Madras High Court
Chittanai Amjed Ahmed vs Union Of India on 16 December, 2021
WP Nos. 26107 & 26150 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 16.12.2021
CORAM
THE HONOURABLE MR. JUSTICE M. DHANDAPANI
W.P. Nos. 26107 & 26150 of 2021
and
W.M.P. Nos. 27558, 27559, 27602, 27604 & 27605 of 2021
WP No. 26107 of 2021
and
WMP Nos. 27558 & 27559 of 2021
Chittanai Amjed Ahmed .. Petitioner
Versus
1. Union of India
Represented by the
Ministry of Corporate Affairs
A Wing, Shastri Bhawan
Rajendra Prasad Road
New Delhi – 110 001
2. Registrar of Companies, Chennai
Block No. 6, B Wing 2nd Floor
Shastri Bhawan 26
Haddows Road
Chennai – 600 034 .. Respondents
WP No. 26150 of 2021
and
WMP Nos. 27602, 27604 & 27605 of 2021
1. Sadasivam
2. Nirmala Sadasivam .. Petitioners
Versus
1. Union of India
Represented by its Secretary
https://www.mhc.tn.gov.in/judis
WP Nos. 26107 & 26150 of 2021
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi – 110 001
2. Registrar of Companies
1st Floor, Ashok Pingley Bhawan
Municipal Corporation
Nehru Chowk, Bilaspur
Chattisgarh – 495 001 .. Respondents
WP No. 26107 of 2021:- 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 impugned
order dated 18.12.2018 uploaded and hosted of the website of the 1st respondent
insofar as the petitioner herein is concerned, quash the status “Disqualfied under
Section 164(2)” as illegal, arbitrary and devoid of merit and consequentially
direct the respondents herein to permit the petitioner to get reappointed as
director of any company or appointed as Director in any other company without
any hindrance.
WP No. 26150 of 2021:- 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 respondents, culminating in the
undated impugned order published on 28.11.2019 by the second respondent in
the official website of the 1st respondent wherein the petitioners were
disqualified to function as Directors (DIN Nos.02415291 and 02456254) and
quash the same and direct the second respondent to restore the writ petitioners
as Directors within a time frame to be fixed by the Hon'ble Court.
WP No. 26107 of 2021
For Petitioner : Mr. Keerthikiran Murali
For Respondents : Mr. A. Prakash
Additional Central Government
Standing Counsel
https://www.mhc.tn.gov.in/judis
WP Nos. 26107 & 26150 of 2021
WP No. 26150 of 2021
For Petitioner : Mr.K. Ashok Kumar
For Respondents : Mr. A. Prakash
Additional Central Government
Standing Counsel
COMMON ORDER
The prayer made in these writ petitions is to issue a Certiorarified
Mandamus, calling for the records of the respective respondents in so far as it
relates to the publication of the list of disqualified Directors in which the names
of the respective petitioners are included and the consequential deactivation of
their Director Identification Number (DIN).
2. According to the petitioners, the respondents herein released a list
of disqualified directors under Section 164(2)(a) of the Companies Act, 2013,
disqualifying them as directors of the various companies, in which, names of the
petitioners were also included. In other words, the respondents, disqualified the
petitioners as Directors 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 (s) is/are serving as a Director. According to the
petitioners, by virtue of such disqualification, they could not be appointed or
reappointed as director in any other company for a period of 5 years.
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WP Nos. 26107 & 26150 of 2021
Therefore, assailing the orders of disqualification mainly on the ground that such
orders have been passed in gross violation of principles of natural justice, the
present writ petitions are filed.
3. Today, when the writ petitions are taken up for consideration, the
learned counsel appearing for the petitioners 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
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WP Nos. 26107 & 26150 of 2021
issue as to whether the Registrar of Companies 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 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 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
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WP Nos. 26107 & 26150 of 2021
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."
4. The aforesaid submissions of the learned counsel for the petitioners
have been conceded on the side of the respondents. It is also submitted by
Mr. K. Ramanamurthy, learned Central Government Standing Counsel
appearing for some of the respondents in these writ petitions, on instructions,
submitted that as directed by the Division Bench of this Court, the Registrar of
Companies is in the process of conducting an enquiry to decide the extent of
default committed by the individual Directors and subject to the outcome of
such enquiry, appropriate orders will be passed. The said submission is
recorded.
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WP Nos. 26107 & 26150 of 2021
5. Having regard to the above, all the writ petitions stand allowed, in
the terms as indicated in the judgment in Meethelaveetil Kaitheri
Muralidharan's case. No costs. Consequently, connected miscellaneous
petitions are closed. It is needless to mention that the Registrar of Companies
shall conduct an enquiry taking note of the observations made by the Division
Bench of this Court, mentioned supra.
16.12.2021
Index : Yes/No
Internet : Yes/No
rli
To
1. Union of India
Represented by the
Ministry of Corporate Affairs
A Wing, Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi – 110 001
2. Registrar of Companies, Chennai
Block No. 6, B Wing 2nd Floor
Shastri Bhawan 26
Haddows Road
Chennai – 600 034
3. Registrar of Companies
1st Floor, Ashok Pingley Bhawan
Municipal Corporation
Nehru Chowk, Bilaspur
Chattisgarh – 495 001
https://www.mhc.tn.gov.in/judis
WP Nos. 26107 & 26150 of 2021
M. DHANDAPANI, J
rli
WP Nos. 26107
& 26150 of 2021
16.12.2021
https://www.mhc.tn.gov.in/judis
