Dilip Kumar Singh vs Union Of India And Another
2021 Latest Caselaw 931 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

?Court No. - 21
 

 
Case :- WRIT - C No. - 27200 of 2020
 

 
Petitioner :- Dilip Kumar Singh
 
Respondent :- Union Of India And Another
 
Counsel for Petitioner :- Suyash Agarwal,Ankur Agarwal
 
Counsel for Respondent :- A.S.G.I.
 

 
Hon'ble Mahesh Chandra Tripathi,J.

Hon'ble Sanjay Kumar Pachori,J.

Heard Sri Suyash Agarwal, learned counsel for the petitioner and Shri Vinay Kumar Singh, Advocate holding brief of Shri C.B. Singh, learned Central Government Standing Counsel appearing for the respondents.

This writ petition has been filed praying for the following reliefs:

"I. Issue writ, order or direction in the nature of certiorari quashing of Directors associated with "struck off companies" published on the Website of the Ministry of Corporate Affairs, Government of India, to the extent, the said list shows the status of the petitioner as a "disqualified" Director.

II. issue writ, order or direction in the nature of Mandamus directing the Respondent No.1 to activate Director Identification Number (DIN) No. 02891954 of the petitioner expeditiously

III. Pass any or such further orders as this Hon'ble Court may deem fit and proper in light of the facts and circumstances of the present case.

IV. Award the cost of the petition to the petitioner".

Learned counsel for the petitioner and the learned Central Government Standing Counsel, appearing for the respondents jointly state that the controversy involved in the present writ petition is squarely covered by the Division Bench judgement of this Court dated 16.1.2020 in Writ-C No.12498 of 2019 (Jai Shankar Agrahari Vs. Union of India and another) and other connected writ petitions. Paragraph nos. 78 to 82 of the aforesaid judgement are reproduced below:

"78. The Fourth Question is "Whether there is any provision empowering Registrar of Companies to de-activate "DIN" of petitioners who were allotted DIN under Section 154 of Act, 2013?"

79. We need not go into this aspect in detail for the reason that various High Courts have examined relevant statutory provisions on this aspect and have taken a common view that there is no provision which empowers ROC to de-activate DIN, only on the ground that a Director has incurred disqualification under Section 164(2) (a) or his Office has become vacant under Section 167(1) (a). In this regard relevant extract of the judgments of different High Courts may be reproduced as under :

(1) Delhi High Court's judgment in Mukut Pathak (supra), paragraphs 106, 108, 109 and 110:

"106. Neither any of the provisions of the Companies Act nor the Rules framed thereunder stipulate cancellation or deactivation of DIN on account of a director suffering a disqualification under Section 164(2) of the Act. It is relevant to note that Rule 11 of the Company (Appointment and Qualification of Directors) Rules, 2014 was amended with effect from 05.07.2018 to provide for deactivation of DIN in the event of failure to file Form DIR-3-E-KYC within the period as stipulated under Rule 12A of the said Rules. The amendment so introduced also does not empower the Central Government to cancel or deactivate the DIN of disqualified directors.

108. It is important to note that whereas a DIN is necessary for a person to act as a director; it is not necessary that a person who has a DIN be appointed as a director. Section 164 (2) only provides for temporary disqualification for a period of five years for a person to be appointed/re-appointed as a director. Thus, it is not necessary that the DIN of such person to be deactivated.

109. It is also material to note that sub-section (2) of section 167 of the Act provides for a punishment for any person who functions as a director knowing that his office has become vacant on account of his disqualification as specified in Section 167 (1) of the Act. Thus, Section 167 includes a mechanism for enforcing the rigors of Section 167 (1) of the Act. In the present case, the respondents have sought to cancel/deactivate the DIN of directors disqualified under Section 164 (2) of the Act. This has been done to enforce the provisions of Section 167 (1) of the Act. Clearly, this is not supported by any statutory provision. This Court is of the view that the Central Government having framed the rules specifying the conditions in which a DIN may be cancelled, cannot cancel the same on any other ground and without reference to such rules.

110. Similarly, there is also no provision supporting the respondents action of cancelling the DSC of various directors. The said action is therefore unsustainable."

