Section 248 empowers the Registrar of Companies to initiate striking off the name of the company from the registrar of companies for reasons as provided in 248(1). However, if any party is aggrieved by the order of the registrar, the remedy lies in an appeal which can be filed with the tribunal.
Section 252(3) of the Companies Act, 2013 empowers the National Company Law Tribunal (NCLT) to restore a struck-off company and make just directions to place affected persons, as nearly as possible, in their position without the strike-off.
However, it is pertinent to note that restoration is often accompanied by cost. Rule 87A(4)(c) of the NCLT Rules, 2016 empowers the tribunal with discretion to pass a restoration order to direct the applicant or appellant to pay the Registrar of Companies “his costs of, and occasioned by, the appeal or application, unless the Tribunal directs otherwise”.
Restoration costs beyond making good the default:
The financial burden of restoration extends beyond making good the original default. The company must ordinarily complete its pending filings and pay the applicable filing fees and additional fees. Costs imposed as a condition of restoration are a further outlay, apart from the professional and procedural expenses of pursuing restoration. Rule 87A(4)(d) separately requires pending financial statements and annual returns to be filed within the time directed by the Tribunal. Payment of restoration costs does not replace those obligations or, by itself, extinguish liability for the underlying default.
It is therefore advisable for companies to comply with their filing requirements within the prescribed time. Eligible inactive companies should consider dormant status under Section 455, while continuing to meet the applicable requirements. A notice under Section 248(1) should also be addressed promptly with supporting documents within thirty days, to help avoid strike-off and the expense of seeking restoration.
If the company has already been struck off, restoration must be sought through the applicable remedy under Section 252. Where the NCLT allows restoration, but the applicant is aggrieved by the costs imposed, the cost direction may be challenged before the National Company Law Appellate Tribunal (NCLAT) under Section 421.
A power requiring a basis for assessment:
Rule 87A links the costs incurred by the Registrar of Companies with the proceedings and also preserves discretion of tribunal to direct otherwise. It specifies neither detailed assessment factors nor a monetary ceiling. A reasoned assessment should therefore consider the relevant expenditure, the facts and circumstances, and the identity and purpose of the person seeking restoration before fixing the cost condition.
The meaning of “costs” is therefore important to the exercise this discretion.
Definition of “Cost” – Law Lexicon :
Costs as meaning legal expenses. In the prosecution and defense of actions, the parties are necessarily put to certain expenses, or as they are commonly called costs; consisting of money paid to the Government for stamp duties to the officers of the Courts, and to the counsel and attornies for their fees, etc. (Tomlin)
For restoration, the question is what connected expenditure the applicant should reasonably bear.
Variation in restoration costs before NCLT Mumbai
The orders discussed below were passed between the period April’2026 to September 2026 by the NCLT, Mumbai bench. The cost imposed ranged between Rs. 25,000 to Rs. 3,00,000. The fourteen orders are grouped by the amount imposed.
| Cost per order | Case or company | Reason for striking off and restoration |
| Rs. 25,000 | Ashok Bhonsale & Anr. v Registrar of Companies, Mumbai[1] Jeevan Agarwal [Director of Llardo Finance Private Limited] v Registrar of Companies, Mumbai[2] | Failure to file statutory returns. Proceedings pending with High Court. Failure to file annual returns. |
| Rs. 50,000 | Luxora Properties Private Limited v Registrar of Companies, Mumbai[3] Terra Firma Estates Private Limited v Registrar of Companies, Goa Daman & Diu[4] | Failure to file financial statements and annual returns, company also held fixed assets, current investments, loans and advances forming considerable size. Failure to file financial statements and annual returns due to lack of professional guidance but was in continuous business operations since incorporation. |
| Rs. 1 lakh | Anubhav Agarwal Director of US Magnets Pvt. Ltd v Registrar of Companies Mumbai[5] Ashdeen Dinyar Jamshedji Member and Director of Noble Paint and Varnish Company Private Limited v Registrar of Companies, Mumbai[6] Jijai Business Park Private Limited v Registrar of Companies, Mumbai[7] | Failure to file financial statements and annual returns. Company also held interests in real estate and properties. Failure to file financial statements and annual returns, but the company had prepared provisional financial statements. Further, the company had immobile assets and investments. Failure to file INC-20A and annual returns. It also held industrial property acquired on lease and completed construction. |
| Rs. 2 lakh | Shalini Madadi Reddy ((Shareholder of Eden Holdings Private Limited v Registrar of Companies Mumbai[8] Vivify Infrastructure Private Limited v Registrar of Companies Mumbai [9] | Failure to file Income tax return, GST return and audited financial statements. However, the company held investment interest in immovable properties indirectly through its shareholding in another Company Failure to file financial statements and annual returns also the Company had a registered development agreement for development of land parcel for which monetary consideration was duly paid relating to which there was a pending dispute which was later settled. |
| Rs. 2.50 lakh | Shamvik Containers Private Limited v Registrar of Companies, Mumbai [10] Sameer Narayan Bandekar v Registrar of Companies, Mumbai [11] | Failure to file financial statements, further there was a pending dispute with relation a property. Failure to file financial statements and annual returns. Company having business, assets and liabilities of its own, which are being used economically for the business of the Company. |
| Rs. 3 lakh | Diipesh Lakshman Bhagtani Shareholder of MDED Estates Pvt. Ltd. v Registrar of Companies[12] | Failure to file financial statements. Company had acquired valuable redevelopment rights, raised substantial funds from directors and stakeholders and company also paid Security Deposit in pursuance to development agreement which is subject matter of proceeding. |
These orders highlight the additional financial exposure that may accompany restoration. The variation does not, by itself, establish that the costs were excessive, since the facts and defaults differed. Some orders refer broadly to the company’s size, operations and conduct, or to continued business without statutory compliance. However, the orders do not consistently explain the computation or connect the particular amount with expenditure occasioned by the proceedings. Reasons for restoring a company, such as existing assets or pending litigation, do not by themselves explain the quantum of costs. These amounts relate only to the orders reviewed and do not represent a standard rate or cover all restoration orders passed by the Bench.
