2020 (1) TMI 1323 - HC - Companies Law

Cancellation of petitioner's DIN - Disqualification as Director in respect of all companies, of which he was a director, due to default apparently committed by one of such companies only - HELD THAT - No ratio of law pertaining to the question-in-dispute in the present case was decided at all, either by the Division Bench or by the learned single judge, against whose order such appeal was preferred before the Division Bench. As such, the judgment cited on behalf of the respondent-authorities has no relevance to the instant case. Accordingly, the respondent-authorities acted palpably de hors the law in disqualifying the present petitioner from his status pertaining to the petitioner's DIN in respect of all companies where he was a director and not merely the non-compliant company. Petition allowed.

Summary

Issues:
Petitioner's Director Identification Number (DIN) cancellation due to default by one company affecting all companies where the petitioner was a director.

Analysis:
The petitioner's grievance was that their DIN was canceled due to default by one company, affecting all companies where they were a director. The petitioner argued that rule 14 of the Companies (Appointment and Qualification of Directors) Rules, 2014 pertains only to the defaulting company and not to other companies where the director operates. The petitioner relied on two unreported judgments supporting this proposition. However, the respondent authorities cited a Division Bench judgment stating that disqualification in respect of the DIN operates not only in the erring company but all other companies where the person is a director as well.

The Division Bench held that interference in an intra-court mandamus appeal is not warranted unless palpable infirmities or perversity are noticed in the impugned order. The judgment cited by the respondent authorities was found irrelevant to the present case, while the co-ordinate Bench judgments cited by the petitioner were considered binding. The court concluded that the respondent authorities acted outside the law by disqualifying the petitioner from all companies where they were a director, not just the non-compliant company. Consequently, the court allowed the petition, setting aside the decision to disqualify the petitioner's DIN status in all companies except the non-compliant one.

In the final ruling, the court allowed the petition and set aside the decision disqualifying the petitioner's DIN status in all companies where they were a director, except the non-compliant company. No costs were awarded, and urgent certified copies of the order were to be made available to the parties upon compliance with necessary formalities.