Madras High Court
Arumugam Prammarajan vs Union Of India on 4 February, 2021
Author: Abdul Quddhose
Bench: Abdul Quddhose
W.P.Nos.2331 and 2334 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.02.2021
CORAM:
THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE
W.P.Nos.2331 and 2334 of 2021
and W.M.P.Nos.2633, 2635, 2437 & 2438 of 2021
Arumugam Prammarajan ... Petitioner in W.P.No.2331 of 2021
Soosaimanickam Ignasi ... Petitioner in W.P.No.2334 of 2021
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,
Block No.6, B – Wing, 2nd Floor,
Shastri Bhawan 26, Haddows Road,
Chennai – 600 006. ... Respondents in both WPs
COMMON PRAYER: Writ Petitions filed under Article 226 of the
Constitution of India, for issuance of a Writ of Certiorarified Mandamus to call
for the records of the 2nd respondent relating to the impugned order dated
18.12.2018 uploaded in the website of the 1st respondent in so far as the
petitioners herein are concerned, quash the same as illegal, arbitrary and devoid
of merit and consequentially direct the respondents herein to permit petitioners
to get re-appointed as Directors of the companies or appointed as Directors in
any companies without any hindrance.
For Petitioners in both WPs : Mr.Inbaraju
For Respondents in both WPs : Mr.Infant Dinesh
Addl. Central Government Standing Counsel
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W.P.Nos.2331 and 2334 of 2021
COMMON ORDER
These writ petitions have been filed challenging the disqualification of the petitioners as Directors under Section 164(2)(a) of the Companies Act, 2013 on the ground that they have not submitted their financial statements or annual returns for three financial years consecutively. The petitioners have challenged the common impugned order dated 18.12.2018 passed by the second respondent on the ground that without affording opportunity to the petitioners, the said order has been passed.
2.Mr.Infant Dinesh, learned Additional Central Government Standing Counsel accepts notice on behalf of the respondents. By consent of both parties, these Writ Petitions are taken up for final disposal at the admission stage itself.
3.Heard Mr.Inbaraju, learned counsel for the petitioners and Mr.Infant Dinesh, learned Additional Central Government Standing Counsel for the respondents.
4.It is also contended by the learned counsel for the petitioners that the common impugned order 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.Nos.2331 and 2334 of 2021
5.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 https://www.mhc.tn.gov.in/judis/ 3/6 W.P.Nos.2331 and 2334 of 2021 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.
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.
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6.The case on hand stands on the same footing. In the instant case, also, no notice was given to the petitioners before disqualifying them as Directors of M/s.Enfros India Solutions 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 common impugned order dated 18.12.2018 passed by the second respondent disqualifying the petitioners as Directors of M/s.Enfros India Solutions Private Limited under Section 164(2)(a) of the Companies Act, 2013 is hereby set aside in the terms indicated in the aforesaid judgment and these writ petitions are allowed. No costs. Consequently, connected miscellaneous petitions are closed.
04.02.2021
Index : Yes / No
Internet : Yes / No
Speaking/Non-speaking order
vsi-2/pam
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W.P.Nos.2331 and 2334 of 2021
ABDUL QUDDHOSE, J.
vsi-2/pam
To
1.The Secretary,
Union of India,
Ministry of Corporate Affairs,
Shastri Bhawan, Dr.Rajendra Prasad Road, New Delhi – 110 001.
2.Registrar of Companies, Block No.6, B – Wing, 2nd Floor, Shastri Bhawan 26, Haddows Road, Chennai – 600 006.
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