Madras High Court
Govind Manchalal vs Union Of India on 11 January, 2021
W.P.No.18260 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.01.2021
CORAM:
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
W.P.No.18260 of 2018
and W.M.P.Nos.21578 & 21579 of 2018
Govind Manchalal ... Petitioner
Vs.
1.Union of India,
Represented by its Secretary,
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad 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
PRAYER: Writ Petition filed under Article 226 of the Constitution of India,
for issuance of a Writ of Certiorarified Mandamus to call for the records of the
2nd respondent relating to the impugned order dated 08.09.2017 uploaded in 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 both the respondents herein to permit petitioner to get reappointed as
Director of any Company or appointed as Director in any company without any
hindrance.
For Petitioner : Mr.S.Shanmuga Velayutham
For Respondents : Mr.Madana Gopal Rao
CGSC
https://www.mhc.tn.gov.in/judis/
1/6
W.P.No.18260 of 2018
ORDER
This writ petition has been filed challenging the disqualification of the
petitioner as Director under Section 164(2)(a) of the Companies Act, 2013 on
the ground that he has not submitted his financial statements or annual returns
for three financial years consecutively. The petitioner has challenged the
impugned order dated 08.09.2017 passed by the second respondent on the
ground that without affording opportunity to the petitioner, the said order has
been passed.
2.Heard Mr.S.Shanmuga Velayutham, learned counsel for the petitioner
and Mr.Madana Gopal Rao, learned CGSC for the respondents. By consent of
both parties, this Writ Petition is taken up for final disposal at the admission
stage itself.
3.It is also contended by the learned counsel for the petitioner that the
impugned order has been passed in violation of the provisions of the
Companies Act, 2013 and therefore the said order is bad in law.
4.The issue raised in this writ petition was considered by the Hon'ble
Division Bench of this Court by its order dated 09.10.2020 in W.A. No.569 &
https://www.mhc.tn.gov.in/judis/
W.P.No.18260 of 2018
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 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
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W.P.No.18260 of 2018
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.
5.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 a Director of
M/s.Solok Impex Private Limited.
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W.P.No.18260 of 2018
6.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 case also.
7.Accordingly, the impugned order dated 08.09.2017 passed by the
second respondent disqualifying the petitioner as a Director of M/s.Solok
Impex Private Limited under Section 164(2)(a) of the Companies Act, 2013 is
hereby set aside in the terms indicated in the aforesaid judgment and the writ
petition is allowed. No costs. Consequently, connected miscellaneous
petitions are closed.
11.01.2021
Index : Yes / No
Internet : Yes / No
Speaking/Non-speaking order
pam
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.
https://www.mhc.tn.gov.in/judis/
W.P.No.18260 of 2018
ABDUL QUDDHOSE, J.
pam
To
1.The Secretary,
Union of India,
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad 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.
W.P.No.18260 of 2018
11.01.2021
https://www.mhc.tn.gov.in/judis/
