What is Section 248 of the Companies Act 2013?

Last updated 22 May 2026

The statute that governs company dissolution in India

Before the Companies Act 2013 came into force, company closure in India was governed by Section 560 of the Companies Act 1956, administered through a scheme known as the Fast Track Exit (FTE). The 2013 Act replaced this with Section 248, which is more structured and applies to both voluntary closure and ROC-initiated removal of defunct companies.

Section 248 sits within Chapter XVIII of the Companies Act 2013, titled "Removal of Names of Companies from the Register of Companies." It is a self-contained regime covering who can apply, the conditions that must be met, the process the ROC must follow, and the effect of strike off on the company and its directors.

Section 248(1) — ROC-initiated strike off

Under Section 248(1), the Registrar of Companies (ROC) has the power to suo motu — that is, on its own initiative — remove a company's name from the register. The ROC can do this when it has reasonable cause to believe any of the following: that the company has failed to commence business within one year of incorporation; that the company is not carrying on any business or operation for a period of two immediately preceding financial years and has not applied for dormant company status; or that the subscribers to the memorandum have not paid the subscription amount and the declaration under Section 10A has not been filed within 180 days of incorporation.

Even in a suo motu action, the ROC must follow due process: it must send a notice to the company and its directors, publish the notice in the Official Gazette, and wait for objections. Only after this process — and if no valid objections are received — can the ROC proceed to strike off. The company and its directors can respond and object at this stage.

Section 248(2) — voluntary application by directors

Section 248(2) is the route that most founders and directors use when they decide to proactively close a company. Under this provision, a company can make an application to the ROC for striking off its name from the register. The conditions are specific: the company must not have commenced business since its incorporation, or must have ceased to carry on business for a period of two or more immediately preceding financial years.

Crucially, there must be no pending liabilities. The application must be accompanied by an indemnity bond signed by all directors undertaking to discharge any liability of the company that may arise after strike off, an affidavit confirming the accuracy of the particulars, a statement of accounts certified by a practising CA, and a bank account closure certificate. The form used is Form STK-2, filed on the MCA21 portal.

Conditions for eligibility under Section 248(2)

Two primary conditions must both be satisfied. First, the company must either have never commenced business (verified by the fact that no bank transactions were made for business purposes, no employees were hired, no invoices were raised) or it must have ceased business for at least two consecutive financial years. Second, there must be no pending liabilities — this is an absolute condition, not a procedural one. No bank loans, no GST arrears, no income tax demands, no pending litigation, no employee dues, no vendor payables.

There are also negative conditions — situations that bar a company from applying under Section 248(2) regardless of whether it meets the above criteria. A company cannot apply if it has in the three months preceding the application: changed its registered office from one state to another, made a disposal of property or rights held by the company for gain, engaged in any other activity except to conclude the winding up, or filed an application to the Tribunal. These bars exist to prevent abuse of the strike off mechanism.

What happens after the application is filed

After STK-2 is filed, the ROC issues a Service Request Number and reviews the application. If prima facie satisfied, the ROC publishes a public notice in the Official Gazette and in a local newspaper, inviting objections from creditors, regulatory authorities, or any interested party. The notice period is 30 days. If valid objections are received, the ROC must deal with them before proceeding. If no objections are received within the notice period, the ROC strikes off the name and publishes the strike off order in the Official Gazette.

Director liability after strike off under Section 248

Section 248(7) provides that the liability of every director and member of a company continues even after the company is struck off — for the period of two years after the date of dissolution — for any debt contracted before strike off and for any damages or injury suffered by any person by reason of the company's acts or defaults before dissolution. This is why the indemnity bond is not merely a formality: it is a formal acknowledgement by directors that they remain on the hook for undisclosed liabilities.

Additionally, under Section 252, any aggrieved person (a creditor, a shareholder, or the Registrar) can apply to the NCLT within twenty years of the company being struck off to have the name restored to the register. If the NCLT is satisfied that the company was in fact carrying on business at the time of strike off, or that the application contained false information, it can restore the company, which effectively revives the directors' liability as well.

Section 248 vs the old FTE scheme under the 1956 Act

Under the Companies Act 1956, Section 560 governed strike off. MCA introduced the Fast Track Exit (FTE) scheme in 2011 as an administrative scheme under Section 560 to speed up the process for dormant companies. With the 2013 Act, Section 248 replaced Section 560, and the STK-2 form replaced the earlier FTE form. The core requirements — cessation of business, no liabilities, director indemnity — remained, but the 2013 regime is more codified and the eligibility conditions are more explicitly defined in the statute itself, leaving less room for ambiguity.

This article is for general information only. For your specific situation, consult a practicing CA.