Madras High Court
Ramachandran Sathyaprakash vs Union Of India on 8 April, 2021
W.P.No.8695 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 08.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA
W.P.No.8695 of 2021
and
W.M.P.Nos.9230 and 9231 of 2021
(Heard Through VC)
Ramachandran Sathyaprakash .. 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,
Shasthri Bhavan, 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 17.12.2018 uploaded in the website of the 1st
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 petitioner to get
reappointed as a Director of any company or permit the petitioner
herein to get appointed as a Director of any company without any
hindrance.
***
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W.P.No.8695 of 2021
For Petitioner : Mr.K.K.Vijay Vigneshwar
For Respondents : Mr.M.Sathyan
Central Government Standing Counsel
ORDER
Mr.M.Sathyan, 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 a Director of any company or to get
appointed as a Director of any company without any hindrance.
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
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W.P.No.8695 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.
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 Muralidharan V. Union of
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W.P.No.8695 of 2021
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 company A, it is necessary that such
person continues to retain the DIN. In this connection, it is also
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W.P.No.8695 of 2021
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."
PUSHPA SATHYANARAYANA, J.
rsi
8. In view of the aforesaid position, following the decision of
the Hon'ble First Bench of this Court in Meethelaveetil Kaitheri
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W.P.No.8695 of 2021
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.
08.04.2021
Index : Yes / No
Internet : Yes/No
rsi
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, Chennai,
Block No.6, B Wing 2nd Floor,
Shasthri Bhavan, 26 Haddows Road,
Chennai - 600 034
W.P.No.8695 of 2021
and
W.M.P.Nos.9135 and 9136 of 2021
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