Madras High Court
Meena Subrahmanyan vs Union Of India on 30 November, 2021
W.P.No.20517 of 2019
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 30.11.2021
CORAM
THE HONOURABLE MR. JUSTICE M.DHANDAPANI
W.P.No.20517 of 2019
Meena Subrahmanyan ... 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. The Registrar of Companies
Tamilnadu, Chennai,
Block No.6, B-Wing, 2nd Floor,
Shastri Bhawan,
26, Haddows Road,
Chennai 600 006. ... Respondents
Writ Petition filed under Article 226 of the Constitution of India
praying for the issuance of a writ of Certiorarified Mandamus calling for the
records of the 2nd Respondent relating to the impugned order dated
08.09.2017, read with the updated list dated 01.11.2017 and the list dated
17.12.2018 uploaded and hosted on the website of the 1st Respondent insofar
as the Petitioner herein is concerned, quash the same as illegal, arbitrary and
devoid of merits and consequently direct the Respondents herein to permit the
Petitioner to get reappointed as Director in any Company without any
hindrance.
Page No.1 of 7
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W.P.No.20517 of 2019
For Petitioner : Mr.P.Raj Kumar Jhabakh
For Respondents : Mr.J.Madhana Gopal Rao
ORDER
Petitioner has come up with this Writ Petition seeking to quash the
impugned order dated 08.09.2017 passed by the 2nd Respondent herein, read
with the updated list dated 01.11.2017 and the list dated 17.12.2018
uploaded and hosted on the website of the 1st Respondent insofar as she is
concerned, and for a consequential direction to the Respondents herein to
permit her to get reappointed as Director in any Company, without any
hindrance.
2. According to the Petitioner, on 08.09.2017, the 2 nd Respondent
published 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 which, her name was also mentioned vide Director
Identification Number 02401737. In other words, the 2nd Respondent, by
including the name of the Petitioner in the list, has disqualified her as Director
under Section 164(2)(a) of the Companies Act, 2013, for non-filing of
financial statements or annual returns by the defaulting Companies on whose
board, the Petitioner is also a Director, due to which, she is prohibited from
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W.P.No.20517 of 2019
being appointed or reappointed as Director in any other Company for a period
of five years. Stating that the action so taken by the 2 nd Respondent is
arbitrary and unreasonable, the Petitioner has filed the present Writ Petition
for the aforesaid relief.
3. Today, when the matter was taken up for consideration, learned
counsel appearing for the parties jointly submitted that, the issue involved
herein is no longer res integra.
4. Learned counsel for the Petitioner drew the attention of this
Court to the order dated 03.08.2018 passed by this Court in W.P.No.25455
of 2017 etc. batch, in the case of Bhagavan Das Dhananjaya Das reported
in (2018) 6 MLJ 704, whereby, those Writ Petitions were allowed setting
aside the impugned orders 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 (Khushru
Dorab Madan v. Union of India), which were dismissed by an order dated
27.01.2020. Some of the aggrieved Petitioners challenged the said order of
the learned Single Judge before the Division Bench of this Court in
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W.P.No.20517 of 2019
W.A.No.569 of 2020, etc. batch (Meethelaveetil Kaitheri Muralidharan v.
Union of India, reported in (2020) 6 CTC 113. The Division Bench
elaborately dealt with the issue as to whether the Registrar of Companies is
entitled to deactivate the Director Identification Number (DIN) and allowed
those Writ Appeals on 09.10.2020. Relevant portion of the said judgment is
extracted hereunder:
"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 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
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W.P.No.20517 of 2019
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 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.20517 of 2019
5. Therefore, following the aforesaid decision, this Writ Petition is
allowed in the terms as indicated in the judgment rendered in the case of
Meethelaveetil Kaitheri Muralidharan (supra). No costs. Consequently,
connected W.M.P.Nos.19783 and 19786 of 2019 are closed.
30.11.2021
Index : Yes/No
Speaking Order : Yes/No
(aeb)
To:
1. The Secretary,
Union of India
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr. Rajendra Prasad Road,
New Delhi – 110 001.
2. The Registrar of Companies
Tamilnadu, Chennai,
Block No.6, B-Wing, 2nd Floor,
Shastri Bhawan,
26, Haddows Road,
Chennai 600 006.
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W.P.No.20517 of 2019
M.DHANDAPANI,J.
(aeb)
W.P.No.20517 of 2019
30.11.2021
https://www.mhc.tn.gov.in/judis
