Removal of Names of Companies from the Register of Companies
1. Where the Registrar has reasonable cause to believe that:—
a. a company has failed to commence its business within one year of its incorporation;
b. the subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty days from the date of incorporation of a company and a declaration under sub-section (1 ) of section 11 to this effect has not been filed within one hundred and eighty days of its incorporation; or
c. a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455, he shall send a notice to the company and all the directors of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.
2. Without prejudice to the provisions of sub-section (1 ), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent. members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub-section (1 ) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:
Provided that: in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.
3. Nothing in sub-section (2 ) shall apply to a company registered under section 8.
4. A notice issued under sub-section (1 ) or sub-section (2 ) shall be published in the prescribed manner and also in the Official Gazette for the information of the general public.
5. At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.
6. The Registrar, before passing an order under sub-section (5 ), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:
Provided that: notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.
7. The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5 ), shall continue and may be enforced as if the company had not been dissolved.
8. Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies.
Legal Commentary & Landmark Judgments: Section 248
Section 248 empowers the Registrar of Companies to strike off defunct, inoperative, or non-compliant companies, and permits companies to apply voluntarily for removal of name.
Sub-section (7) expressly provides that the liability of every director, manager, and member shall continue and may be enforced as if the company had not been dissolved.
Section 248 is the MCA's primary administrative scalpel against shell companies. Over five lakh companies have been struck off under Section 248 for failing to file financial returns for two consecutive years. Crucially, strike-off immediately freezes company bank accounts; directors cannot access funds until the company is formally restored by the NCLT under Section 252.