Madras High Court
Raj Gurtu vs Union Of India on 24 November, 2021
1 W.P.No. 24734 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 24.11.2021
CORAM:
THE HONOURABLE MR. JUSTICE M.DHANDAPANI
W.P.No. 24734 of 2021
and
W.M.P.Nos.126016, 26017 and 26018 of 2021
1.Raj Gurtu
2.Pandurangan Rajeswari ... Petitioners
/Vs/
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi - 110 001.
2. The Registrar of Companies,
Chennai, Tamil Nadu,
Block No.6, B Wing, 2nd Floor,
Shastri Bhawan, 26, Haddows Road,
Chennai - 600 034. ... Respondents
Prayer : Writ petition filed under Article 226 of the Constitution of India
praying Writ of Certiorarified Mandamus, to call for the records of the
second respondent relating to the impugned order dated 17.12.2018
uploaded in the website of the first respondent in so far as the petitioner
https://www.mhc.tn.gov.in/judis
2 W.P.No. 24734 of 2021
herein is concerned, quash the same as illegal, arbitary and devoid of
merit and consequentially direct the respondents herein to permit the
petitioner to get re-appointed as Director of any Company or appointed
as Director in any Company without any hindrance.
For Petitioners : Mr.S.K.Mageshwaran
For Respondents :Ms.P.J.Anitha
_______
ORDER
The present writ petition has been filed seeking a writ
Certiorarified Mandamus callin for the records of the second respondent
relating to the impugned order dated 17.12.2018 uploaded in the website
of the first respondent in so far as the petitioner herein is concerned,
quash the same and for consequential relief.
2. According to the petitioners, 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
01.110.2017, in which, their names was also mentioned as Item Nos.5334
& 5335 (DIN Nos.03062031, 03345688). The second respondent, by
including the name of the petitioners, has disqualified them as Director
https://www.mhc.tn.gov.in/judis
under Section 164(2)(a) of the Companies Act, 2013, for non-filing of
financial statement 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, they are prohibited from being
appointed or re-appointed as a Director in any other company for a
period of five years until 31.03.2022. Stating that the action so taken by
the second respondent is arbitrary and unreasonable, the petitioners have
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 W.P.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 Companies Act, which came into effect
from 01.04.2014. Thereafter, yet another set of disqualified directors
approached this court by filing W.P.No.13616 of 2018 etc. batch
https://www.mhc.tn.gov.in/judis
(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 1958 : (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 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
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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 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
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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."
4. Therefore, following the aforesaid decision, this 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.
24.11.2021
Speaking Order/ Non Speaking Order
Index: Yes/ No
Internet: Yes/ No
gba
To
1. Union of India,
Represented by its
Ministry of Corporate Affairs,
https://www.mhc.tn.gov.in/judis
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi - 110 001.
2. The Registrar of Companies,
Chennai, Tamil Nadu,
Block No.6, B Wing, 2nd Floor,
Shastri Bhawan, 26, Haddows Road,
Chennai - 600 034.
https://www.mhc.tn.gov.in/judis
M.DHANDAPANI, J.
gba
W.P.No. 24734 of 2021
and
W.M.P.Nos.126016, 26017 and
26018 of 2021
24.11.2021
https://www.mhc.tn.gov.in/judis
