Strike Off of Companies Under Section 248: Form STK-2 Filing Requirements, Director Liabilities, Tax NOC & NCLT Restoration Under Section 252
For board directors, promoters, liquidating stakeholders, and corporate secretarial teams navigating dormant corporate entities in India, the process of company closure is governed by Section 248 of the Companies Act, 2013—commonly referred to as Strike Off (Fast Track Exit).
While voluntary striking off via Form STK-2 offers a streamlined, cost-effective alternative to formal court-monitored winding up under the Insolvency and Bankruptcy Code (IBC), widespread misconceptions surround its legal finality. Many corporate directors mistakenly believe that once the Registrar of Companies (ROC) issues Form STK-7 (Notice of Striking Off) and dissolves the company name from the official register, all historical civil and tax liabilities evaporate.
Under Indian corporate jurisprudence, striking off does not extinguish director liabilities. By virtue of Section 248(7), the personal liability of every director, manager, and officer continues as if the company had never been dissolved. Furthermore, under Section 252, aggrieved creditors, tax authorities, or even former promoters can petition the National Company Law Tribunal (NCLT) within statutory limitation windows spanning up to 20 years to restore the company to active status.
At PGT & Associates, our corporate governance, secretarial compliance, and NCLT dispute resolution desk regularly advises corporate boards on voluntary strike-off filings, assists dormant companies in clearing statutory backlogs, defends directors against Section 164(2) disqualifications, and represents stakeholders in Section 252 revival petitions. Below is an exhaustive, technical operational manual on Section 248 procedures, STK-2 prerequisite checks, director indemnities, and NCLT restoration jurisprudence for corporate managers in 2026.
1. Statutory Architecture: Section 248 Grounds & STK-2 Eligibility
Under Section 248 of the Companies Act, 2013, read with the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, a company's name can be struck off via two distinct pathways:
Suo Motu Striking Off by ROC [Section 248(1)]: Triggered unilaterally by the Registrar if the company fails to commence business within one year of incorporation, or fails to carry on business/operations for two immediately preceding financial years without applying for Dormant Company status under Section 455.
Voluntary Application by Company [Section 248(2)]: Executed voluntarily by filing e-Form STK-2 after obtaining shareholder approval through a Special Resolution (or consent of 75% members in terms of paid-up share capital) and extinguishing all corporate liabilities.
Ineligible Companies (Barred from Section 248 Strike Off):
Under Rule 3 of the Removal of Names Rules, the following entities cannot apply for voluntary strike off under Section 248(2):
Listed Companies or delisted companies where formal delisting compliances remain unresolved.
Companies against which an inspection, inquiry, or investigation has been ordered under Section 206, 208, or 210, or where an investigation is pending before the Serious Fraud Investigation Office (SFIO).
Companies that have received notices of prosecution from the ROC, or where compounding applications for serious offenses remain pending before the Regional Director (RD).
Companies against which corporate insolvency resolution proceedings (CIRP) or liquidation proceedings are pending before the NCLT under IBC, 2016.
Section 8 (non-profit) companies registered under the Act.
2. Mandatory Documentation & The STK-2 Filing Protocol
Filing Form STK-2 requires surgical corporate secretarial execution. Incomplete or inconsistent filings will trigger immediate rejection by the Centre for Processing Accelerated Corporate Exit (C-PACE)—the centralized MCA authority established to process corporate strike-offs.
The ₹10,000 Government Fee & The C-PACE Scrutiny Mechanism:
Every application under Form STK-2 carries a statutory MCA filing fee of ₹10,000. Upon submission, C-PACE conducts rigorous electronic checks:
Income Tax Portal Verification: Automatic electronic ping to the Income Tax Department's insight portal to confirm that no open scrutiny notices, pending demand orders under Section 156, or active reassessment proceedings under Section 148 exist.
Public Notice in Form STK-6: C-PACE publishes a public notice on the MCA portal, in the Official Gazette, and in leading English and vernacular newspapers, inviting objections within 30 days.
Regulatory Regulatory Intimations: C-PACE dispatches formal letters to the Income Tax Department, GST Department, RBI, and SEBI giving them 30 days to raise objections. If no objection is received, deemed consent is presumed.
3. The Personal Liability Trap: Section 248(7) & Tax Notice Survival
The single most dangerous trap for company directors is the assumption that striking off acts as an absolute release from debt and statutory liability.
Statutory Analysis of Section 248(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."
This provision preserves personal liability across three critical vectors:
Tax Department's Power to Quash Strike Off:
If the Income Tax Department discovers escaped income or unreported bank transactions (e.g., high-value deposits flagged under Section 148A), the department routinely files a petition under Section 252(2) before the NCLT to revive the company and proceed with reassessment.
4. Restoration of Struck-Off Companies under Section 252 before NCLT
When a company has been struck off—either suo motu by the ROC or voluntarily—it can be restored to the Register of Companies exclusively through an order passed by the National Company Law Tribunal (NCLT) under Section 252.
The "Just and Equitable" Doctrine Under Section 252(3):
Under Section 252(3), the NCLT possesses wide discretionary powers to restore a company if it is satisfied that:
The company was, at the time of its name being struck off, carrying on business or in operation; OR
It is otherwise just that the name of the company be restored to the register of companies.
#### Legitimate Grounds Recognized by NCLT for Restoration:
Undisposed Immovable Property / Bank Deposits: The company holds title to land, commercial properties, intellectual property, or trapped bank balances that cannot be transferred or liquidated while dissolved (M.A. Panjwani v. ROC).