(2) Gujarat High Court in Gaurang Balvantlal Shah (supra), Paragraphs 29 to 31:

"29. This takes the Court to the next question as to whether the respondents could have deactivated the DINs of the petitioners as a consequence of the impugned list? In this regard, it would be appropriate to refer to the relevant provisions contained in the Act and the said Rules. Section 152 (3) provides that no person shall be appointed as a Director of a company, unless he has been allotted the Director Identification Number under Section 154, Section 153 requires every individual intending to be appointed as Director of a company to make an application for allotment of DIN to the Central Government in such form and manner as may be prescribed. Section 154 states that the Central Government shall within one month from the receipt of the application under Section 153 allot a DIN to an applicant in such manner as may be prescribed. Section 155 prohibits any individual, who has already been allotted a DIN under Section 154 from applying for or obtaining or possessing another DIN. Rules 9 and 10 of the said Rules of 2014 prescribe the procedure for making application for allotment and for the allotment of DIN, and further provide that the DIN allotted by the Central Government under the said Rules would be valid for the lifetime of the applicant and shall not be allotted to any other person.

30. Rule 11 provides for cancellation or surrender or deactivation of DIN. Accordingly, the Central Government or Regional Director or any authorized officer of Regional Director may, on being satisfied on verification of particulars of documentary proof attached with an application from any person, cancel or deactivate the DIN on any of the ground mentioned in Clause (a) to (f) thereof. The said Rule 11 does not contemplate any suo motu powers either with the Central Government or with the authorised officer or Regional Director to cancel or deactivate the DIN allotted to the Director, nor any of the clauses mentioned in the said Rule contemplates cancellation or deactivation of DIN of the Director of the "struck off company" or of the Director having become ineligible under Section 164 of the said Act. The reason appears to be that once an individual, who is intending to be the Director of a particular company is allotted DIN by the Central Government, such DIN would be valid for the lifetime of the applicant and on the basis of such DIN he could become Director in other companies also. Hence, if one of the companies in which he was Director is "struck off", his DIN could not be cancelled or deactivated as that would run counter to the provisions contained in the Rule 11, which specifically provides for the circumstances under which the DIN could be cancelled or deactivated.

31. In that view of the matter, the Court is of the opinion that the action of the respondents in deactivating the DINs of the petitioners-Directors along with the publication of the impugned list of Directors of "struck off" companies under Section 248, also was not legally tenable. Of course, as per Rule 12 of the said Rules, the individual who has been allotted the FIN, in the event of any change in his particulars stated in Form DIR-3 has to intimate such change to the Central Government within the prescribed time in Form DIR-6, however, if that is not done, the DIN could not be cancelled or deactivated. The cancellation or deactivation of the DIN could be resorted to by the concerned respondents only as per the provisions contained in the said Rules."

(3) Telangana High Court in Venkata Ramana Tadiparthi (supra), Paragraphs 28 and 30.

"28. Clauses (a) to (f) of Rule 11, extracted above, provides for the circumstances under which the DIN can be cancelled or deactivated. The said grounds, are different from the ground envisaged under Section 164 (2) (a) of the Act. Therefore, for the alleged violation under Section 164 of the Act, DINs cannot be cancelled or deactivated, except in accordance with Rule 11 of the Rules.

30. In view of the above facts and circumstances and the judgment referred to supra, the deactivation of the DINs of the petitioners for alleged violations under Section 164 of the Act, cannot be sustained."

80. This Court (Lucknow Bench) also in Mohd. Tariq Siddiqui (supra) been quoted in ex tensio, the view taken by Gujarat High Court and has allowed writ petition. Operative part of judgment in para 7 reads as under :

"7. In view of above, the writ petitions for challenge to the deactivation of the Director Identification Number are allowed. It was de-activated on account of dis-qualification in one company effecting Director Identification Number for the other companies. The opposite parties are directed to activate the Director Identification Number of use for other company. The opposite parties would however be at liberty to take legal action against the petitioners for any statutory default or non-compliance of the provisions of the Act of 2013. It would obviously be in accordance with the provisions of law."

81. Question-4 is, therefore, answered in favour of petitioners. We hold that in absence of any provision to deactivate DIN of petitioners if they have incurred disqualification under Section 164 of Act, 2013, the action of respondents and in particular of ROC, in deactivating DIN of petitioners, cannot be sustained.

82. The above discussion leads to the consequence that all writ petitions have to be allowed partly and action of respondents in deactivating DIN of petitioners is to be quashed."

In view of the statements jointly made by the learned counsel for the parties, this writ petition is also disposed of in terms of the aforesaid judgement in the case of Jai Shankar Agrahari (supra).

Order Date :- 18.1.2021

T. Sinha