Calcutta High Court (Appellete Side)
(Ad) vs Union Of India & Ors on 31 January, 2018
Author: Debangsu Basak
Bench: Debangsu Basak
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S/L No.52 W.P. 1227 (W) of 2018
31.01.2018
Ct-13 Laxmi Dhar Parida
(AD) vs.
Union of India & Ors.
Mr. Chayan Gupta, Adv.
Mr. A.K. Upadhyay. Adv.
... for the petitioner.
Mr. Koushik Chandra, Ld. A.S.G.
Mr. Shiv Chandra Prasad. Adv.
... for the respondents-Union of India.
A decision of the Registrar of Companies taken under the provisions of Section 164(2)(a) of the Companies Act, 2013 in naming the petitioners as persons who stand disqualified to act as Directors is under challenge in the present writ petition.
Learned Advocate for the petitioner relies upon an order dated January 15, 2018 passed in W.P.669(W) of 2018 (Chaitanya Rajaram Kalbag & anr. vs. Union of India & ors.) and submits that, the petitioner should be afforded a similar protection. The petitioner is similarly situated and circumstanced as that of Chaitanya Rajaram Kalbag & anr.(supra). He submits that, the decision of the Registrar of Companies to place the name of the petitioner in the list of the defaulting Directors is bad in law. The subsequent scheme taken out by the Central Government is not attracted as the petitioner as a Director cannot apply under the scheme. He refers to Clause 3 of the scheme in support of his contention.
The respondents are represented by the Additional Solicitor General.
It appears that the petitioner figures in the list of 2 Directors published by the Registrar of Companies under Section 164 of the Companies Act, 2013. This decision is under challenge in the present writ petition. Similar decision of the Registrar of Companies was challenged before the writ court by different persons. Initially, no interim order was passed. Being aggrieved by the order refusing to grant interim order an appeal was carried. The appeal court had passed an order in M.A.T. 1874 of 2017 with CAN 10479 of 2017 (Arun Seth vs. Union of India & Ors.). Following such order of the Division Bench, Chaitanya Rajaram Kalbag & anr. (supra) was passed. At the point of time when Arun Senth (supra) and Chaitanya Rajaram Kalbag & anr. (supra) were passed, the scheme of 2018 was not in vogue. The Central Government by a writing dated December 29, 2017 has promulgated the Condonation of Delay Scheme 2018. Clause 3 of the said scheme is as follows:
"3. Applicability:- This scheme is applicable to all defaulting companies (other than the companies which have been stuck off/whose names have been removed from the register of companies under section 248(5) of the Act). A defaulting company is permitted to file its overdue documents which were due for filing till 30.06.2017 in accordance with the provisions of this Scheme."
The petitioner was a Director of a defaulting company. A Director is appointed to the Board of a Company only if he enjoys the majority support of the shareholders. The number of shares held by the Director in much is immaterial. A Director owes 3 fiduciary duties to ensure that provisions of the law are complied with by the Company in its functioning. Compliance of formalities under the Companies Act, 1956 and Companies Act, 2013 are duties of a Director of a Company. The default is of the Company. The Board of Directors of the Company can avail of the Scheme. The Board of Directors will take steps to make the Company apply under the Scheme of 2018 if it wants to. No material is placed on record to suggest why the petitioner as a Director of such defaulting company will not take steps to have such defaulting company take the benefit of the Condonation of Delay Scheme, 2018 by making the defaulting company comply with the relevant provisions of the Companies Act, 2013 or the Companies Act, 1956 as the case may be. In the event, the contention of the petitioner that, as a natural person, it need not take any steps to have a defaulting company rectify the defects and avail of the benefits of the Scheme of 2018 is accepted, then, the entire edifice of Section 164 of the Companies Act, 2013 may stand affected.
In such circumstances, neither the prima facie case nor the balance of convenience and inconvenience is in favour of the petitioner for granting any interim order.
The issues raised in the writ petition are required to be adjudicated after affording an opportunity to the respondents to file affidavits.
Let the affidavit -in -opposition be filed within four weeks from date. Reply, thereto, if any, be filed within two weeks thereafter.
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The writ petition will be treated as ready for hearing immediately on completion of the time stipulated for filing of such affidavits.
Liberty is given to the parties to mention for early hearing.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.
(Debangsu Basak, J.)