conditions:

• Filing of all pending annual returns and financial statements within a specified period (usually 30-90 days)
• Payment of all outstanding filing fees and late fees to the RoC
• Payment of any penalties imposed by the NCLT
• Compliance with any other directions (e.g., appointment of auditors, holding AGM)

Phase 4: Post-Order Compliance (4-8 Weeks)

Step 11: File the NCLT order with the RoC. Section 252(2) requires a copy of the Tribunal's order to be filed with the Registrar within 30 days from the date of the order — not from the date you receive the certified copy — using Form INC-28. On receipt, the Registrar restores the name to the register and issues a fresh certificate of incorporation, and the company's status on the MCA portal changes from "Struck Off" to "Active."

Step 12: File all pending annual returns and financial statements. File pending MGT-7 (Annual Returns) and AOC-4 (Financial Statements) for every year from the date of strike-off to the current date. Late filing fees apply at INR 100 per day per form — this can accumulate to lakhs if the company has been struck off for several years.

Step 13: Reactivate DINs. Once the company's status changes to "Active," apply for reactivation of the deactivated DINs of all directors. The MCA reactivates DINs upon confirmation that the company has been restored and all pending filings are completed.

Step 14: Unfreeze bank accounts. Present the NCLT restoration order and updated MCA status certificate to the company's bank to request unfreezing of bank accounts.

Step 15: Resume FEMA and RBI compliance. For foreign-owned companies, file updated FLA Returns with the RBI for the years during which the company was struck off. Update FC-GPR reporting if any changes in foreign shareholding occurred during the strike-off period.

Cost Breakdown

Only the first two rows can be stated in advance: the NCLT fee is fixed, and the MCA additional fee is a formula. Everything else has to be quoted for your specific case, and the number of dormant years is what drives it — get written quotes rather than working to a rule of thumb.

The single largest cost component is typically the late filing fees payable to the MCA. For a company struck off 5 years ago with both MGT-7 and AOC-4 pending for all 5 years, the late fee alone would be approximately INR 100 x 365 days x 5 years x 2 forms = INR 3,65,000. For 10 years: INR 7,30,000.

Director Disqualification and DIN Reactivation

One of the most impactful consequences of a company being struck off is the disqualification of all its directors under Section 164(2) of the Companies Act, 2013.

How Disqualification Works

Under Section 164(2)(a), a person who is or has been a director of a company that has not filed financial statements or annual returns for any continuous period of three financial years is not eligible to be re-appointed as a director of that company, or appointed in any other company, for five years from the date on which the company failed to do so. The MCA deactivates the DIN of every disqualified director, preventing them from:

• Being appointed as a director of any other company in India
• Filing any statutory forms that require DIN authentication
• Signing digital documents on behalf of any company

Impact on Foreign Companies

For foreign-owned companies, the Indian resident director — who is often an employee or professional nominee — bears the brunt of this disqualification. If the resident director serves on the boards of other Indian companies (which is common for professional nominee directors), their disqualification disrupts all those directorships.

DIN Reactivation Process

DIN reactivation after company restoration follows a two-stage process:

1. Company restoration: Once the NCLT orders restoration and the company's MCA status changes to "Active," the DINs of directors can be reactivated
2. Filing Form DIR-3 KYC: Each director must file updated KYC through Form DIR-3 KYC on the MCA portal

Important distinction: DIN reactivation and removal of disqualification are separate processes. Section 164(2)(a) runs the five-year period from the date on which the company failed to file — not from the date the default is made good — so completing the pending filings after restoration does not by itself reset, extend or shorten a disqualification already incurred. Where a director needs the disqualification formally lifted, the application is made in Form DIR-10.

