Madras High Court
Parthasarathy Vasu vs Union Of India on 30 April, 2021
W.P.No.11099 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 30.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA
W.P.No.11099 of 2021 and
W.M.P. Nos.11748 & 11749 of 2021
Parthasarathy Vasu ...Petitioner
Vs
1.Union of India,
represented by its Secretary,
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2.Registrar of Companies,
Tamilnadu, Chennai,
Block No.6, B Wing 2nd Floor,
Shastri Bhawan 26,
Haddows Road,
Chennai – 600 006. ...Respondents
Prayer: Writ Petitions filed under Article 226 of the Constitution of India to
issue a Writ of Certiorarified mandamus calling for the records of the 2nd
respondent relating to the impugned order dated 17.12.2018 uploaded in the
website of the first respondent, in so far as the petitioner herein is concerned,
quash the same as illegal, arbitrary and devoid of merit and consequentially
direct the respondents herein to permit petitioner to get reappointed as
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1/7
W.P.No.11099 of 2021
Director of any Company or appointed as Director in any company without
any bar or hindrance.
For Petitioner : Mr.G.Gautham Ram Vittal
For Respondents : Mr.R.Subramanian,
Central Government Standing Counsel
****
ORDER
Mr.R.Subramanian, 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
17.12.2018, 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.
4. Heard the learned counsel on either side and perused the materials
placed before this Court.
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W.P.No.11099 of 2021
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 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
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W.P.No.11099 of 2021
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
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
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W.P.No.11099 of 2021
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.
*****
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
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W.P.No.11099 of 2021
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.
30.04.2021
srn
To
1.Union of India,
represented by its Secretary,
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2.Registrar of Companies,
Tamilnadu, Chennai,
Block No.6, B Wing 2nd Floor,
Shastri Bhawan 26,
Haddows Road,
Chennai – 600 006.
https://www.mhc.tn.gov.in/judis/
W.P.No.11099 of 2021
PUSHPA SATHYANARAYANA, J.
srn
W.P.No.11099 of 2021 and
W.M.P. Nos.11748 & 11749 of 2021
30.04.2021
https://www.mhc.tn.gov.in/judis/
