Companies Act Section 356

Companies Act, Section 356: Powers of the Tribunal to Declare Dissolution of a Company Void 

Section 356 of the Companies Act, 2013 provides an important safeguard mechanism in the corporate dissolution process by empowering the National Company Law Tribunal (NCLT) to declare the dissolution of a company void under certain circumstances. This provision ensures that if it is later discovered that a company was dissolved prematurely, or there are unfinished matters such as unresolved claims, assets, or legal obligations, then such dissolution can be reversed, and the company treated as though it had not been dissolved.

This section serves as a legal recourse to correct or reopen dissolution proceedings that may have occurred in error, oversight, or without full consideration of all relevant interests.

1. Power of the Tribunal to Declare Dissolution Void

Under sub-section (1) of Section 356, the Tribunal is vested with the authority to reverse the dissolution of a company, subject to certain conditions:

If a company has been dissolved under any circumstances including dissolution pursuant to the provisions of:
This Chapter (Chapter XX on Winding Up), Section 232 (dealing with mergers, amalgamations, or compromises), or Any other applicable law or mechanism for company dissolution.
The Tribunal may declare such dissolution void if it receives an application to that effect and is satisfied that the interests of justice require such a declaration.
Who Can Apply?

The application to the Tribunal seeking such a declaration may be made by:

The Company Liquidator if he believes that dissolution was improper, premature, or requires reversal due to uncompleted liquidation responsibilities or unresolved claims.
Any other person who appears to the Tribunal to be interested in the affairs of the company this includes creditors, shareholders, legal claimants, or any other party whose rights or interests are affected by the company’s dissolution.
Time Limit for Application

The Tribunal can exercise this power only within two years from the date of dissolution of the company.
This period acts as a limitation to ensure finality of proceedings but allows ample time for parties to discover any irregularities or injustices resulting from the dissolution.
Effect of Declaration: Once the Tribunal passes an order declaring the dissolution to be void:
The company is deemed to have never been dissolved, and All necessary proceedings legal, administrative, or financial may be resumed as if the dissolution had never occurred.
This ensures continuity and allows parties to address any residual or overlooked matters within the legal framework of a functioning corporate entity.
2. Registrar Compliance and Filing Requirements

Sub-section (2) ensures proper documentation and regulatory compliance following a Tribunal order declaring a dissolution void. It lays down the following procedural requirements:

(a) Intimation to the Registrar by the Tribunal: The Tribunal is required to forward a copy of the order (that declares the dissolution void) to the Registrar of Companies (RoC).
This must be done within 30 days from the date of the order. Upon receipt, the Registrar shall record the order, updating the official records to reflect that the company is no longer considered dissolved.
(b) Filing of Certified Copy by the Applicant: The Tribunal shall also direct:
The Company Liquidator, or The person who made the application for declaring the dissolution void, To file a certified copy of the order with the Registrar within 30 days from the date of the order, or within such extended time as the Tribunal may allow.
This ensures that the corporate records are updated consistently, and that the reinstatement of the company is formally and publicly acknowledged.
Significance of Section 356

Section 356 plays a vital remedial role by:

Providing a legal remedy to reverse the dissolution of a company when it is found that doing so would be in the interest of justice.
Protecting the rights of creditors, contributories, shareholders, and other stakeholders who may have been adversely affected by the company's premature or improper dissolution.
Enabling the continuation or completion of legal proceedings, distribution of undisclosed assets, recovery of dues, or fulfillment of unexecuted obligations that remained unresolved at the time of dissolution.
Ensuring proper regulatory reporting and updating of official records maintained by the Registrar, thereby upholding corporate transparency and accountability.