Madras High Court
Rajeshwari Narayanaswamy vs Union Of India on 5 January, 2021
W.P. Nos.13742 and 13744 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. Nos.13742 and 13744 of 2020
and
WMP Nos.17325 and 17326 of 2020
Rajeshwari Narayanaswamy ... Petitioner in W.P.No.
13742 of 2020
Kamaraja Vairavan ... Petitioner in W.P.No.
13744 of 2020
Vs
1. Union of India
Rep. by its
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi.
2. Registrar of Companies
Block No.6, B Wing, II Floor
Shastri Bhawan
26 Haddows Road
Chennai 600 006. ... Respondents for both WPs
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
Prayer for WP No.13742 of 2020 : Writ Petition filed under Article 226 of
the Constitution of India to issue a Writ of Certiorarified Mandamus calling
for the records of the 1st respondent pertaining to the list of disqualified
directors published by 2nd respondent in Drive - III in S. No.48 giving
effect from 1st November 2018 and quash the same and direct the 2nd
respondent to revoke the DIN of petitioner and cancel the disqualification of
the petitioner.
Prayer for WP No.13744 of 2020 : Writ Petition filed under Article 226 of
the Constitution of India to issue a Writ of Certiorarified Mandamus calling
for the records of the 1st respondent pertaining to the list of disqualified
directors published by 2nd respondent in Drive - III in S. No.49 giving
effect from 1st November 2018 and quash the same and direct the 2nd
respondent to revoke the DIN of petitioner and cancel the disqualification of
the petitioner.
For petitioners in both W.P.s ... Mr.K.Senguttuvan
For respondents in both W.P.s... Mr.M.Sathyan
CGSC
COMMON ORDER
Heard Mr.K.Senguttuvan, learned counsel for the petitioner and
Mr.M.Sathyan, learned CGSC accepts notice for the respondents.
2. By consent of both the parties, these writ petitions are taken up for
final disposal at the time of admission itself.
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
3. These writ petitions have 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 01.11.2018 passed by the second
respondent on the ground that without affording opportunity to the
petitioners, the said orders have been passed.
4. It is also contended by the learned counsel for the petitioners that
the impugned orders both dated 01.11.2018 have been passed in violation of
the provisions of the Companies Act, 2013 and therefore the said orders are
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 :
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
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.
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
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 them as
Directors of the subject Company.
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 01.11.2018 passed by the
second respondent disqualifying the petitioners as Directors of the subject
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
Company under Section 164(2) (a) of the Companies Act, 2013 are hereby
set aside in the terms indicated in the aforesaid judgment and these writ
petitions are allowed. No costs. Consequently, connected Miscellaneous
Petitions are closed.
05.01.2021
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
vsi2
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
To
1. The Ministry of Corporate Affairs
Union of India
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi.
2. Registrar of Companies
Block No.6, B Wing, II Floor
Shastri Bhawan
26 Haddows Road
Chennai 600 006.
https://www.mhc.tn.gov.in/judis/
W.P. Nos.13742 and 13744 of 2020
ABDUL QUDDHOSE, J.
vsi2
W.P. Nos.13742 and 13744 of 2020
05.01.2021
https://www.mhc.tn.gov.in/judis/
