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Corporate Restructuring, Valuation and Insolvency · Strike Off and Restoration of Name of the Company and LLP

Strike Off of Producer Company under Section 378ZP

Updated 11 October 2026 · Fact-checked

Section 378ZP lets the Registrar strike off a Producer Company's name if it fails to commence business within one year, stops transacting with Members, or no longer carries on its objects. A show-cause notice is needed. Members can appeal to the Tribunal within sixty days, and the order stays until the appeal is decided.

Understand Strike Off of Producer Company under Section 378ZP

A Producer Company is a company formed by primary producers, such as farmers, under Part IXA of the Companies Act, 2013. It exists to serve its Members. So the law ties its survival to real business with Members.

Section 378ZP is the special strike off provision for this company. It is separate from the general power in section 248, which covers other companies. You must know both and how they connect.

Under sub-section (1), the Registrar makes an order striking off the name if any one of three things is true: the company has failed to commence business within one year of its registration; it ceases to transact business with the Members; or the Registrar, after such inquiry as he thinks fit, is satisfied that it is no longer carrying on any of its objects specified in section 378B. On the order, the company ceases to exist forthwith.

There is a safeguard. The proviso says no order can be passed until the Registrar has given a notice to show cause to the company, with a copy to all its directors, and a reasonable opportunity to represent its case.

Sub-section (2) deals with a different ground. If the Registrar has reasonable cause to believe the company is not maintaining the mutual assistance principles specified, he strikes the name off in accordance with section 248. So the general procedure applies here. Sub-sections (3) and (4) give the remedy: an aggrieved Member can appeal to the Tribunal within sixty days of an order under sub-section (1), and the order does not take effect until the appeal is disposed of.

Key rules to remember

Grounds under 378ZP(1)
(a) no commencement of business within 1 year of registration; (b) ceases to transact business with Members; (c) Registrar satisfied, after inquiry, that company no longer carries on any object under section 378B
Any one ground is enough. The effect is that the company ceases to exist forthwith.
Proviso to 378ZP(1)
Show-cause notice to company + copy to all directors + reasonable opportunity to represent
Mandatory before the order is passed.
Mutual assistance principles ground
378ZP(2): reasonable cause to believe principles not maintained → strike off per section 248
Follows the general section 248 procedure.
Appeal
378ZP(3): Member aggrieved by an order under sub-section (1) → Tribunal within 60 days; 378ZP(4): order not effective until appeal disposed of
Appeal lies for orders under sub-section (1), and only a Member can file it.
Section 248 notice period
Notice to company and all directors; representations within 30 days of the date of notice
Applies to the sub-section (2) route through section 248.
Liability after strike off
Section 248(7): liability of directors, managers, officers and members continues as if company not dissolved; 248(8): Tribunal can still wind up
Applies on the section 248 route.

How to solve Strike Off of Producer Company under Section 378ZP questions

Use the same sequence for any question on striking off a Producer Company.

  1. 1Identify the company type: confirm it is a Producer Company and note the facts given.
  2. 2Find the ground. Match the facts to: no commencement within one year, ceasing to transact with Members, no longer carrying on its objects, or breach of mutual assistance principles.
  3. 3Choose the route. The first three grounds fall under 378ZP(1). The mutual assistance ground falls under 378ZP(2) and follows section 248.
  4. 4Check the procedure. For 378ZP(1), ask whether a show-cause notice was given to the company with a copy to all directors, and whether a reasonable opportunity was given. For section 248, note the notice and the 30-day representation period.
  5. 5State the effect: the company ceases to exist forthwith under sub-section (1).
  6. 6Give the remedy: a Member can appeal to the Tribunal within sixty days, and the order is held back until disposal.
  7. 7Conclude clearly in one sentence, tied to the facts.

Quickest way: Ground, route, notice, appeal

When to use it: Use when a short case asks whether the Registrar's order is valid or what the Members can do.

  1. Write the ground in the Act's words.
  2. Write the route: 378ZP(1) direct order, or 378ZP(2) via section 248.
  3. Check the show-cause notice with a copy to directors.
  4. Add the 60-day appeal to the Tribunal and the stay until disposal.
  5. Close with the conclusion.

