Kottaram Viswanathan Ramesh v. Union Of India
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.11.2020
CORAM
THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA W.P.No.15508 of 2020 and W.M.P.Nos.19357 and 19359 of 2020 Kottaram Viswanathan Ramesh ..Petitioner Vs.
1. The Union of India Rep. by its Secretary, Ministry of Corporate Affairs, Shastri Bhavan, Dr.Rajendra Prasad Road, New Delhi-110 001.
2. The Registrar of Companies, Tamilnadu, Chennai, Block No.6, B wing, 2nd place, Shastri Bhawan, No.26, Haddows Road, Chennai-600 034.
..Respondents * * * Prayer : Writ Petitions filed under Article 226 of the Constitution of India praying for a Writ of Certiorarified Mandamus calling for the records of the second respondent relating to the impugned order dated 13.12.2019 uploaded in the website of the first respondent insofar as the petitioner herein is concerned, quash the same as illegal, arbitrary and devoid of merit and consequentially, direct the respondents herein to permit the petitioner to get reappointed as Director of any Company or appointed as Director in any company without any hindrance.
* * * For Petitioner :
Mr.S.Sathish For Respondents :
Mr.L.J.Venkatesh CGSC
O R D E R
Challenge is laid to the order of the second respondent dated 13.12.2019, uploaded in the website of the first respondent insofar as the petitioner herein is concerned, and a consequential direction is sought for to direct the respondents
to permit the petitioner to get reappointed as Director of any Company or appointed as Director in any company without any hindrance.
2. Heard the learned counsel on either side and perused the materials placed before this Court.
3. The issue involved in this writ petition is no more a res integra. It is to be stated that the Registrar of Companies (RoC) has been disqualifying the Directors under Section 164(2) (a) of the Companies Act, 2013 by order dated 08.09.2017. Another list was published in the website of the first respondent on 01.11.2017 disqualifying the Directors. Yet another list of Directors were disqualified on 17.12.2018 by the RoC. Subsequently, the impugned list was uploaded in the website of the first respondent on 13.12.2019 disqualifying the Directors.
4. Several of the Directors so disqualified under the above mentioned notifications dated 08.09.2017 and 01.11.2017 challenged the same before this Court and this Court by order dated 03.08.2018 in Bhagavan Das Dhananjaya Das V. Union of India, (2018) 6 MLJ 704, allowed the batch of writ petitions and set aside the aforesaid notifications/orders.
5. The notification dated 17.12.2018, which was uploaded in the website by the first respondent on 18.12.2018 was challenged on the strength of the judgment of this Court in Bhagavan Das case (cited supra). However, they were dismissed by this Court, and such orders were passed on 27.01.2020 and 10.02.2020, etc. The said orders were put to challenge in a batch of writ appeals, which were dealt with by the Hon'ble First Bench of this Court in W.A.No.569 of 2020, etc. batch (Meethelaveetil Kaitheri Muralidharan V. Union of India, 2020 SCC OnLine Mad 1958). The Hon'ble Division Bench in the said order dealt with the powers of the RoC in the light of Sections 164 and 167(1) of the Companies Act, 2013 and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 and also has elaborately considered as to whether the RoC is entitled to deactivate the Director Identification Number (DIN) by referring to the Rules 19, 10 and 11 of the said 2014 Rules and held as follows :
"41. 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.
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43. 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 learned counsel for the petitioner also submitted that the petitioner was a Director of company called Macs Magik Doors and Windows Private Limited, which was struck off under the provisions of Section 248 of the Companies Act, 2013,
besides two other Companies, one of which is also under the process of striking off. His disqualifocation was on the ground that the said company, which was struck off by the ROC, did not comply with the statutory requirements. The learned counsel for the petitioner contended that the Gujarat High Court in Gaurang Balvantlal Shah V. Union of India, (2019) 214 Com Cas 199, held that the DIN could not be cancelled or deactivated merely because one of the companies, in which such a person was a Director had been struck off from the Registrar of Companies under Section 248 of the Companies Act, 2013. The First Division Bench of this Court relied upon the said judgment in Meethelaveetil Kaitheri Muralidharan's case (supra) and concurred with the said view. The learned counsel for the petitioner also requested the Court to follow the above judgement of the First Bench of this Court and pass orders in the same line.
7. In view of the aforesaid position, following the decision of the Hon'ble First Bench of this Court in Meethelaveetil Kaitheri Muralidharan's case (supra), concurring with the view taken by the Gujarat High Court in Gaurang Balvantlal Shah (supra), this writ petition is allowed, in the terms indicated in the aforesaid judgment in Meethelaveetil Kaitheri Muralidharan's case (supra). No costs. Consequently, connected miscellaneous petitions are closed.
Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar To
1. The Secretary, Ministry of Corporate Affairs, Union of India Shastri Bhavan, Dr.Rajendra Prasad Road, New Delhi-110 001.
2. The Registrar of Companies, Tamilnadu, Chennai, Block No.6, B wing, 2nd place, Shastri Bhawan, No.26, Haddows Road, Chennai-600 034.
+1cc to Mr.S.Satish, Advocate, S.R.No.35378 W.P.No.15508 of 2020 RLD(CO) RV(07/12/2020)