Mr.Suchindran Baskar Narayan v. Union Of India

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 29.01.2021

CORAM

THE HONOURABLE MR.JUSTICE ABDUL QUDDHOSE W.P.NO.1584 of 2021 and WMP.Nos.1794 and 1795 of 2020 Suchindran Baskar Narayan .... Petitioner Vs.

1.Union of India, Rep.by its Secretary, Ministry of Corporate Affairs, Shastri Bhawan, Dr.Rajendra Pradad Road, New Delhi - 110 001.

2.Registrar of Companies, Puducherry No.7, Second Floor, Karuvadikuppam Main Road, Senthamarai Nagar, Muthialpet, Puducherry -605003. .... Respondents Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorarified Mandamus calling for the records of the 2nd respondent relating to the impugned order dated 14.12.2018, uploaded and hosted on the website of the 1st respondent in so far as the Petitioner herein is concerned, Quash the same and consequently, direct the respondents herein to reactivate the DIN 6380164 of the petitioner. For Petitioner : Mr.R.Palaniandavan For Respondents : Mr.Madana Gopal Rao, CGSC for R1 Mr.A.V.Ramalingam, Additional Government Pleader (Pondy)for R2

ORDER

Heard Mr.R.Palaniandavan, learned counsel for the petitioner, Mr.Madana Gopal Rao, learned CGSC accepts notice for the 1st respondent and Mr.A.V.Ramalingam, learned Additional Government Pleader (Pondicherry) accepts notice for the second respondent.

2. By consent of both the parties, this writ petition is taken up for final disposal.

3. 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 14.12.2018 passed by the second respondent on the ground that without affording opportunity to the petitioner, the said order has been passed.

4. It is also contended by the learned counsel for the petitioner that the impugned order dated 14.12.2018 has been passed in violation of the provisions of the Companies Act, 2013 and therefore the said order is bad in law.

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 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.

6. 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.Humata Foundation.

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 cases also.

8. Accordingly, the impugned order dated 14.12.2018 passed by the second respondent disqualifying the petitioner as Director of the subject Company under Section 164(2) of the Companies Act, 2013 is hereby set aside in the terms indicated in the aforesaid judgment and this writ petition is allowed. Since, the writ petition is allowed, the petitioner is entitled to seek benefit under CFSS 2020 scheme, which expired on 31.12.2020.

However, it is for the respondents to consider the same on merits and in accordance with law. No costs. Consequently, connected Miscellaneous Petitions are closed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar vsi2 To 1.The Secretary, Union of India, Ministry of Corporate Affairs, Shastri Bhawan, Dr.Rajendra Pradad Road, New Delhi - 110 001.

2.Registrar of Companies, Puducherry No.7, Second Floor, Karuvadikuppam Main Road, Senthamarai Nagar, Muthialpet, Puducherry - 605 003.

+1cc to Mr.R. PALANIANDAVAN, Advocate, S.R.No.4510 PVS(CO) SM/19/02/2021 W.P. No.1584 of 2021