Madras High Court
Ashok Balasubramanian vs Union Of India on 15 June, 2021
W.P.No.13177 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 15.06.2021
CORAM:
THE HON'BLE MR.JUSTICE R.MAHADEVAN
W.P.No. 13177 of 2021
and W.M.P.Nos.13986 & 13987 of 2021
Ashok Balasubramanian ... Petitioner
Vs
1. Union of India
Represented by its
Ministry of Corporate Affairs,
Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2. The Registrar of Companies
Chennai, Tamilnadu,
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
praying for a writ of certiorarified mandamus calling for the records of the
2nd respondent relating to the impugned order dated 13.12.2019 captioned
uploaded in the website of the 1st respondent insofar as the petitioner herein
is concerned, quash the same as illegal, arbitrary and devoid of merit and
1/8
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W.P.No.13177 of 2021
consequentially direct the respondents herein to permit the petitioner to get
appointed as Director of any other company.
For Petitioner : Mr.A.M. Ilango
For Respondents : Mr.R.Sidharth,
Central Govt. Standing Counsel
for R1
Mr.Stalin Abhimanyu
Govt. Advocate for R2
ORDER
The prayer made in this writ petition is to issue a Certiorarified
Mandamus, calling for the records of the second respondent relating to the
order dated 13.12.2019 which was uploaded in the website of the first
respondent, insofar as the petitioner is concerned and quash the same and
for consequential relief.
2.According to the petitioner, the second respondent released a list of
disqualified directors, who have been disqualified under Section 164(2)(a)
of the Companies Act, 2013, as directors with effect from 01.11.2018 in
which, his name was also mentioned. (DIN No: 00425641). In other words,
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W.P.No.13177 of 2021
the second respondent, by including the name of the petitioner, has
disqualified him as Director under Section 164(2)(a) of the Companies Act,
2013 for non-filing of financial statements or annual returns for continuous
period of three financial years by the defaulting companies on whose board,
the petitioner is also a Director, due to which, he is prohibited from being
appointed or reappointed as director in any other company for a period of 5
years. Stating that the action so taken by the second respondent is arbitrary
and unreasonable, the petitioner has filed the present writ petition with the
aforesaid prayer.
3.Today, when the matter was taken up for consideration, the learned
counsel appearing for the parties jointly submitted that the issue involved
herein is no longer res integra. Earlier, this Court by order dated 03.08.2018
in WP.No.25455 of 2017 etc. batch, in Bhagavan Das Dhananjaya Das
case reported in (2018) 6 MLJ 704, allowed those writ petitions and set
aside the orders dated 08.09.2017, 01.11.2017, 17.12.2018, etc. passed by
the Registrar of Companies, disqualifying the petitioners therein to hold the
office of directorship of the companies under Section 164(2)(a) of the
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W.P.No.13177 of 2021
Companies Act, which came into effect from 01.04.2014. Thereafter, yet
another set of disqualified directors approached this court by filing
WP.No.13616 of 2018 etc. batch (Khushru Dorab Madan v. Union of
India) which were dismissed by order dated 27.01.2020. The said order of
the learned single judge was challenged by some of the petitioners therein
before the Division Bench of this Court in W.A.No.569 of 2020, etc. batch
(Meethelaveetil Kaitheri Muralidharan v. Union of India, 2020 SCC
OnLine Mad 2958 : (2020) 6 CTC 113), which after elaborately dealt with
the issue as to whether the RoC is entitled to deactivate the Director
Identification Number (DIN), allowed those writ appeals on 09.10.2020, the
relevant passage of which, are profitably, extracted below:
"41. 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
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W.P.No.13177 of 2021
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.
42. In light of the above analysis, we concur with the
views of the Delhi High Court in Mukut Pathak, the Allahabad
High Court in Jai Shankar Agrahari and the Gujarat High
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W.P.No.13177 of 2021
Court in Gaurang Balvantlal Shah to the effect that the ROC
is not empowered to deactivate the DIN under the relevant
rules. In Yashodhara Shroff, the Karnataka High Court
upheld the constitutionality of Section 164(2) and proceeded to
hold that a prior or post decisional hearing is not necessary.
For reasons detailed in preceding paragraphs, we disagree
with the view of the Karnataka High Court that prior notice is
not required under Section 164(2) of CA 2013.
43. 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."
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W.P.No.13177 of 2021
4.Therefore, following the aforesaid decision, the writ petition stands
allowed, in the terms as indicated in the judgment in Meethelaveetil
Kaitheri Muralidharan's case. No costs. Consequently, connected
miscellaneous petitions are closed.
25.06.2021
Index : yes/no
Internet : yes/no
msr
To
1. Union of India
Ministry of Corporate Affairs,
Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2. The Registrar of Companies
No.7, AGT Business Park
Phase II, 1st Floor,
Civil Aerodrome Post,
Coimbatore – 641 014.
https://www.mhc.tn.gov.in/judis/
W.P.No.13177 of 2021
R.MAHADEVAN, J.
msr
W.P.No. 13177 of 2021
and W.M.P.Nos.13986
& 13987 of 2021
25.06.2021
https://www.mhc.tn.gov.in/judis/