Pending Litigation / Arbitration: The company is an indispensable plaintiff or defendant in pending judicial or arbitration proceedings where valuable corporate rights are at stake.
Income Tax Reassessment by Revenue: The Income Tax Department seeks revival to recover undisputed arrears or complete Section 148 assessments (CIT v. ROC & Ors.).
Inadvertent Non-Filing Due to Management Disputes: Operational paralysis caused by bona fide shareholder disputes rather than fraudulent intent, where the business remains commercially viable.
Step-by-Step NCLT Section 252 Petition Workflow:
Filing of Petition in Form NCLT-1: Accompanied by supporting affidavit (Form NCLT-4), audited financials for the relevant years, bank statements showing active transactions, and MCA payment receipts.
Service of Advance Notice: Mandatory service to the ROC, Regional Director, Income Tax Department, and other relevant regulatory bodies at least 14 days prior to the hearing date.
ROC Report & Tax Department Response: The ROC and Income Tax Department file formal counter-affidavits detailing compliance status and tax dues.
NCLT Hearing & Restoration Order: If satisfied, the Tribunal issues an order directing the ROC to restore the company upon payment of token costs (typically ranging from ₹25,000 to ₹1,00,000 to the Prime Minister's Relief Fund or MCA).
Filing e-Form INC-28: The certified true copy of the NCLT order must be filed with the ROC within 30 days via Form INC-28. The ROC then shifts the company's status from "Struck Off" back to "Active".
Filing Overdue Statutory Returns: Within the timeline granted by NCLT (usually 30 to 45 days), the company must file all pending Annual Returns (MGT-7/7A) and Financial Statements (AOC-4) with normal late filing fees.
5. Director Disqualification & Section 164(2) Remediation
When the ROC strikes off a defaulting company suo motu due to continuous non-filing of financial statements for 3 consecutive financial years, it automatically triggers Section 164(2)(a) disqualification for all directors on the board.
Remediation Strategies for Disqualified Directors:
Restoration via NCLT Section 252: Once the NCLT orders the restoration of the defaulting company and pending returns are filed, the primary default is cured. Directors can then apply to the ROC for DIN reactivation.
High Court Writ Petition (Article 226): Where disqualification was imposed without adhering to principles of natural justice (e.g., no prior show-cause notice issued under Section 164), directors can petition the jurisdictional High Court for a writ of certiorari quashing the disqualification and ordering immediate DIN re-activation, in accordance with landmark rulings in Mukut Pathak v. Union of India (Delhi HC) and Meethelaveetil Kaitheri Muralidharan v. Union of India (Madras HC).
Frequently Asked Questions (FAQs) on Company Strike Off & Restoration
Q1. Can a company with pending bank loans or creditor dues apply for Form STK-2?
No. Form STK-2 requires an absolute declaration of NIL liabilities. Attempting to strike off a company while liabilities remain unpaid constitutes fraud under Section 251, making directors personally liable for all corporate debts without limitation, in addition to facing criminal prosecution under Section 447 of the Companies Act.
Q2. How long does the C-PACE strike off process take from the date of STK-2 filing?
Under standard operating conditions without objections, the centralized C-PACE processing takes between 90 to 120 days. This includes the mandatory 30-day statutory public notice period under Form STK-6 and regulatory intimation windows.
Q3. Can the Income Tax Department reopen assessments after a company is struck off?
Yes. The Income Tax Department can either invoke Section 179 to recover taxes directly from the directors of private companies, or file a petition under Section 252 before the NCLT within the 3-year or 20-year limitation period to restore the company to active status and issue assessment notices under Section 148.
Q4. What happens to the company's property or bank accounts if struck off without transfer?
Any assets, bank balances, or properties left in the name of a struck-off company become bona vacantia (property without an owner) and effectively vest in the State. The only legal remedy to reclaim, sell, or operate these assets is to petition the NCLT for restoration under Section 252(3).
Q5. Can a strike-off application be filed if the company has not commenced operations since incorporation?
Yes. Under Section 248(1)(a), a company that has not commenced operations within one year of its incorporation can apply for voluntary strike off. However, the company must have filed Form INC-20A (Declaration of Commencement of Business) or ensure that subscriber capital dues are properly accounted for before STK-2 submission.
Q6. Is an Income Tax No Objection Certificate (NOC) mandatory before filing STK-2?
While physical submission of an Income Tax NOC is no longer strictly mandatory under the simplified C-PACE regime, C-PACE electronically transmits the STK-2 data to the Income Tax Department. If the tax authorities find pending scrutiny, demands, or unfiled returns, they will lodge a formal objection, leading to the immediate rejection of the strike-off application.
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Institutional Corporate Governance & NCLT Advisory from PGT & Associates
Whether your board requires an accelerated voluntary exit under C-PACE or needs emergency NCLT representation to restore a struck-off corporate entity and reactivate disqualified DINs, PGT & Associates delivers end-to-end legal and secretarial counsel.
📋 Download the Complete Form STK-2 Fast-Track Exit & Due Diligence Checklist (PDF) — Pre-filing balance sheet audit steps, indemnity bond drafts, and C-PACE objection prevention guides.
For directors, corporate counsel, and liquidating promoters seeking authoritative corporate advisory:
💼 Consult the PGT & Associates Corporate Law & NCLT Desk — Partner-led review of corporate records, STK-2 fast-track filings, Section 252 NCLT restoration petitions, and DIN reactivation counsel.
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