Madhya Pradesh High Court
Mrs.Renu Garg vs Union Of India on 26 April, 2019
Bench: Sanjay Yadav, Vivek Agarwal
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WP.6368.2019
HIGH COURT OF MADHYA PRADESH
BENCH AT GWALIOR
DIVISION BENCH:
HON'BLE SHRI JUSTICE SANJAY YADAV
&
HON'BLE SHRI JUSTICE VIVEK AGARWAL
Writ Petition No. 6368 Of 2019
Mrs. Renu Garg and another
Vs.
Union of India and another
*********************
Shri B.K. Mishra & Shri U.K. Shrivas, learned counsel for the
petitioners.
Shri Vivek Khedkar, learned Assistant Solicitor General, for
respondents/Union of India.
*********************
Whether approved for reporting : Yes/No
ORDER
(26/04/2019) Per Justice Sanjay Yadav:
M/s Vihan Organic Farms, a private limited company registered under the Companies Act, 2013 (for brevity "2013 Act") said to be engaged in the business of retail estate promoters, developers and project management association including civil, mechanical and 2 WP.6368.2019 electrical and all other types of erection, commissioning projects, as well as consultants for execution of projects on turnkey basis having registered office at village Chowki via Bilokala Tahsil and District Shivpuri (M.P.), as did not file the return since 2013 led to striking off its name from the Register Of Members for not carrying on any business or operation for a period preceding two financial years, nor filing application within said period for obtaining the status of a dormant company under Section 455 of 2013 Act.
(2) The striking off the name of company from the ROM is under Section 248 of 2013 Act which provides that:
"248. Power of Registrar to remove name of company from register of companies.-
(1) Where the Registrar has reasonable cause to believe that--
(a) a company has failed to commence its business within one year of its incorporation;
(b) the subscribers to the memorandum have not paid the subscription which they had undertaken to pay within a period of one hundred and eighty days from the date of incorporation of a company and a declaration under sub-section (1) of section 11 to this effect has not been filed within one hundred and eighty days of its incorporation; or
(c) a company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455, he shall send a notice to the company and all the directors 3 WP.6368.2019 of the company, of his intention to remove the name of the company from the register of companies and requesting them to send their representations along with copies of the relevant documents, if any, within a period of thirty days from the date of the notice.
(2) Without prejudice to the provisions of sub-section (1), a company may, after extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent.
members in terms of paid-up share capital, file an application in the prescribed manner to the Registrar for removing the name of the company from the register of companies on all or any of the grounds specified in sub- section (1) and the Registrar shall, on receipt of such application, cause a public notice to be issued in the prescribed manner:
Provided that in the case of a company regulated under a special Act, approval of the regulatory body constituted or established under that Act shall also be obtained and enclosed with the application.
(3) Nothing in sub-section (2) shall apply to a company registered under section 8.
(4) A notice issued under sub-section (1) or sub-section (2) shall be published in the prescribed manner and also in the Official Gazette for the information of the general public.
(5) At the expiry of the time mentioned in the notice, the Registrar may, unless cause to the contrary is shown by the company, strike off its name from the register of companies, and shall publish notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved.
(6) The Registrar, before passing an order under sub-
section (5), shall satisfy himself that sufficient provision has been made for the realisation of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company within a reasonable time and, if necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company:
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WP.6368.2019 Provided that notwithstanding the undertakings referred to in this sub-section, the assets of the company shall be made available for the payment or discharge of all its liabilities and obligations even after the date of the order removing the name of the company from the register of companies.
(7) The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.
(8) Nothing in this section shall affect the power of the Tribunal to wind up a company the name of which has been struck off from the register of companies."
