Madras High Court
Mrs.Mangaiarkarasi vs Union Of India on 21 June, 2021
W.P.No.12908 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.06.2021
CORAM
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
W.P.No.12908 of 2021
and WMP No.13714 of 2021
Mrs.Mangaiarkarasi ... Petitioner
Vs
1. Union of India
Ministry of Corporate Affairs
New Delhi.
2. The Registrar of Companies
No.7 AGT Business Park
I Floor, Phase II, Avinashi Road,
Civil Aerodrome Post,
Coimbatore – 641 014. ... 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
second respondent relating to impugned order dated 26.11.2016 uploaded
and hosted on the website of the first respondent in so far as petitioner
herein is concerned, quash the same as void, illegal and unconstitutional and
direct the respondents herein to permit the petitioner to get reappointed as
1/8
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W.P.No.12908 of 2021
Director of any company or appointed as Director in any company without
any hindrance.
For Petitioner : M/s.Sivanandam
For Respondents : Mrs.V.Sudha,
Central Govt. Standing Counsel
for R1
Mr.Stalin Abhimanyu,
Government 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 26.11.2016 captioned “list – 1 stk” 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 01.11.2016, in
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W.P.No.12908 of 2021
which, her name was also mentioned as item no.53 (DIN No: 00276408). In
other words, the second respondent, by including the name of the petitioner,
has disqualified her 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, she 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.12908 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
for vacating the office of director by a director of a Defaulting
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W.P.No.12908 of 2021
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
Court in Gaurang Balvantlal Shah to the effect that the ROC
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W.P.No.12908 of 2021
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.12908 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 petition is closed.
21.06.2021
Index : Yes/No
Internet : Yes/No
rgr
To
1. Union of India
Ministry of Corporate Affairs
New Delhi.
2. The Registrar of Companies
No.7 AGT Business Park
I Floor, Phase II, Avinashi Road,
Civil Aerodrome Post,
Coimbatore – 641 014.
https://www.mhc.tn.gov.in/judis/
W.P.No.12908 of 2021
R.MAHADEVAN, J.
rgr
W.P.No.12908 of 2021
21.06.2021
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