Calcutta High Court (Appellete Side)
Chetan Chokhani vs Union Of India And Others on 22 November, 2019
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S/L. 22.
November 22, 2019.
MNS.
W. P. No. 21504(W) of 2019
Chetan Chokhani
Vs.
Union of India and others
Mr. Saptarshi Banerjee,
Mr. A. K. Upadhyay,
Mr. Somesh Ghosh
... for the petitioner.
Mr. Subhankar Chakraborty,
Mr. Saptarshi Bhattacharjee
...for the Registrar of Companies.
Affidavit-of-service filed in Court today be taken on record.
The grievance of the petitioner is that the petitioner's Director Identification Number
(DIN) was deactivated by the respondent no. 2, on the ground of certain alleged defaults
made by the petitioner in respect of a particular company.
It is submitted by learned counsel for the petitioner that such DIN pertains to the directorship of the petitioner in several companies even other than the company-in- question regarding which the allegations were raised by the respondent no. 2 and as such, the punishment meted out was disproportionate with the allegations against the petitioner.
Learned counsel for the respondent no. 2 relies on Section 164(2) of the Companies Act, 2013 and argues that no person, who is or has been a director of a company, which has committed the defaults as mentioned therein, shall be eligible to be 2 re-appointed as a director of that company or appointed in other company for a period of five years.
Learned counsel further relies on Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 for the purpose of arguing that certain modalities have to be undertaken by the director; such as informing to the company concerned about his disqualification in Form DIR-8 and other formalities, as prescribed, in the said Rule.
It is submitted that such modalities were not complied with by the petitioner in due time.
As such, it is argued that the writ petition ought to be dismissed. Learned counsel for the respondent no. 2 further relies on an order dated August 6, 2018 passed by the Supreme Court in SLP Nos. 18693-18703 of 2018 granting stay of operation of an allegedly similar order of the Bombay High Court, which is now sought by the present petitioner.
As such, it is argued on behalf of the respondent no. 2 that, in view of such stay order, and the matter being sub judice in the Supreme Court, this Court ought not to grant any stay order in a similar matter.
In reply, learned counsel appearing for the petitioner cites an order of the Telangana High Court, wherein apparently it was recorded that the Assistant Solicitor General of India appeared and conceded that, pursuant to the interim orders passed by the Telangana High Court, the DIN of the petitioners be restored and interim orders of the said Court are complied with.
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It is argued by the petitioner that several High Courts have been passing similar orders staying the action taken by the respective Registrars of Companies and as such, a similar order ought to be passed in the present case as well.
A perusal of Section 164(2) of the 2013 Act, makes it abundantly clear that the legislature intentionally made a distinction in the language of the first part of the said sub- section and the second part thereof; whereas sub-section (2) of Section 164 starts with the expression "no one person, who is or has been a director of a company", which has committed defaults specific therein, it culminates with the expression "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".
As such, the said section makes a distinction between the directorship of the concerned person in respect of the company allegedly at fault and other companies of which he is a director. In respect of the former, the eligibility of re-appointment of a director of the person has been curtailed by the sub-section-in-question; whereas, as regards other companies, only fresh appointments, as expressed by the term "appointed", as opposed to "re-appointed", has been used.
Hence, for the alleged default committed, if at all, by the petitioner in respect of a particular company, the directorship of the said person, already existing in companies other than the defaulting company, cannot be restrained or curbed in any manner as per Section 164(2) of the 2013 Act.
Even a perusal of Section 167 of the 2013 Act and the proviso to sub-section (1)(a) thereof shows that the said proviso came into force after the disqualification of the present petitioner by the respondents.
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As such, the said proviso is not applicable to the present case. So far as the applicability of Rule 14 of the 2014 Rules is concerned, the same pertains, on the face of it, to the company at default and not to other companies and as such, it cannot be mandatory for the director-in-question to comply with the provisions thereof in respect of all other companies of which she/he is a director but which are not at fault, but in respect of the defaulting company only.
In such view of the matter, the petitioner has prima facie satisfied this Court that the respondents have acted de hors the law and natural justice in abrogating the DIN of the petitioner in respect of other companies than the company allegedly at default.
As such, there shall be stay of operation of the de-activation of the DIN of the petitioner in respect of other companies, than the company in respect of which the allegation of default has been made, till disposal of the writ petition.
The respondents are directed to file their affidavit(s)-in-opposition within three weeks from date. Reply, if any, to be filed by the petitioner within one week after reopening of the court after the oncoming Christmas vacation.
The matter will appear for hearing on January 14, 2020.
(Sabyasachi Bhattacharyya, J.) 5