Govindarajan Thyagarajan vs Union Of India
2021 Latest Caselaw 4511 Mad

Citation : 2021 Latest Caselaw 4511 Mad
Judgement Date : 22 February, 2021

Madras High Court

Govindarajan Thyagarajan vs Union Of India on 22 February, 2021

                                                                                    W.P. No.3579 of 2021

                               IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                  DATED : 22.02.2021

                                                          CORAM

                            THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

                                              W.P. No.3579 of 2021
                                                       and
                                            WMP Nos.4070 & 4072 of 2021


                      Govindarajan Thyagarajan                    ....      Petitioner

                                                    Vs.

                      1. Union of India,
                         Rep by its Secretary,
                         Ministry of Corporate Affairs,
                         Shastri Bhawan,
                         Rajendra Prasad Road,
                         New Delhi – 110 001.

                      2. The Registrar of Companies,
                         Tamil Nadu,
                         Block No.6, B Wing, 2nd Floor,
                         Shastri Bhawan,
                         26, Haddows Road,
                         Chennai – 600 034.                          ....     Respondents

                      Writ Petition filed under Article 226 of the Constitution of India to issue a
                      Writ of Certiorarified Mandamus calling for the records of the Notification
                      dated 01.11.2017 issued by the 2nd respondent and published in the official

                      1/7


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                                                                                      W.P. No.3579 of 2021

                      website of the 1st respondent herein and quash the Notification dated
                      01.11.2017 as void, illegal and unconstitutional as far as the petitioner is
                      concerned and direct the Respondents to permit the petitioner to get
                      reappointed without any hindrance.


                            For Petitioner           : M/s.Rathidevi and Associates
                            For Respondents          : Mr. R.Sidharth
                                                       CGSC


                                                          ORDER

Mr.R.Sidharth, learned Central Government Standing Counsel accepts

notice for the respondents.

2. This writ petition has been filed challenging the disqualification of

the petitioners as Director under Section 164(2)(a) of the Companies Act,

2013 on the ground that he has not submitted financial statements for three

consecutive financial years. The petitioner has challenged the impugned

order dated 01.11.2017 passed by the second respondent on the ground that

without affording opportunity to the petitioner, the said order has been

passed.

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3. Heard Ms.Rathidevi, learned counsel for the petitioner and

Mr.R.Sidharth, learned Central Government Standing Counsel for the

respondents.

4. By consent of both the parties, this writ petition is taken up for final

disposal at the time of admission itself.

5. It is also contended by the learned counsel for the petitioner that the

impugned order dated 01.11.2017 has been passed in violation of the

provisions of the Companies Act, 2013 and therefore the said orders are bad

in law.

6. The issue raised in these writ petitions was considered by the

Hon'ble Division Bench of this Court by its order dated 09.10.2020 in W.A.

No.569 & Ors. of 2020 in the case of Meetgelaveetil Kaitheri

Muralidharan Versus Union of India & Another and in paragraphs 36 and

38, it has been held as follows :

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36. 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.

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38. 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.

7. The case on hand stands on the same footing. In the instant case,

also, no notice was given to the petitioners before disqualifying him as

Director of M/s.Royal Technova Bio Sciences Private Limited.

8. For the foregoing reasons, the ratio laid down by the Hon'ble

Division Bench of this Court, dated 09.10.2020 in W.A. No.569 & batch

applies to the facts of the instant cases also.

9. Accordingly, the impugned order dated 01.11.2017 passed by the

second respondent disqualifying the petitioner as Director of M/s.Royal

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Technova Bio Sciences Private Limited under Section 164(2) (a) of the

Companies Act, 2013 is hereby set aside in the terms indicated in the

aforesaid judgment and this writ petition is allowed. No costs. Consequently,