Madras High Court
D.Jayakumar vs Union Of India on 19 April, 2021
W.P.No.9683 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 19.04.2021
CORAM
THE HONOURABLE MRS.JUSTICE PUSHPA SATHYANARAYANA
W.P.No.9683 of 2021
and W.M.P.Nos.10269 and 10270 of 2021
(Heard Through VC)
D.Jayakumar .. Petitioner
Vs.
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhawan,
New Delhi.
2. Registrar of Companies,
Tamil Nadu Coimbatore,
No.7, AGT Business Park,
I Floor, Phase II, Coimbatore - 641 014 .. 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 dated 05.09.2017
uploaded in the website of the 1st respondent insofar as the petitioner herein
is concerned, quash the same as illegal, arbitrary and devoid of merit and
consequentially direct the respondents herein to permit petitioner to get
reappointed as Director in any Company without any hindrance.
1/8
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W.P.No.9683 of 2021
For Petitioner : Mr.R.Kannan
For Respondents : Mr.V.Sudha,
Central Government Standing Counsel
ORDER
Ms.V.Sudha, 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
05.09.2017, 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 appointed as
Director in any company without any hindrance.
4. Heard the learned counsel on either side and perused the materials
placed before this Court.
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W.P.No.9683 of 2021
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 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
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W.P.No.9683 of 2021
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
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W.P.No.9683 of 2021
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
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W.P.No.9683 of 2021
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."
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), the writ petition is allowed, in the terms
indicated in the aforesaid judgment. No costs. Consequently, connected
miscellaneous petitions are closed.
19.04.2021
Index : Yes / No
Internet : Yes/No
http://www.judis.nic.in
W.P.No.9683 of 2021
srn
To
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhawan,
New Delhi.
2. The Registrar of Companies,
Tamil Nadu Coimbatore,
No.7, AGT Business Park,
I Floor, Phase II, Coimbatore - 641 014
http://www.judis.nic.in
W.P.No.9683 of 2021
PUSHPA SATHYANARAYANA, J.
srn
W.P.No.9683 of 2021
and
W.M.P.Nos.10269 and 10270 of 2021
19.04.2021
http://www.judis.nic.in