Common mistakes in Strike Off of Producer Company under Section 378ZP

  • Applying section 248 to every Producer Company strike off.

    Students remember section 248 as the general strike off rule.

    Fix: Use 378ZP(1) for the three direct grounds. Use section 248 only through 378ZP(2) for breach of mutual assistance principles.

  • Forgetting the show-cause notice.

    The order looks like a simple Registrar action.

    Fix: Always state the proviso: notice to the company, copy to all directors, reasonable opportunity to represent.

  • Saying any person can appeal.

    Students confuse it with general appeal rights.

    Fix: Sub-section (3) allows a Member who is aggrieved to appeal to the Tribunal within sixty days of the order.

  • Stating that the order operates during the appeal.

    Students assume Registrar orders take effect at once.

    Fix: Under sub-section (4), the order does not take effect until the appeal is disposed of.

  • Mixing the ground of ceasing to transact with Members with the 'two financial years' ground in section 248.

    Both relate to inactivity.

    Fix: 378ZP has its own wording: one year for commencement, and ceasing to transact with Members. The two-year test belongs to section 248(1)(c).

Worked examples

Example 1

Hari Krishi Producer Company Limited was registered in April 2025. By June 2027 it has not begun any business. The Registrar issues a show-cause notice to the company and all directors, hears their reply, and strikes off its name. Is the action valid?

Show the solution
  1. Ground: the company failed to commence business within one year of registration. This is a ground under 378ZP(1).
  2. Procedure: the proviso needs a show-cause notice to the company with a copy to all directors, and a reasonable opportunity to represent. Both were done.
  3. Effect: on the order, the company ceases to exist forthwith.
  4. Remedy: an aggrieved Member may appeal to the Tribunal within sixty days.

Answer: The action is valid. The ground exists and the proviso was followed. The company ceases to exist forthwith, subject to a Member's right to appeal within sixty days.

Example 2

The Registrar strikes off Kisan Mitra Producer Company under 378ZP(1). Member Ramesh files an appeal before the Tribunal within sixty days. The Registrar says the company stands dissolved and can be treated as non-existent. Advise.

Show the solution
  1. The order is under sub-section (1), so a Member may appeal under sub-section (3) within sixty days.
  2. Ramesh is a Member and filed within time, so the appeal is maintainable.
  3. Sub-section (4) says that when an appeal is filed, the order of striking off does not take effect until the appeal is disposed of.
  4. So the Registrar cannot treat the company as non-existent while the appeal is pending.

Answer: The Registrar is wrong. Because the appeal was filed in time, the strike off order does not take effect until the Tribunal disposes of the appeal.

Exam tips

  • Quote the three grounds of 378ZP(1) in the Act's words, then apply the facts.
  • Always mention the show-cause notice with a copy to all directors. Examiners reward it.
  • Say clearly that 378ZP(2) sends the mutual assistance ground to the section 248 procedure.
  • Mention the sixty-day appeal and the stay under 378ZP(4) in your conclusion.
  • Follow the format: provision, facts, conclusion.

Practice questions from Strike Off and Restoration of Name of the Company and LLP

Strike Off of Producer Company under Section 378ZP: frequently asked questions

What is section 378ZP of the Companies Act, 2013?

It is the provision for striking off the name of a Producer Company. The Registrar can do so on stated grounds after a show-cause notice. The company then ceases to exist forthwith.

How is 378ZP different from section 248?

Section 378ZP is the special rule for Producer Companies, with its own grounds and a Member's appeal. Section 248 is the general rule for companies. Sub-section (2) of 378ZP sends one ground to the section 248 procedure.

Who can appeal against a strike off order of a Producer Company?

Any Member aggrieved by an order under sub-section (1) can appeal to the Tribunal within sixty days of the order. The order does not take effect until the appeal is disposed of.

Is a notice required before striking off a Producer Company?

Yes. Under the proviso to sub-section (1), the Registrar must give a show-cause notice to the company, with a copy to all its directors, and a reasonable opportunity to represent its case.