Madras High Court
Narayanaswamy Jayapragash vs Union Of India on 23 April, 2021
W.P.No.10091 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.04.2021
CORAM
THE HONOURABLE Mrs.JUSTICE PUSHPA SATHYANARAYANA
W.P.No.10091 of 2021
and W.M.P.Nos.10719 and 10720 of 2021
(Heard Through VC)
Narayanaswamy Jayapragash .. Petitioner
-vs-
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2. Registrar of Companies, Chennai
Block No.6, B Wing, 2nd Floor,
Shastri Bhawan,
No.26, Haddows Road,
Chennai – 600 034. .. Respondents
***
Prayer: Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of certiorarified Mandamus calling for the records of
the second respondent and consequently quash the impugned order dated
13.12.2019 uploaded in the website of the first respondent and insofar as the
petitioner herein is concerned, quash the same as illegal, arbitrary and
devoid of merit and consequently direct the respondents herein to permit the
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W.P.No.10091 of 2021
petitioner herein to get appointed as a Director of any company without any
hindrance.
For Petitioner : Mr.K.K.Vijay Vigneshwar
For Respondents : Mr.J.Madhanagopal Rao
Central Government Standing Counsel
ORDER
Mr.J.Madhanagopal Rao, learned Central Government Standing
Counsel takes notice for the respondents.
2. By consent of the parties, this writ petition is taken up for final
disposal at the admission stage itself.
3. Challenge is laid to the order of the second respondent dated
13.12.2019, insofar as the petitioner is concerned, and consequential
direction is sought for to direct the respondents herein to permit the
petitioner to get reappointed as Director of any company or appointed as
Director in any company without any hindrance.
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W.P.No.10091 of 2021
4. Heard the learned counsel on either side and perused the materials
placed before this Court.
5. The issue involved in this writ petition is no more a res integra. It
is to be stated that the Registrar of Companies (RoC) has been disqualifying
the Directors under Section 164(2)(a) of the Companies Act, 2013 by order
dated 08.09.2017. Another list was published in the website of the first
respondent on 01.11.2017 disqualifying the Directors. Yet another list of
Directors were disqualified on 17.12.2018 by the RoC.
6. Several of the Directors so disqualified under the above mentioned
notifications dated 08.09.2017 and 01.11.2017 challenged the same before
this Court and this Court by order dated 03.08.2018 in Bhagavan Das
Dhananjaya Das V.Union of India, (2018) 6 MLJ 704, allowed the batch
of writ petitions and set aside the aforesaid notifications/orders.
7. The notification dated 17.12.2018, which was uploaded in the
website by the first respondent on 18.12.2018 was challenged on the
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W.P.No.10091 of 2021
strength of the judgment of this Court in Bhagavan Das case (cited supra).
However, they were dismissed by this Court, and such orders were passed
on 27.01.2020 and 10.02.2020, etc. The said orders were put to challenge in
a batch of writ appeals, which were dealt with by the Hon'ble First Bench of
this Court in W.A.No.569 of 2020, etc. batch (Meethelaveetil Kaitheri
Muralidharan V. Union of India, 2020 SCC OnLine Mad 2958 : (2020)
6 CTC 113). The Hon'ble Division Bench in the said order dealt with the
powers of the RoC in the light of Sections 164 and 167(1) of the Companies
Act, 2013 and Rule 14 of the Companies (Appointment and Qualifications
of Directors) Rules, 2014 and also has elaborately considered as to whether
the RoC is entitled to deactivate the Director Identification Number (DIN)
by referring to the Rules 19, 10 and 11 of the said 2014 Rules and held as
follows :
"41. As is evident from the above, Rules 9 and 10 deals
with the application for allotment of DIN. Rule 10(6) specifies
that the DIN is valid for the life time of the applicant and shall
not be allotted to any other person. Rule 11 provides for the
cancellation or surrender or deactivation of the DIN. It is very
clear upon examining Rule 11 that neither cancellation nor
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W.P.No.10091 of 2021
deactivation is provided for upon disqualification under
Section 164(2) of CA 2013. In this connection, it is also
pertinent to refer to Section 167(1) of CA 2013 which provides
for vacating the office of director by a director of a Defaulting
Company. As a corollary, it follows that if a person is a
director of five companies, which may be referred to as
companies A to E, if the default is committed by company A by
not filing financial statements or annual returns, the said
director of company A would incur disqualification and would
vacate office as director of companies B to E. However, the
said person would not vacate office as director of company A.
If such person does not vacate office and continues to be a
director of company A, it is necessary that such person
continues to retain the DIN. In this connection, it is also
pertinent to point out that it is not possible to file either the
financial statements or the annual returns without a DIN.
Consequently, the director of Defaulting Company A, in the
above example, would be required to retain the DIN so as to
make good the deficiency by filing the respective documents.
Thus, apart from the fact that the AQD Rules do not empower
the ROC to deactivate the DIN, we find that such deactivation
would also be contrary to Section 164(2) read with 167(1) of
CA 2013 inasmuch as the person concerned would continue to
be a director of the Defaulting Company.
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W.P.No.10091 of 2021
*****
43. In the result, these appeals are allowed by setting
aside the impugned order dated 27.01.2020. Consequently, the
publication of the list of disqualified directors by the ROC and
the deactivation of the DIN of the Appellants is hereby
quashed. As a corollary to our conclusion on the deactivation
of DIN, the DIN of the respective directors shall be reactivated
within 30 days of the date of receipt of a copy of this order.
Nonetheless, we make it clear that it is open to the ROC
concerned to initiate action with regard to disqualification
subject to an enquiry to decide the question of attribution of
default to specific directors by taking into account the
observations and conclusions herein. No costs. Consequently,
connected miscellaneous petitions are closed."
8. In view of the aforesaid position, following the decision of the
Hon'ble First Bench of this Court in Meethelaveetil Kaitheri
Muralidharan's case (supra), the writ petition is allowed, in the terms
indicated in the aforesaid judgment. No costs. Consequently, connected
miscellaneous petitions are closed.
23.04.2021
Index : Yes / No
Internet : Yes/No
srn
https://www.mhc.tn.gov.in/judis/
W.P.No.10091 of 2021
To
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2. The Registrar of Companies, Chennai
Block No.6, B Wing, 2nd Floor,
Shastri Bhawan,
No.26, Haddows Road,
Chennai – 600 034.
https://www.mhc.tn.gov.in/judis/
W.P.No.10091 of 2021
PUSHPA SATHYANARAYANA, J.
srn
W.P.No.10091 of 2021
and W.M.P.Nos.10719 and 10720 of 2021
23.04.2021
https://www.mhc.tn.gov.in/judis/
