Madras High Court
Vijairamprem Subbaraj vs Union Of India on 11 January, 2021
W.P. Nos.586 and 589 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. Nos.586 and 589 of 2021
and
WMP Nos.653, 654, 658 and 659 of 2021
Vijairamprem Subbaraj .... Petitioner in
WP No.586 of 2021
Umadevi Vijairam .... Petitioner in
WP No.589 of 2021
Vs.
1.Union of India,
Rep.by its
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Pradad Road,
New Delhi – 110 001.
2.Registrar of Companies,
Tamil Nadu, Chennai,
Block No.6,B Wing, 2nd floor,
Shastri Bhawan,
26 Haddows Road,
Chennai – 600 006. .... Respondents
in both WPs
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W.P. Nos.586 and 589 of 2021
Common Prayer : Writ Petitions filed under Article 226 of the Constitution
of India to issue a Writ of Certiorarified Mandamus calling for the records
of the 2nd respondent relating to the impugned order dated 13.12.2019
uploaded and hosted on the website of the 1st respondent in so far as the
petitioner herein is concerned, quash the same as illegal, arbitrary and
devoid of merit and consequentially direct the respondents herein to permit
petitioner to get reappointed as Director in any Company or appointed as
Director in any company without any bar or hindrance.
For Petitioner in both WPs : Mr.K.Vijayaraghavan
For Respondents in both Wps : Ms.Anuradha
ACGSC
COMMON 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 13.12.2019 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. Nos.586 and 589 of 2021
2. Heard Mr.K.Vijayaraghavan, learned counsel for the petitioner and
Ms.Anuradha, learned ACGSC accepts notice for the respondents.
3. By consent of both the parties, these writ petitions are taken up for
final disposal at the time of admission itself.
4. It is also contended by the learned counsel for the petitioners that
the impugned order dated 13.12.2019 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
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W.P. Nos.586 and 589 of 2021
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.
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
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W.P. Nos.586 and 589 of 2021
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 petitioners before disqualifying them as
Directors of M/s.Aruppukottai Shri Ramalinga Roller Flour Mills Limited.
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 18.12.2018 passed by the
second respondent disqualifying the petitioners as Directors of
M/s.Aruppukottai Shri Ramalinga Roller Flour Mills Limited under Section
164(2) (a) of the Companies Act, 2013 is hereby set aside in the terms
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W.P. Nos.586 and 589 of 2021
indicated in the aforesaid judgment and these writ petitions are 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
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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.
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W.P. Nos.586 and 589 of 2021
ABDUL QUDDHOSE, J.
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W.P. Nos.586 and 589 of 2021
11.01.2021
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