Madras High Court

Baalu Renukadevi vs Union Of India on 30 April, 2021

                                                                      W.P.Nos.10840 & 10846 of 2021

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                 DATED: 30.04.2021

                                                       CORAM

                      THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA

                                         W.P.Nos.10840 & 10846 of 2021 and
                                       W.M.P. Nos.11475, 11478, 11483 and 11484

                   Baalu Renukadevi                        ... Petitioner in W.P. No.10840 of 2021

                   Thallikotai Raju Baalu Rajaa            ...Petitioner in W.P. No.10846 of 2021

                                                      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,
                     Tamil Nadu, Chennai,
                     Block No.6, 'B' Wing,
                     2nd Floor, Shasthri Bhavan,
                     Chennai-600 006.                      ...Respondents in both the petitions

                   Prayer in both the petitions: 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
                   13.12.2019 uploaded and hosted on the website of the first respondent, in
                   sofar as the petitioner herein is concerned, quash the same as illegal, arbitrary
                   and devoid of merit and consequentially direct the respondents herein to
https://www.mhc.tn.gov.in/judis/

                   1/7
                                                                        W.P.Nos.10840 & 10846 of 2021

                   permit petitioner to get reappointed as Director of any Company or appointed
                   as Director in any company without any bar or hindrance.

                   For Petitioner in both the petitions      : Mr.K.Vijayaragavan

                   For Respondents in both the petitions : Mr.R.Subramanian,
                                                           Central Government Standing Counsel
                                                       ****

COMMON ORDER

Mr.R.Subramanian, learned Central Government Standing Counsel

takes notice for the respondents.

2. By consent of the parties, these writ petitions are taken up for final

disposal at the admission stage itself.

3. Challenge is laid to the orders of the second respondent dated

13.12.2019, insofar as the petitioners are concerned, and consequential

direction is sought for to direct the respondents herein to permit the

petitioners to get reappointed as Directors of any company or to get appointed

as Directors of any company without any hindrance.

https://www.mhc.tn.gov.in/judis/

W.P.Nos.10840 & 10846 of 2021

4. Heard the learned counsel on either side and perused the materials

placed before this Court.

5. The issue involved in these writ petitions 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 https://www.mhc.tn.gov.in/judis/

W.P.Nos.10840 & 10846 of 2021

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 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 https://www.mhc.tn.gov.in/judis/

W.P.Nos.10840 & 10846 of 2021

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.

*****

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,

https://www.mhc.tn.gov.in/judis/

W.P.Nos.10840 & 10846 of 2021

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), these writ petitions are allowed, in the terms

indicated in the aforesaid judgment. No costs. Consequently, connected

miscellaneous petitions are closed.

30.04.2021

Index : Yes / No Internet: Yessrn To

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, Tamil Nadu, Chennai, Block No.6, 'B' Wing, 2nd Floor, Shasthri Bhavan, Chennai-600 006.

https://www.mhc.tn.gov.in/judis/

W.P.Nos.10840 & 10846 of 2021

PUSHPA SATHYANARAYANA, J.