The Hon'ble Court allowed the petitioner's writ petition, finding that disqualification under Section 164 does not affect a director's qualification for other companies. The judgment relies on a prior bench decision allowing a batch of similar writ petitions.
Petition allowed; petitioner permitted to avail of the Companies Fresh Start Scheme.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 16.12.2020
CORAM
THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA
W.P.No.14210 of 2020 and W.M.P.Nos.17681 and 17682 of 2020
B.Ramachandran ..Petitioner
Vs.
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 second respondent relating to the impugned order dated 13.12.2019 uploaded in the website of the first respondent insofar as the petitioner herein is concerned, quash the same as illegal, arbitrary and devoid of merit and consequently, direct the respondents herein to permit the petitioner to get reappointed as director in the Company or appointed as Director in any other Company without any hindrance.
For Petitioners: Mr.B.Aparna
For Respondents: Mr.K.Subburanga Bharathi Central Government Standing Counsel O R D E R
Challenge is laid to the order of the second respondent dated 13.12.2019, insofar as the petitioner is concerned, and consequential direction is sought for to direct the respondents to permit the petitioner to get reappointed as Director in the Company or appointed in any other company without any hindrance.
"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 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. *****
31.12.2020. No costs. Consequently, the connected Miscellaneous Petitions are closed.
Sd/-
Assistant Registrar //True Copy//
Sub Assistant Registrar
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 2 nd Floor,,
Shastri Bhawan 26,
Haddows Road,
Chennai – 600 006.
+1cc to Mr.B.Aparna, Advocate, S.R.No.41388
W.P.No.14210 of 2020 and
W.M.P.Nos.17681 and 17682 of 2020
SR-II(CO)
CS(29/12/2020)
3 issues framed by the court
Whether the discharge of a company director under Section 164 (2) (a) of the Companies Act 2013 constitutes disqualification as a director.
Whether the Registrar of Companies has the authority to deactivate a Director Identification Number (DIN) upon disqualification under Section 164.
Whether the petitioner is eligible for recall as a director following the licensing decision of the previous appellate order.
Colour shows how this judgement treated each authority
Bhagavan Das Dhananjaya Das V. Union of IndiaReferred¶17
Bhagavan Das Dhananjaya Das V. Union of India, (2018) 6 MLJ 704
Meethelaveetil Kaitheri Muralidharan V. Union of IndiaDistinguished¶18
Meethelaveetil Kaitheri Muralidharan V. Union of India, 2020 SCC OnLine Mad 1958 · Who else cites this
5 provisions across 3 enactments
B. Ramachandran
Union of India
The Registrar of Companies, Tamilnadu
Pushpa Sathyanarayana
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
