Madras High Court
Rajendran Monish vs Union Of India on 7 April, 2021
W.P.No.8576 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA
W.P.No.8576 of 2021
and
W.M.P.Nos.9135 and 9136 of 2021
(Heard Through VC)
Rajendran Monish .. 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,
Tamil Nadu, Chennai,
Block No.6, B Wing 2nd Floor,
Shasthri Bhavan, 26 Haddows Road,
Chennai - 600 006 .. 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 relating to the impugned order of
disqualification under Section 164(2) dated 17.12.2018, uploaded and
hosted on the website of the 1st respondent on 18.12.2018 in so far as
the petitioner herein is concerned and quash the status "Disqualified
under Section 164(2)" against his Director Identification Number (DIN
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W.P.No.8576 of 2021
No:06753300) as illegal, arbitrary and devoid of merits and
consequentially direct the respondents herein to permit the petitioner
to get reappointed as Director of any Company or appointed as
Director in any Company or to act as Director in any active Company
without any hindrance.
***
For Petitioner : Mr.Druga V. Bhatt
For Respondents : Mr.R.Sidharth
Central Government Standing Counsel
ORDER
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 to permit the
petitioner to get reappointed as Director of any Company or appointed
in any other Company without any hindrance.
2. Heard the learned counsel on either side and perused the
materials placed before this Court.
3. 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
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W.P.No.8576 of 2021
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.
4. 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.
5. 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.
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W.P.No.8576 of 2021
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 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
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W.P.No.8576 of 2021
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 by taking into
account the observations and conclusions herein. No costs.
Consequently, connected miscellaneous petitions are closed."
6. 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
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W.P.No.8576 of 2021
terms indicated in the aforesaid judgment. No costs. Consequently,
connected miscellaneous petitions are closed.
07.04.2021
Index : Yes / No
Internet : Yes/No
srn
To
1. The Secretary,
Union of India,
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad Road,
New Delhi - 110 001.
2. The Registrar of Companies,
IInd Floor, No.26, Haddows Road,
Shastri Bhawan,
Chennai - 6000 006.
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W.P.No.8576 of 2021
PUSHPA SATHYANARAYANA, J.
srn
W.P.No.8576 of 2021
and
W.M.P.Nos.9135 and 9136 of 2021
07.04.2021
Page 7/7
