Gnasigamani Varkees Tharuma Raj … vs Registrar Of Companies
2021 Latest Caselaw 813 Mad

                                                                              W.P. No.16331 of 2018

                                   IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                DATED : 11.01.2021

                                                      CORAM

                               THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE

                                              W.P. No.16331 of 2018
                                                       and
                                          WMP Nos.19477 and 19478 of 2018


                     Gnasigamani Varkees Tharuma raj                   …     Petitioner

                                                         Vs

                     1. Registrar of Companies
                     Block No.6, B Wing, II Floor
                     Shastri Bhawan
                     26 Haddows Road
                     Chennai 600 006.

                     2. The Secretary,
                     Ministry of Corporate Affairs
                     5th Floor, “A” wing,
                     Shastri Bhawan
                      Rajendra Prasad Road
                     New Delhi.                                  ...   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 08.09.2017 published in the official website of the MCA

                     1/6


https://www.mhc.tn.gov.in/judis/
                                                                                     W.P. No.16331 of 2018

                     and quash the same under Section 164(2) of the Companies Act as void,
                     illegal and unconstitutional as far as petitioner concern and direct the
                     respondent to permit the petitioner to continue as director of Rejoice
                     Products Limited.


                               For petitioner                    ...    Ms.P.Indumathi
                               For respondents                   ...    Mr.Madana Gopal Rao
                                                                        CGSC

                                                           ORDER

This writ petition has been filed challenging the disqualification of

the petitioner as Director under Section 164(2) 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

Notification dated 08.09.2017 published in the official website of the

second respondent on the ground that without affording opportunity to the

petitioner, the said Notification has been published.

2. Heard Ms.P.Indhumathi, learned counsel for the petitioner and

Mr.Madana Gopal Rao, learned CGSC appearing 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.

https://www.mhc.tn.gov.in/judis/ W.P. No.16331 of 2018

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

the impugned Notification dated 08.09.2017 has been published in

violation of the provisions of the Companies Act, 2013 and therefore the

said Notification 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

https://www.mhc.tn.gov.in/judis/ W.P. No.16331 of 2018

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 him as Director of M/s.Rejoice Products Limited.

https://www.mhc.tn.gov.in/judis/ W.P. No.16331 of 2018

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 Notification dated 08.09.2017 issued

by the respondents disqualifying the petitioner as Director of M/s.Rejoice

Products Limited under Section 164(2) 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.

11.01.2021

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. No.16331 of 2018

ABDUL QUDDHOSE, J.

vsi2

To

1. Registrar of Companies Block No.6, B Wing, II Floor Shastri Bhawan 26 Haddows Road Chennai 600 006.

2. The Secretary, Ministry of Corporate Affairs Union of India Shastri Bhawan Rajendra Prasad Road New Delhi.

W.P. No.16331 of 2018

11.01.2021

https://www.mhc.tn.gov.in/judis/