Reasonableness as the guiding consideration:
General Section 35 of the Code of Civil Procedure, 1908 (CPC) recognizes discretion over who pays costs and to what extent, subject to applicable law and rules.
A more detailed framework appears in Section 35 CPC as substituted for commercial disputes of specified value through Section 16 and the Schedule to the Commercial Courts Act, 2015, and in Section 31A of the Arbitration and Conciliation Act, 1996. Both expressly define costs by reference to “reasonable costs”.
These include witness expenses, legal fees and other connected expenditure; Section 31A additionally covers arbitration-specific expenses. Reasonableness calls for assessment of justified expenditure, rather than automatic recovery of the amount claimed.
Both provisions allow the court to decide whether costs should be paid, how much should be paid and when they should be paid. This is useful guidance when considering whether an applicant should bear restoration costs and, if so, what amount is justified.
The term “reasonable” as defined in Law Lexicon:
By the term “reasonable” is not meant expedient, nor that the conditions must be such as the Court would impose if it were called on to prescribe what should be the conditions. They are to be deemed reasonable where, although perhaps not the wisest and best that might be adopted, they are fit and appropriate to the end in view, and are manifestly adopted in good faith for that purpose.
The frameworks discussed above provides persuasive guidance; they do not directly govern Section 252. Rule 87A ordinarily places the costs incurred by the Registrar of Companies’ on the successful restoration applicant. An unsupported or disproportionate condition may be challenged before NCLAT.
Interestingly sub-section (3) of Section 35 of CPC as substituted for commercial disputes through Section 16 and the Schedule to the Commercial Courts Act, 2015 and Section 31A of the Arbitration and Conciliation Act, 1996 also provide factors that a court should consider while imposing the costs. The factors stated are stated below:
- the conduct of the parties;
- whether a party succeeded on part of its case, despite not being wholly successful;
- whether a frivolous counterclaim caused delay;
- whether a reasonable settlement offer was made and unreasonably refused; and
- whether a frivolous claim was made and a vexatious proceeding instituted, wasting the court’s time.
The additional factor in (e) is expressly stated in commercial Section 35, but not separately listed in Section 31A(3). These factors should be adapted to restoration only where relevant.
In restoration proceedings, the useful guidance is to assess relevant conduct and the circumstances causing expenditure, while keeping Rule 87A’s specific wording and the applicant’s role in view.
Appellate relief from inadequately justified costs:
In the light of above, let us discuss some orders where appeal was preferred on the cost imposed while restoring the name.
NCLAT’s restoration decisions illustrate how these considerations can guide the assessment:
Income Tax Department v Registrar of Companies[13]
- Discretion based on the applicant’s role. NCLT Amaravati imposed Rs. 25,000 in each of four Income Tax Department applications for Gazette publication and counsel fees. NCLAT noted that the Department sought restoration for statutory tax assessments and was distinct from the defaulting companies. One government body was facilitating another’s functions. The amount also lacked adequate determination and justification. NCLAT quashed all four directions and ordered refund within four weeks, demonstrating the importance of the applicant’s identity and purpose.
Ganton Projects Private Limited v Registrar of Companies (NCT of Delhi and Haryana)[14]
- Determination before quantification. In Ganton Projects, NCLT Delhi imposed Rs. 10 lakh. The company challenged the amount as disproportionate and unreasoned, referring to additional filing fees, natural justice and the Companies Compliance Facilitation Scheme, 2026. NCLAT rejected inadvertence as an excuse for serious filing defaults but required a rational correlation between the costs imposed and those occasioned by the proceedings. It reduced the amount to Rs. 5 lakh because the original direction lacked a reasoned computation. The Rs. 2 lakh interim deposit was adjusted, leaving Rs. 3 lakh payable.
VIP Farms Private Limited v Registrar of Companies (NCT of Delhi and Haryana) [15]
- Rationality and proportionality in VIP Farms. NCLT Delhi imposed Rs. 7 lakh by multiplying Rs. 25,000 by the years considered for default. NCLAT found no explanation for that annual rate and no determination connecting it with the Registrar of Companies’ costs occasioned by the proceedings. Filing defaults were established but did not justify this calculation. Referring to section 35 CPC, NCLAT required reasons and logic and a balance between the magnitude of default and the financial burden. It reduced costs to a consolidated Rs. 4 lakh while retaining the finding of filing default. The reduction addressed an unsupported assessment however, the judgment gives no itemized calculation or formula explaining precisely why Rs. 4 lakh was chosen.
Conclusion:
The orders discussed offer a practical lesson: the cost of keeping a company compliant can be much lower than the cost of bringing it back onto the register. Timely action can therefore save companies’ avoidable expense. A Company Secretary plays an important role in this process by monitoring filing requirements, advising on dormant status where appropriate, and ensuring prompt responses to strike-off notices.
When restoration is sought, Tribunals should explain the basis for the costs imposed, taking guidance from the principles discussed above. This would help ensure that the amount reflects the circumstances of the case and places a reasonable and proportionate burden on the applicant.
The article is written by Ms. Kavita Dosani