Madras High Court

Rajagraham Chandragrham vs Union Of India on 9 April, 2021

                                                                W.P.Nos.8933 & 8947 of 2021

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                               DATED: 09.04.2021

                                                     CORAM

                           THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA

                                        W.P.Nos.8933 & 8947 of 2021 and
                                   W.M.P.Nos.9465, 9466, 9470 and 9471 of 2021

                   Rajagraham Chandragrham                          ... Petitioner in
                   (Din No.02824613)                                    W.P. No.8933/2021

                   Sureshgraham Chandragraham
                   (Din No.03533484)                                ... Petitioner in
                                                                        W.P. No.8947/2021
                                                     Vs
                   1.Union of India
                     Represented by its
                     Ministry of Corporate Affairs
                     Shastri Bhavan, Dr.Rajendra Prasad Road
                     New Delhi - 110 001.

                   2.The Registrar of Companies,
                     Tamil Nadu, Chennai,
                     Block No.6, B Wing 2nd Floor
                     Shastri Bhawan, 26, Haddows Road
                     Chennai - 600 006                              ...Respondents in both

WPs

Prayer in W.P. No.8933 of 2021: Writ Petition 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 in the website of the 1st respondent insofar as the petitioner herein Serial No.1992 disqualifying Rajagraham Chandragraham (Din No.02824613) relating to the petitioner Company namely Graham Travels Private Limited (U63040TN1994PTC027549) is in STRIKE OFF status is concerned and quash the same and consequentially direct the respondents herein to permit the petitioner to file returns and

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

W.P.Nos.8933 & 8947 of 2021

get reappointed as Director of any Company or appointed as Director in any Company without any hindrance.

Prayer in W.P. No.8947 of 2021: Writ Petition 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 in the website of the 1st respondent insofar as the petitioner herein Serial No.1993 disqualifying Sureshgraham Chandragraham (Din No.03533484) relating to the petitioner Company namely Graham Travels Private Limited (U63040TN1994PTC027549) is in STRIKE OFF status is concerned and quash the same and consequentially direct the respondents herein to permit the petitioner to file returns and get reappointed as Director of any Company or appointed as Director in any Company without any hindrance.


                                        For Petitioner in   :      Mr.M.Joseph Thatheus Jerome
                                        both WPs

                                        For RR1 & R2 in     :      Mr.M.Sathyan,
                                        both WPs                   CGSC


                                                        COMMON ORDER

Mr.M.Sathyan, 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.

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

W.P.Nos.8933 & 8947 of 2021

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.

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)

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

W.P.Nos.8933 & 8947 of 2021

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 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

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

W.P.Nos.8933 & 8947 of 2021

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

W.P.Nos.8933 & 8947 of 2021

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.

09.04.2021

Index : Yes / No Internet: Yes srn

1.Union of India, Represented by its Ministry of Corporate Affairs Shastri Bhavan, Dr.Rajendra Prasad Road New Delhi - 110 001.

2.The Registrar of Companies, Tamil Nadu, 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.Nos.8933 & 8947 of 2021

PUSHPA SATHYANARAYANA, J.