Madras High Court
Manju Chamundeeswari vs Union Of India on 15 December, 2021
WP No. 26572 of 2021
THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 15.12.2021
CORAM
THE HONOURABLE MR.JUSTICE M. DHANDAPANI
W.P.No.26572 of 2021
and
W.MP. Nos.28025 & 28027 of 2021
Manju Chamundeeswari .. Petitioner
Versus
1. Union of India
Represented by its Secretary
Ministry of Corporate Affairs
ShastriBhawan, Dr.Rajendra Prasad Road
New Delhi – 110 001
2. Registrar of Companies
Block No.6, B-Wing
2nd Floor, Shastribhavan 26
Haddows Road
Chennai, Tamil Nadu 600 034 .. Respondents
Writ Petition filed under Article 226 of the Constitution of India praying
for issuance of a Writ of Certiorarified Mandamus, calling for the records of
the 2nd respondent relating to the impunged order dated 13.12.2019 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 consequently direct
the respondents herein to permit the petitioner (having DIN No.03422757) to
get reapppointed as Director in the company or appointed in any other
company without any hindrance.
For Petitioner : M/s. Savitha. G
For Respondents : Mr.V.Udayakumar
Central Government Standing Counsel
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WP No. 26572 of 2021
ORDER
The prayer made in this writ petition is to issue a Certiorarified
Mandamus, calling for the records of the second respondent relating to the
order dated 13.12.2019 which was uploaded in the website of the first
respondent, insofar as the petitioner is concerned and quash the same and for
consequential relief.
2.According to the petitioner, the second respondent released a list of
disqualified directors, who have been disqualified under Section 164(2)(a) of
the Companies Act, 2013, as directors with effect from 01.11.2018, in which,
his name was also mentioned as item no. 130 (DIN No: 3422757). In other
words, the second respondent, by including the name of the petitioner, has
disqualified him as Director under Section 164(2)(a) of the Companies Act,
2013 for non-filing of financial statements or annual returns for continuous
period of three financial years by the defaulting companies on whose board, the
petitioner is also a Director, due to which, he is prohibited from being
appointed or reappointed as director in any other company for a period of 5
years. Stating that the action so taken by the second respondent is arbitrary
and unreasonable, the petitioner has filed the present writ petition with the
aforesaid prayer.
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WP No. 26572 of 2021
3.Today, when the matter was taken up for consideration, the learned
counsel appearing for the parties jointly submitted that the issue involved
herein is no longer res integra. Earlier, this Court by order dated 03.08.2018
in WP.No.25455 of 2017 etc. batch, in Bhagavan Das Dhananjaya Das case
reported in (2018) 6 MLJ 704, allowed those writ petitions and set aside the
orders dated 08.09.2017, 01.11.2017, 17.12.2018, etc. passed by the Registrar
of Companies, disqualifying the petitioners therein to hold the office of
directorship of the companies under Section 164(2)(a) of the Companies Act,
which came into effect from 01.04.2014. Thereafter, yet another set of
disqualified directors approached this court by filing WP.No.13616 of 2018
etc. batch (Khushru Dorab Madan v. Union of India) which were dismissed
by order dated 27.01.2020. The said order of the learned single judge was
challenged by some of the petitioners therein before the Division 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), which after elaborately dealt with the issue as to whether the RoC
is entitled to deactivate the Director Identification Number (DIN), allowed
those writ appeals on 09.10.2020, the relevant passage of which, are
profitably, extracted below:
"41. As is evident from the above, Rules 9 and 10 deals
with the application for allotment of DIN. Rule 10(6) specifies
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WP No. 26572 of 2021
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 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
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WP No. 26572 of 2021
would continue to be a director of the Defaulting Company.
42. In light of the above analysis, we concur with the views
of the Delhi High Court in Mukut Pathak, the Allahabad High
Court in Jai Shankar Agrahari and the Gujarat High Court in
Gaurang Balvantlal Shah to the effect that the ROC is not
empowered to deactivate the DIN under the relevant rules. In
Yashodhara Shroff, the Karnataka High Court upheld the
constitutionality of Section 164(2) and proceeded to hold that a
prior or post decisional hearing is not necessary. For reasons
detailed in preceding paragraphs, we disagree with the view of
the Karnataka High Court that prior notice is not required
under Section 164(2) of CA 2013.
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."
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WP No. 26572 of 2021
4.Therefore, following the aforesaid decision, the writ petition stands
allowed, in the terms as indicated in the judgment in Meethelaveetil Kaitheri
Muralidharan's case. No costs. Consequently, connected miscellaneous
petitions are closed.
15.12.2021
Index : Yes/No
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To
1. Union of India
Represented by its Secretary
Ministry of Corporate Affairs
ShastriBhawan, Dr.Rajendra Prasad Road
New Delhi – 110 001
2. Registrar of Companies
Block No.6, B-Wing
2nd Floor, Shastribhavan Building
Chennai, Tamil Nadu 600 034
https://www.mhc.tn.gov.in/judis
WP No. 26572 of 2021
M. DHANDAPANI, J.
rli
WP No. 26572 of 2021
15.12.2021
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