Madras High Court
Kannu Mudaliar Sekar vs Union Of India on 11 January, 2021
W.P. No.539 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. No.539 of 2021
and
WMP No.774 of 2021
1. Kannu Mudaliar Sekar
2. Sekar Kalai Arasi … Petitioners
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
Writ Petition 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 18.12.2018 uploaded in the
1/6
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W.P. No.539 of 2021
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 of any Company or appointed as Director in any company without
any hindrance and reactivate the Director Identification Number (DIN) of
the Petitioner.
For petitioners ... Ms.P.M.Vatsala
For respondents ... Ms.Anuradha,
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 18.12.2018 passed by the second respondent on the
ground that without affording opportunity to the petitioners, the said orders
have been passed.
2. Heard Ms.P.M.Vatsala, learned counsel for the petitioner and
Ms.Anuradha, 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.
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W.P. No.539 of 2021
4. It is also contended by the learned counsel for the petitioners that
the impugned order dated 18.12.2018 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.539 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 petitioners before disqualifying them as
Directors of M/s.Arudhra Alloys Private Ltd.
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W.P. No.539 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 18.12.2018 passed by the
second respondent disqualifying the petitioners as Directors of
M/s.Arudhra Alloys Private 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 Petition is closed.
11.01.2021
(3/3)
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
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W.P. No.539 of 2021
ABDUL QUDDHOSE, J.
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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.
W.P. No.539 of 2021
11.01.2021
https://www.mhc.tn.gov.in/judis/