Special Considerations for Foreign Investors

FEMA Compliance After Restoration

A restored company with foreign investment must immediately address its FEMA compliance backlog:

• File pending FLA Returns with the RBI for every year the company was struck off
• Update FC-GPR/FC-TRS reporting on the FIRMS portal to reflect the current status of foreign investment
• If the company's bank accounts were frozen, coordinate with the Authorized Dealer (AD) bank to unfreeze accounts and resume foreign exchange transactions

Property and Asset Recovery

Assets left in a dissolved company can pass to the government as bona vacantia under general law — the Companies Act has no express vesting provision for a Section 248 dissolution, and Section 248(6) instead obliges the Registrar to satisfy himself, before dissolution, that sufficient provision has been made for realising amounts due to the company and for discharging its liabilities. In practice this rarely bites. Section 252(3) empowers the Tribunal, when ordering restoration, to give such directions and make such provisions as are just for placing the company and all other persons as nearly as may be in the position they would have occupied had the name never been struck off.

For real estate, the company should update land registry records to reflect the restoration and ensure there are no encumbrances created during the strike-off period.

Ongoing Business Relationships

If the company had active contracts, customer relationships, or regulatory licenses at the time of strike-off, these may need to be renegotiated or renewed after restoration. Key actions include:

• Notify banks, customers, and vendors of the restoration
• Renew any expired regulatory licenses (GST registration, IEC, professional tax, shops and establishments)
• Update PAN and TAN records with the Income Tax Department
• File pending income tax returns for the years during the strike-off period

Voluntary Strike-Off vs Involuntary: Does It Matter for Restoration?

A significant legal question is whether the NCLT can restore companies that were voluntarily struck off (under Section 248(2)) versus those struck off suo motu by the RoC (under Section 248(1)).

The NCLAT (appellate tribunal) has ruled in multiple cases that Section 252 applies to both voluntary and involuntary strike-offs. However, for voluntary strike-offs, the NCLT may scrutinise the petition more closely — the company voluntarily chose to be struck off, so it must demonstrate a compelling change in circumstances that justifies restoration.

Common grounds for restoring voluntarily struck-off companies include:

• Discovery of pending tax refunds or receivables that can only be claimed by the company
• Pending litigation where the company is a necessary party
• FEMA compliance issues that require the company to exist for the foreign investor to repatriate capital
• Creditors who discover outstanding claims after the voluntary strike-off

Key Takeaways

• Section 252(3) gives you 20 years to file for restoration: The company, or any member, creditor or workman, can apply to the NCLT within 20 years of the strike-off notice in the Official Gazette. Separately, any person aggrieved by the Registrar's dissolution order has a three-year appeal under Section 252(1), and the Registrar himself has three years where the name was struck off inadvertently or on incorrect information
• Form NCLT-9 is the filing vehicle: The petition is filed in Form NCLT-9 with a statutory fee of INR 1,000. CS or advocate representation is charged on top of that at commercially negotiated rates, driven mainly by how many dormant years have to be reconstructed
• Late filing fees are the biggest cost: MCA late filing fees at INR 100 per day per form accumulate rapidly for long-dormant companies. A company struck off for 5 years faces approximately INR 3.65 lakh in late fees alone for MGT-7 and AOC-4 filings
• DIN reactivation follows restoration but disqualification may persist: Directors' DINs are reactivated once the company is restored and pending filings completed, but the five years under Section 164(2)(a) run from the original default, not from the date it is cured, and formal removal is sought in Form DIR-10
• Foreign investors must address FEMA backlog immediately: File pending FLA Returns, update FC-GPR reporting, and unfreeze bank accounts through the AD bank. FEMA reporting missed during the strike-off period is regularised first by paying the Late Submission Fee — INR 7,500 flat for a non-flow return, or INR 7,500 plus 0.025% of the amount involved for each year of delay for a flow return such as FC-GPR — available for up to three years from the due date, with compounding only beyond that window
• Engage a company secretary early: Section 432 lets a party appear in person, but in practice NCLT restoration petitions are practitioner work. Starting the process with professional guidance saves months of procedural delays. Beacon Filing's annual compliance services can help restore your company and bring all filings current