(3) The petitioners though in paragraph 5.14(iv) of the petition have stated that "the petitioners got to know that the name of the said company had not been struck off under the provisions of Section 248 of the Companies Act, 2013 by Registrar of Companies". This contention; however, is contrary to the facts borne out from Annexure P/3 and Annexure P/4 which record the status of the company in question as 'strike off'. Such an incorrect statement by the petitioners is not appreciated. Be that as it may. It is further evident from record that no appeal against the decision of Registrar of Companies of striking off the name of company from ROM is shown to have been filed. Section 252 of 2013 Act envisages that:
"252. Appeal to Tribunal.- (1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company 5 WP.6368.2019 from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies: Provided that before passing any order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned: Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on basis of incorrect information furnished by the company or its directors, which requires restoration in the register of companies, he may within a period of three years from the date of passing of the order dissolving the company under section 248, file an application before the Tribunal seeking restoration of name of such company. (2) A copy of the order passed by the Tribunal shall be filed by the company with the Registrar within thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporation. (3) If a company, or any member or creditor or workmen thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies."
Thus, the striking off the name of the company in question, seems to 6 WP.6368.2019 us, has been allowed to attain finality.
(4) Be that as it may. The striking off the name of company from the ROM has its consequential effect on the status of the Director (s) of such company. The consequences are referred in sub-section (2) of Section 164 of 2013 Act which envisages:
"164. Disqualifications for appointment of director.-
(1) XX XX XX (2) No person who is or has been a director of a company which--
(a) has not filed financial statements or annual returns for any continuous period of three financial years; or
(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so."
(5) The petitioners who claim themselves to be the directors of the company in question having suffered the consequences have filed this writ petition challenging declaration of petitioners as disqualified under Section 164(2)(a) of 2013 Act vide impugned notices dated 06.09.2017 and 12.09.2017 as unconstitutional being in violation of fundamental and statutory right. Article 19(1)(g) of the Constitution has been taken shelter that the action impedes their fundamental right 7 WP.6368.2019 to carry out profession of their choice. And as to statutory violation, it is urged that, the disqualification is without giving any opportunity of hearing; consequently, relief for revival of DIN is sought. (6) The notification S.O. 2938 (E) dated 06th September, 2017 published in the Gazette of India (Extraordinary) dated 06.09.2017 is in the following terms:
"In exercise of the powers conferred by section 458 of the Companies Act, 2013 (18 of 2013), the Central Government hereby delegates to the Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad, and Shillong, the powers and functions vested in it under sub-section (2) of section 66 of the said Act, subject to the condition that the Central Government may revoke such delegation of powers or may itself exercise the powers under the said sub-section, if in its opinion such a course of action is necessary in the public interest.
2. This notification shall come into force with effect from the date of its publication in the Official Gazettee."
(7) Evidently, the notification is in exercise of powers under Section 458 of 2013 Act by the Central Government delegating the powers and functions vested in it under sub-section (2) of Section 66 of 2013 Act.
(8) Sub-section (2) of Section 66 of 2013 Act empowers the Central Government to give representation to the Tribunal in response to the notice under sub-section (1) of Section 66 which provides for "(1) subject to confirmation by the Tribunal on an application by the company, a company limited by shares or limited by guarantee and 8 WP.6368.2019 having a share capital may, by a special resolution, reduce the share capital in any manner and in particular, may (a) extinguish or reduce the liability on any of its shares in respect of the share capital not paid-up; or (b) either with or without extinguishing or reducing liability on any of its shares,--(i) cancel any paid-up share capital which is lost or is unrepresented by available assets; or (ii) pay off any paid-up share capital which is in excess of the wants of the company, alter its memorandum by reducing the amount of its share capital and of its shares accordingly: Provided that no such reduction shall be made if the company is in arrears in the repayment of any deposits accepted by it, either before or after the commencement of this Act, or the interest payable thereon.
(9) It is this power and function conferred on the Central Government under Section 66(2) which has been delegated under sub- section (1) of Section 458 which states that the Central Government may, by notification, and subject to such conditions, limitations and restrictions as may be specified therein, delegate any of its powers or functions under this Act other than the power to make rules to such authority or officer as may be specified in the notification: Provided that the powers to enforce the provisions contained in section 194 and section 195 relating to forward dealing and insider trading shall be delegated to Securities and Exchange Board for listed companies or the companies which intend to get their securities listed and in such 9 WP.6368.2019 case, any officer authorised by the Securities and Exchange Board shall have the power to file a complaint in the court of competent jurisdiction. The act of delegation of power being in consonance with Section 458, we are not impressed with the bare submissions made by the petitioners.
