Madras High Court
Mahesh Babumuvva (Din 01009246) vs Union Of India on 27 January, 2021
W.P. No.20350 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 27.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. No.20350 of 2020
and
WMP Nos.25148 and 25149 of 2020
1. Mahesh Babumuvva (DIN 01009246)
2. Ajay Babumuvva (DIN 1518549) … Petitioners
Vs
1. Union of India
Rep. by its
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi – 110 001.
2. Registrar of Companies
Tamilnadu,
Andaman & Nicobar Islands
Shastri Bhavan,
2nd Floor,
26, Haddows Road,
Chennai – 600 006. ... Respondents
1/7
https://www.mhc.tn.gov.in/judis/
W.P. No.20350 of 2020
Writ Petition filed under Article 226 of the Constitution of India to
issue a Writ of Certiorarified Mandamus to call for the records from the 2nd
respondent relating to both the Companies along with the impugned order
dated 2nd August 2019, uploaded and hosted on the website of the 1st
respondent in so far as the both the petitioners herein are concerned
thereafter declare both the Companies viz., South East Projects Pvt. Ltd.
[CIN :U45200TN2008PTC070073] & South East Constructions Pvt. Ltd.
[CIN : U70109TN2008PTC070072] as have been duly struck – off &
closed, consequentially quash the impugned order dated 2nd August 2019 as
illegal, arbitrary and devoid of merit, thereby permitting the Petitioners to
get reappointed and / or reappointed as Directors of any Company(ies)
without any hindrance.
For petitioner ... Mr.Gaurav Chatterjee
For respondents ... Mr. Madana Gopal Rao
ACGSC
ORDER
This writ petition has been filed challenging the disqualification of
the petitioners as Directors under Section 164(2)(a) of the Companies Act,
2013 on the ground that they have not submitted financial statements for
three consecutive financial years. The petitioners have challenged the
impugned order dated 02.08.2019 passed by the second respondent on the
ground that without affording opportunity to the petitioners, the said order
has been passed.
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W.P. No.20350 of 2020
2. Heard Mr.Gaurav Chatterjee, learned counsel for the petitioner
and Mr.Madana Gopal Rao, learned ACGSC 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.
4. It is also contended by the learned counsel for the petitioner that
the impugned order dated 02.08.2019 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
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W.P. No.20350 of 2020
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.
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.
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W.P. No.20350 of 2020
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 petitioners before disqualifying them as
Directors of M/s.South East Projects Pvt. Ltd. and M/s.South East
Constructions Pvt. Ltd.
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. There are two limbs in the prayer sought for in this writ petition.
In so far as the first limb of the prayer is with regard to the disqualification
of the petitioners and the second limb of the prayer is to declare both the
Companies South East Projects Pvt. Ltd. [CIN :
U45200TN2008PTC070073] & South East Constructions Pvt. Ltd., [CIN:
U45200TN2008PTC070072] where the petitioners were Directors to have
been duly struck off and closed.
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W.P. No.20350 of 2020
9. Insofar as the first limb of the prayer is concerned the issue is now
well settled for the aforementioned reasons and the said relief is granted by
this Court. However, insofar as second limb of the prayer is concerned, the
second respondent shall consider the petitioner's representation, dated
17.08.2020 and pass final orders on merits and in accordance with law.
10. Accordingly, the impugned order dated 02.08.2019 passed by the
second respondent disqualifying the petitioners as Director of M/s.South
East Project Pvt. Ltd. and M/s.South East Constructions Pvt. Ltd., 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.
27.01.2021
Index: Yes/ No
Internet: Yes/No
Speaking Order/Non-speaking Order
vsi2
https://www.mhc.tn.gov.in/judis/
W.P. No.20350 of 2020
ABDUL QUDDHOSE, J.
vsi2
To
1. Union of India
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi – 110 001.
2. Registrar of Companies
Tamilnadu,
Andaman & Nicobar Islands
Shastri Bhavan,
2nd Floor,
26, Haddows Road,
Chennai – 600 006.
W.P. No.20350 of 2020
27.01.2021
https://www.mhc.tn.gov.in/judis/
