Madras High Court
R.Jayakumar vs Union Of India on 16 December, 2021
W.P.No.26750 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 16.12.2021
CORAM:
THE HON'BLE MR.JUSTICE M. DHANDAPANI
W.P.No.26750 of 2021
R.Jayakumar ......Petitioner
Vs
1. Union of India
Represented by its Secretary
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi.
2. The Registrar of Companies
Tamilnadu, Chennai,
Block No.6, B-Wing, 2nd Floor,
Shastri Bhawan,
26, Haddows Road,
Chennai 600 006. ... Respondents
Writ Petition filed under Article 226 of the Constitution of India
praying for the issuance of a writ of Certiorarified Mandamus calling for the
records of the 2nd Respondent relating to the impugned order dated
18.12.2018, which is uploaded in the website of the 1st Respondent insofar
as the Petitioner (DIN: 05349107) herein and quash the same and direct the
2nd Respondent to activate the Petitioner's DIN: 05349107.
For Petitioner : Mr.T.V.Suresh Kumar
For 1st Respondent : Mr.A.Ashwathaman
1/7
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W.P.No.26750 of 2021
ORDER
Petitioner has come up with this Writ Petition seeking to quash the
impugned order dated 18.12.2018 passed by the 2 nd Respondent herein,
which is uploaded in the website of the 1st Respondent, insofar as he is
concerned and for a consequential direction to the 2 nd Respondent to activate
Director Identification Number 05349107.
2. According to the Petitioner, on 18.12.2018, the second
Respondent published a list of disqualified Directors, who have been
disqualified under Section 164(2)(a) of the Companies Act, 2013, as
Directors with effect from 01.11.2017, in which, his name was also
mentioned vide Director Identification Number 05349107. In other words,
the 2nd 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 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 five years. Stating that the action so taken by
the 2nd Respondent is arbitrary and unreasonable, the Petitioner has filed the
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W.P.No.26750 of 2021
present Writ Petition for the aforesaid relief.
3. Today, when the matter was taken up for consideration,
learned counsel appearing for the parties jointly submitted that, the issue
involved herein is no longer res integra.
4. Learned counsel for the Petitioner drew the attention of this
Court to the order dated 03.08.2018 passed by this Court in W.P.No.25455
of 2017 etc. batch, in the case of Bhagavan Das Dhananjaya Das
reported in (2018) 6 MLJ 704, whereby, those Writ Petitions were allowed
setting aside the impugned orders 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 W.P.No.13616 of 2018 etc. batch (Khushru
Dorab Madan v. Union of India), which were dismissed by an order dated
27.01.2020. Some of the aggrieved Petitioners challenged the said order of
the learned Single Judge before the Division Bench of this Court in
W.A.No.569 of 2020, etc. batch (Meethelaveetil Kaitheri Muralidharan
v. Union of India, reported in (2020) 6 CTC 113. The Division Bench
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W.P.No.26750 of 2021
elaborately dealt with the issue as to whether the Registrar of Companies is
entitled to deactivate the Director Identification Number (DIN) and allowed
those Writ Appeals on 09.10.2020. Relevant portion of the said judgment is
extracted hereunder:
"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 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,
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W.P.No.26750 of 2021
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.
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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W.P.No.26750 of 2021
5. Therefore, following the aforesaid decision, this Writ Petition
is allowed in the terms as indicated in the judgment rendered in the case of
Meethelaveetil Kaitheri Muralidharan (supra). No costs. Consequently,
connected W.M.P.Nos.29189 and 28190 of 2021 are closed.
16.12.2021
Index : Yes/No
Speaking Order : Yes/No
(aeb)
To:
1. The Secretary,
Union of India
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi.
2. The Registrar of Companies
Tamilnadu, 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.No.26750 of 2021
M. DHANDAPANI, J.
(aeb)
W.P.No.26750 of 2021
16.12.2021
https://www.mhc.tn.gov.in/judis