(10) As regard to challenge to the press release of Ministry of Corporate Affairs dated 12.09.2017 is concerned, as evident therefrom, it is an article No.270 of series of editorials written by the author on corporate laws. The articles are expression of views/opinion by an individual and are not legislative Acts/enactments as could be tested on the anvil of the stipulations contained in the Constitution or the Statute. Therefore, the question of declaring press release of an article does not arise and the writ sought therefor is misconceived.
(11) The relief as to declaring clause (a) of sub-section (2) of Section 164 of 2013 Act. The clause as stated supra mandates that no person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so. Evidently, the disqualification for being re-appointed or for appointment in another company as directed is co-related with the 10 WP.6368.2019 permanence of the company in which an incumbent is or has been a director. The director is jointly responsible for the failure on the part of the company to file financial statements or annual returns for any continuous period of three years. Contention that since Section 164(2)
(a) was got notified w.e.f. 01.04.2014 therefore is not effective from retrospective date is misconceived. Careful reading of the stipulation in Section 164(2) reveals a prospective disqualification is an outcome of anterior non-performance by the company of whom an incumbent is a director, this not sufficient to say that the provision being not retrospective the antecedent cannot be taken into consideration. Dwelling upon the expanse of the expression "has been" which appears in Section 57 of the Bombay Police Act 1951, it is held by their Lordships in "The State of Bombay (now Maharashtra) Vs. Vishnu Ramchandra [AIR 1961 SC 307]":
"13. It remains only to consider if the language of the section bars an action based on past actions before the Act was passed. The verb "has been" is in the present perfect tense, and may mean either "shall have been" or "shall be".
Looking, however, to the scheme of the enactment as a whole and particularly the other portions of it, it is manifest that the former meaning is intended. The verb "has been" describes past actions, and, to borrow the language of Fry, L.J., in 1884-12 QBD 334 "is used to express a hypothesis, without regard to time." "
(12) The inhibition against retrospective construction is not a rigid rule and must vary secundum materiam observes learned Author in :
Principle of Statutory Interpretation [Ch.6 Syn.2(a)(ii)] after relying 11 WP.6368.2019 on the decision in Barber V. Pigden, (1937) 1 AIIER 126; Carson Vs. Carson (1964) 1 AIIER 681 p. 687.
(13) In this context, reference can also be had of the decision in "Vijay Vs. State of Maharashtra and others [(2006) 6 SCC 289]"
wherein it is held:
"10. It may be true that the amendment came into effect on 8- 8-2003. The legislative policy emanating from the aforesaid provision, in our opinion, is absolutely clear and unambiguous. By introducing the said provision, the legislature, inter alia, intended that for the purpose of bringing grassroot democracy, a person should not be permitted to hold two posts created in terms of the Constitution (73rd Amendment) Act. It is true that ordinarily a statute is construed to have prospective effect, but the same rule does not apply to a disqualifying provision. The inhibition against retrospective construction is not a rigid rule. It does not apply to a curative or a clarificatory statute. If from a perusal of the statute, intendment of the legislature is clear, the court will give effect thereto. For the said purpose, the general scope of the statute is relevant. Every law that takes away a right vested under the existing law is retrospective in nature. [See Govt. of India v. Indian Tobacco Association, (2005) 7 SCC 396.] "The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events. The reason why penal statutes are so construed was stated by Erle, C.J., in Midland Rly. Co. v. Pye, (1861) 10 CBNS 179 (CB NS at p.191) in the following words:
'Those whose duty it is to administer the law very properly guard against giving to an Act of Parliament a retrospective operation, unless the intention of the legislature that it should be so 12 WP.6368.2019 construed is expressed in clear, plain and unambiguous language; because it manifestly shocks one's sense of justice that an act, legal at the time of doing it, should be made unlawful by some new enactment.' This principle has now been recognised by our Constitution and established as a constitutional restriction on legislative power.'
