Madras High Court
Balakrishnan Suseela ... vs Union Of India on 30 April, 2021
W.P.Nos.11293 & 11300 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 30.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA
W.P.Nos.11293 & 11300 of 2021 and
W.M.P. Nos.11941, 11943, 11947 & 11949 of 2021
Balakrishnan Suseela Radhakrishnan ... Petitioner in both the petitions
Vs
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,
Tamil Nadu, Chennai,
Block No.6, 'B' Wing,
II Floor, Shasthri Bhavan,
No.26, Haddows Raod,
Chennai-600 006. ... Respondents in both W.Ps.
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 orders dated
01.11.2017 and 18.12.2018, passed by the 2nd respondent insofar as the
petitioner is concerned and quash the same as illegal and arbitrary and
consequentially direct the respondents to allow the petitioner to be appointed
or re-appointed as a Director of any Company.
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W.P.Nos.11293 & 11300 of 2021
For Petitioner
in both the petitions : Mr.Arun Karthik Mohan
For Respondents
in both the petitions : Mr.J.Madhanagopal Rao,
Central Government Standing Counsel
****
COMMON ORDER
Mr.J.Madhanagopal Rao, 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
01.11.2017 and 18.12.2018, 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 to get
appointed as Director of any company without any hindrance.
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W.P.Nos.11293 & 11300 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
27.01.2020 and 10.02.2020, etc. The said orders were put to challenge in a
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W.P.Nos.11293 & 11300 of 2021
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 companies, which may be referred to as
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W.P.Nos.11293 & 11300 of 2021
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.
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W.P.Nos.11293 & 11300 of 2021
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), 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: Yes
vum
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,
Tamil Nadu, Chennai,
Block No.6, 'B' Wing,
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W.P.Nos.11293 & 11300 of 2021
II Floor, Shasthri Bhavan,
No.26, Haddows Raod,
Chennai-600 006.
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W.P.Nos.11293 & 11300 of 2021
PUSHPA SATHYANARAYANA, J.
vum
W.P.Nos.11293 & 11300 of 2021 and
W.M.P. Nos.11941, 11943, 11947 & 11949 of 2021
30.04.2021
http://www.judis.nic.in
