Madras High Court
Seeyal Abdul Kharim vs Union Of India on 9 February, 2021
Author: Abdul Quddhose
Bench: Abdul Quddhose
W.P.No.18934 of 2018
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 09.02.2021
CORAM
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
W.P.No.18934 of 2018
&
W.M.P.Nos.22323 & 22324 of 2018
Seeyal Abdul Kharim ... Petitioner
Vs.
1.Union of India,
Represented by its
Ministry of Corporate Affairs,
Shastri Bhavan, Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2.The Registrar of Companies,
Block No.6, B-Wing, 2nd floor,
Shastri Bhawan, 26 Haddows Road,
Chennai – 600 006. ... Respondents
PRAYER: Petition filed under Article 226 of the Constitution of India praying
to issue a writ of certiorarified mandamus calling for the records of the second
respondent relating to the impugned order as on 01.11.2017 uploaded in the
website of the 1st respondent in so far as the petitioner is concerned with
Director Identification Number 00580036 under section 164(2)(a) of the
Companies Act, and quash the same as illegal, arbitrary and devoid of merits
https://www.mhc.tn.gov.in/judis/
1/6
W.P.No.18934 of 2018
and consequently direct the respondents herein to permit the petitioner to get
reappointed as Director of any company or appointed as Director in any
company without any hindrance.
For Petitioner :Ms.P.Stella Mary
For Respondents :Mr.B.Ramaratnam
Central Government Standing Counsel
COMMON ORDER
This writ petition has been filed challenging the disqualification of the petitioner as Director under Section 164(2)(a) of the Companies Act, 2013 on the ground that he has not submitted financial statements for three consecutive financial years. The petitioner has challenged the impugned order dated 01.11.2017 passed by the second respondent on the ground that without affording opportunity to the petitioner, the said order has been passed.
2.Heard Ms.P.Stella Mary, learned counsel for the petitioner and Mr.B.Ramaratnam, learned Central Government Standing Counsel for the respondents.
3. It is contended by the learned counsel for the petitioner that the impugned order dated 01.11.2017 has been passed in violation of the provisions of the Companies Act, 2013 and therefore, the said order is bad in law. https://www.mhc.tn.gov.in/judis/ 2/6 W.P.No.18934 of 2018
4. The issue raised in this writ petition was considered by the Hon'ble Division Bench of this Court by its order dated 09.10.2020 in W.A. No.569 & Ors. of 2020 in the case of Meetgelaveetil Kaitheri Muralidharan Versus Union of India & Another and in paragraphs 36 and 38, it has been held as follows :
36. 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 https://www.mhc.tn.gov.in/judis/ 3/6 W.P.No.18934 of 2018 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.
38. 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. The case on hand stands on the same footing. In the instant case also, no notice was given to the petitioner before disqualifying him as Director of M/s.Makwuds India Private Limited.
7. For the foregoing reasons, the ratio laid down by the Hon'ble Division Bench of this Court, dated 09.10.2020 in W.A. No.569 & batch applies to the facts of the instant case also.
8. Accordingly, the impugned order dated 01.11.2017 passed by the second respondent disqualifying the petitioner as Director of M/s.Makwuds India Private Limited under Section 164(2) (a) of the Companies Act, 2013 is hereby set aside in the terms indicated in the aforesaid judgement and these writ https://www.mhc.tn.gov.in/judis/ 4/6 W.P.No.18934 of 2018 petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed.
09.02.2021
nl
Index : Yes / No
Internet : Yes / No
Speaking/Non-speaking orders
To
1.The Secretary,
Ministry of Corporate Affairs,
Shastri Bhavan, Dr.Rajendra Prasad Road,
New Delhi – 110 001.
2.The Registrar of Companies,
Block No.6, B-Wing, 2nd floor,
Shastri Bhawan, 26 Haddows Road,
Chennai – 600 006.
https://www.mhc.tn.gov.in/judis/
5/6
W.P.No.18934 of 2018
ABDUL QUDDHOSE, J.
nl
W.P.No.18934 of 2018
09.02.2021
https://www.mhc.tn.gov.in/judis/
6/6