Madras High Court
Velliangiri Saravanan vs Union Of India on 18 January, 2021
W.P. Nos.755 and 760 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 18.01.2021
CORAM
THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE
W.P. Nos.755 and 760 of 2021
and WMP Nos.802, 803, 805, 808 and 810 of 2021
1. Velliangiri Saravanan
2. Kesavan Brijulai
3. Nachimuthu Gounder Marappa Gounder Ramas
... Petitioner in
W.P.No.755 of 2021
Kandasamy Nagarajan ... Petitioner in
W.P.No.760 of 2021
Vs
1. Union of India
Rep. by its
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi - 110 001
2. Registrar of Companies
Stock Exchange Building,
II Floor, 683, Trichy Road,
Singanallur,
Coimbatore - 641 005 ... Respondents for both WPs
Prayer for WP No.755 of 2021 : 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
https://www.mhc.tn.gov.in/judis/
W.P. Nos.755 and 760 of 2021
07.12.2018 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 the respondents herein to permit
the 1st petitioner (having DIN No.05329719), 2nd petitioner (having DIN
No.06373641) and 3rd petitioner (having DIN No.06385588) to get
reappointed as directors in the Company or appointed in any other Company
without any hindrance.
Prayer for WP No.760 of 2021 : 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
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 the respondents herein to permit
the petitioner (having DIN No.02014702) to get reappointed as director in
the Company or appointed in any other Company without any hindrance.
For petitioners in both W.P.s ... Mr.Mr.Sankar Varadharajan
For respondents in both W.P.s... Ms.Anuradha
ACGSC
COMMON ORDER
These writ petitions have been filed challenging the disqualification
of the petitioner 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 orders dated 07.12.2018 and 08.09.2017 passed by the second
respondent on the ground that without affording opportunity to the
petitioners, the said orders have been passed.
https://www.mhc.tn.gov.in/judis/
W.P. Nos.755 and 760 of 2021
2. Heard Mr.Sankar Varadharajan, learned counsel for the petitioners
and Ms.Anuradha, learned standing counsel 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 orders dated 07.12.2018 and 08.09.2017 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.755 and 760 of 2021
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.755 and 760 of 2021
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 cases,
also, no notices were given to the petitioners before disqualifying them as
Directors of M/s.Zellers Apparel India Private Limited (W.P.No.755 of
2021) and M/s.Yercaud Landscape Property India Pvt.Ltd.(W.P.No.760 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.
https://www.mhc.tn.gov.in/judis/
W.P. Nos.755 and 760 of 2021
8. Accordingly, the impugned orders 07.12.2018 and 08.09.2017
passed by the second respondent disqualifying the petitioners as Directors
of M/s.Zellers Apparel India Private Limited (W.P.No.755 of 2021) and
M/s.Yercaud Landscape Property India Pvt.Ltd.(W.P.No.760 of 2021) 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.
18.01.2021
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
srn
https://www.mhc.tn.gov.in/judis/
W.P. Nos.755 and 760 of 2021
To
1. Union of India
Rep. by its
Ministry of Corporate Affairs
Shastri Bhawan
Dr. Rajendra Prasad Road
New Delhi - 110 001
2. Registrar of Companies
Stock Exchange Building,
II Floor, 683, Trichy Road,
Singanallur,
Coimbatore - 641 005
https://www.mhc.tn.gov.in/judis/
W.P. Nos.755 and 760 of 2021
ABDUL QUDDHOSE, J.
srn
W.P. Nos.755 and 760 of 2021
and
WMP Nos.802, 803, 805, 808 and 810 of 2021
19.01.2021
https://www.mhc.tn.gov.in/judis/
