Madras High Court
D. Mercy Leyal … vs Registrar Of Companies on 20 January, 2021
W.P. No.1069 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 20.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. No.1069 of 2021
and
WMP Nos.1184 and 1188 of 2021
D. Mercy Leyal … Petitioner
Vs
1. Registrar of Companies
Block No.6, B Wing, II Floor
Shastri Bhawan
26 Haddows Road
Chennai 600 006.
2. Union of India
Rep. by its Secretary
Ministry of Corporate Affairs
5th Floor, "A" wing,
Shastri Bhawan,
Rajendra Prasad Road,
New Delhi - 110 001. ... 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 passed by the 1st respondent dated 17.12.2018 published in the
official website of the MCA under Sec.164(2) of the Companies Act and
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W.P. No.1069 of 2021
quash the same as void illegal and unconstitutional as far as petitioner
concern and direct the respondent to permit the petitioner to continue as
director of Daystar Television Network (India) Private Limited and Delight
Broadcasting Private Limited.
For petitioner ... Mr.Murugesh Kasivel
For respondents ... Mr.L.J.Venkateshan
CGSC
ORDER
This writ petition has been filed challenging the disqualification of
the petitioner as Director under Section 164(2)(a) of the Companies Act,
2013 on the ground that she has not submitted financial statements for three
consecutive financial years. The petitioner has challenged the impugned
Notification dated 17.12.2018 passed by the first respondent on the ground
that without affording opportunity to the petitioner, the said Notification has
been passed.
2. Heard Mr.Murugesh Kasivel, learned counsel for the petitioner
and Mr.L.J.Venkateshan, learned CGSC accepts notice for the respondents.
3. By consent of both the parties, this writ petition is taken up for
final disposal at the time of admission itself.
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W.P. No.1069 of 2021
4. It is also contended by the learned counsel for the petitioner that
the impugned order dated 17.12.2018 has been passed in violation of the
provisions of the Companies Act, 2013 and therefore the said order is bad in
law.
5. 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 :
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
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W.P. No.1069 of 2021
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.
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.
6. The case on hand stands on the same footing. In the instant case,
also, no notice was given to the petitioner before disqualifying her as
Director of M/s.Daystar Television Network (India) Private Limited.
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W.P. No.1069 of 2021
7. 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.
8. Accordingly, the impugned order dated 17.12.2018 passed by the
second respondent disqualifying the petitioner as Director of M/s.Daystar
Television Network (India) 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, connected Miscellaneous Petitions are closed.
20.01.2021
Note:In view of the present lock down owing to COVID-
19 pandemic, a web copy of the order may be utilized for
official purposes, but, ensuring that the copy of the order
that is presented is the correct copy, shall be the
responsibility of the Advocate/litigant concerned.
Index: Yes/ No
Internet: Yes/No
Speaking Order/Non-speaking Order
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W.P. No.1069 of 2021
ABDUL QUDDHOSE, J.
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To
1. The Registrar of Companies
Block No.6, B Wing, II Floor
Shastri Bhawan
26 Haddows Road
Chennai 600 006.
2. The Secretary,
Union of India
Ministry of Corporate Affairs
5th Floor, "A" wing,
Shastri Bhawan,
Rajendra Prasad Road,
New Delhi - 110 001.
W.P. No.1069 of 2021
20.01.2021
https://www.mhc.tn.gov.in/judis/