12. The appellant was elected in terms of the provisions of a statute. The right to be elected was created by a statute and, thus, can be taken away by a statute. It is now well settled that when a literal reading of the provision giving retrospective effect does not produce absurdity or anomaly, the same would not be construed to be only prospective. The negation is not a rigid rule and varies with the intention and purport of the legislature, but to apply it in such a case is a doctrine of fairness. When a law is enacted for the benefit of the community as a whole, even in the absence of a provision, the statute may be held to be retrospective in nature. The appellant does not and cannot question the competence of the legislature in this behalf."
(Emphasis Supplied) (14) In "Sajjan Singh Vs. State of Punjab [AIR 1964 SC 464]", it is held:
"13. A statute cannot be said to be retrospective "because a part of the requisites for its actions is drawn from a time antecedent to its passing" (Maxwell on Interpretation of Statutes, 11th Edition, p. 211; see also State of Bombay v. Vishnu Ramchandra, AIR 1961 SC 307. Notice must be taken in this connection of a suggestion made by the learned Counsel that in effect sub-sec. (3) of S. 5 creates a new offence in the discharge of official duty, different from what is defined in the four clauses of S. 5(l). It is said that the act of being in possession of pecuniary resources or property disproportionate to known sources of income, if it cannot be satisfactorily accounted for, is said by this sub-section to constitute the offence of criminal misconduct in addition to those other acts mentioned in cls. a, b, c and d of S. 5(l) which constitute the offence of criminal misconduct. On the basis of this contention the further argument is built that if 13 WP.6368.2019 the pecuniary resources or property acquired before the date of the Act is taken into consideration under sub-sec. (3) what is in fact being done is that a person is being convicted for the acquisition of pecuniary resources or property, though it was not in violation of a law in force at the time of the commission of such act of acquisition. If this argument were correct a conviction of a person under the presumption raised under the S. 5(3) in respect of pecuniary resources or property acquired before the Prevention of Corruption Act would be a breach of fundamental rights under Art. 20(l) of the Constitution and so it would be proper for the Court to construe S. 5(3) in a way so as not to include possession of pecuniary resources or property acquired before the Act for the purpose of that sub-section. The basis of the argument that S. 5(3) creates a new kind of offence of criminal misconduct by a public servant in the discharge of his official duty is however unsound. The sub-section does nothing of the kind. It merely prescribes a rule of evidence for the purpose of proving the offence of criminal misconduct as defined in S. 5(1) for which an accused person is already under trial. It was so held by this Court in C.D.S. Swamy v. The State, 1960-1 SCR 461 : (AIR 1960 SC 7) and again in Surajpal Singh v. State of U.P., AIR 1961 SC 583. It is only when a trial has commenced for criminal misconduct by doing one or more of the acts mentioned in cls. (a), (b), (c) &
(d) of S. 5(l) that sub-s. (3) can come into operation. When there is such a trial, which necessarily must be in respect of acts committed after the Prevention of Corruption Act came into force, sub-sec. (3) places in the hands of the prosecution a new mode of proving an offence with which an accused has already been charged."
(Emphasis Supplied) (15) In view whereof, the contention that Section 164(2)(a) of 2013 Act is unconstitutional does not appeal to us. Consequently, challenge is negatived.
(16) Petitioners who happen to be the directors of the company which has since been deregistered have, thus, incurred disqualification to be continued as directors of the said company. Clause (a) of sub- 14
WP.6368.2019 section (2) of Section 164 of 2013 Act, at the cost of repetition, stipulates that no person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years shall be eligible to be re- appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so. Since we have upheld the validity of Section 164(2)(a) of 2013 Act, we do not find any substance in the claim put forth by the petitioners that no opportunity of hearing was afforded before disqualifying them to continue as Directors and to be reappointed as Directors in the company.
(17) Petition being devoid of substance deserves to be and is hereby dismssed. No costs.
(Sanjay Yadav) (Vivek Agarwal)
Judge Judge
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PAWAN
DHARKAR
2019.05.01
11:59:14
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