Madras High Court
Ponnuru Madhavi Gupta vs Union Of India on 5 June, 2023
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.06.2023
CORAM
THE HON'BLE MR.JUSTICE M.DHANDAPANI
W.P.Nos.11678 & 11682 of 2020
and
WMP.Nos.14330, 14331, 14337 & 14338 of 2020
Ponnuru Madhavi Gupta ... Petitioner in W.P.No.11678 of 2020
Ponnuru Subash Gupta ...Petitioner in W.P.No.11682 of 2020
-Vs-
1. Union of India
Represented by its Secretary,
Ministry of Corporate Affairs,
Shastri Bhawan,
Dr.Rajendra Prasad Road,
New Delhi 110 001.
2. Registrar of Companies,
Tamilnadu, Chennai,
Block No. 6, B. wing,
2nd Floor, Shastri Bhawan,
26 Haddows Road,
Chennai 34.
... Respondents in both the petitions
Common Prayer: Petition filed under Article 226 of the Constitution of India,
for issuance of Writs of Certiorarified Mandamus Calling for the records of the
2nd respondent relating to the impugned order dated 01.11.2017 uploaded in the
https://www.mhc.tn.gov.in/judis
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 Respondnets herein to permit petitioner to get reappointed as Direct of
any company or appointed as Director in any company without any hindrance.
For petitioners : Mr.S.Balakrishnan (for both the petitions)
For Respondents : Mr.Sathiyan RR1 and 2 (for both the petitions)
COMMON ORDER
Since the issues involved in both the writ petitions are one and the
same, the same are disposed by way of this common order.
2. The prayer made in these writ petitions is to issue a writ of
certiorarified mandamus Calling for the records of the 2nd respondent relating to
the impugned order dated 01.11.2017 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 Respondnets
herein to permit petitioner to get reappointed as Direct of any company or
appointed as Director in any company without any hindrance.
3. According to the petitioners, the second respondent released a list of
disqualified directors, who have been disqualified under Section 164(2)(a) of the
https://www.mhc.tn.gov.in/judis
Companies Act, 2013, as directors in which, their names were also mentioned.
(DIN Nos: 1484936 and 5119678). In other words, the second respondent, by
including the name of the petitioners, has disqualified them as Directors 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 petitioners are also the Directors, due
to which, they are 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 petitioners have filed these
writ petitions with the aforesaid prayer.
4.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 Companies Act, which came into effect
https://www.mhc.tn.gov.in/judis
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 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
https://www.mhc.tn.gov.in/judis
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 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
https://www.mhc.tn.gov.in/judis
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.“
5.Therefore, following the aforesaid decision, these writ petitions stand
allowed, in the terms as indicated in the judgment in Meethelaveetil Kaitheri
Muralidharan-s case. No costs. Consequently, connected miscellaneous petitions
are closed.
05.06.2023
rli
https://www.mhc.tn.gov.in/judis
To
1. The District Collector
Coimbatore District,
Coimbatore.
2. The Corporation of Coimbatore,
Rep.by its Commissioner,
Coimbatore.
https://www.mhc.tn.gov.in/judis
M.DHANDAPANI, J.
rli
W.P.Nos.11678 & 11682 of 2020
05.06.2023
https://www.mhc.tn.gov.in/judis
