2019 (12) TMI 1285 - HC - Indian Laws

Deactivation of petitioner's DIN - certain defaults allegedly made by the petitioner in respect of a particular company - HELD THAT - There shall be stay of operation of the publication dated November 1, 2017, pertaining to the de-activation of the present petitioner only, in respect of other companies than the company in respect of which the petitioner has allegedly defaulted, till disposal of the writ petition. Let the matter appear for hearing on January 14, 2020.

Summary

Issues: De-activation of Director Identification Number (DIN) by Registrar of Companies based on alleged defaults in a particular company, applicability of Rule 14 of Companies (Appointment and Qualification of Directors) Rules, 2014 to other companies, interim order for protection of petitioner's directorship.

Analysis:
The petitioner's grievance in this case revolves around the de-activation of their Director Identification Number (DIN) by the Registrar of Companies due to alleged defaults in a specific company. The petitioner contests this action, arguing that even if defaults occurred, the directorship should not be canceled for other companies where no complaints of default exist. This contention is supported by reference to an unreported order of the Court in a similar case, emphasizing that Rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 pertains solely to the defaulting company and not to all companies a director is associated with. The Court finds merit in this argument, recognizing the need to protect the petitioner's interests.

In light of the precedent set by the unreported order, the Court acknowledges the petitioner's prima facie case for an interim order safeguarding their directorship. Consequently, the Court orders a stay on the de-activation of the petitioner's DIN in relation to companies other than the one where the alleged default occurred until the writ petition is resolved. This interim measure aims to prevent any adverse impact on the petitioner's directorship in companies not linked to the defaulting entity.

Further procedural directions are issued, requiring the respondents to file their affidavit(s)-in-opposition within a fortnight and allowing the petitioner to respond by a specified date. The matter is scheduled for a hearing on a set date, coinciding with another related case for consolidated consideration. This comprehensive approach ensures a fair and balanced examination of the issues raised by the petitioner, maintaining procedural integrity and protecting the petitioner's rights during the legal proceedings.