2018 (7) TMI 2195 - HC - Companies Law

Disqualification of Directors - disqualification for the reason that there was default in submitting returns which were statutorily required to be filed with the Registrar of Companies with regard to the affairs of the Company in question, for a continuous period of three financial years - Section 164(2)(a) of the Companies Act, 2013 - HELD THAT - It cannot be denied that the issues raised in this writ petition require adjudication and are of grave importance so far as the working of the spirit, intendment and object of the Companies Act, 2013, more specifically the manner in which the respondents would operate Sections 164 and 248 of the enactment - Issue notice to the respondents. Mr. Ashim Sood, CGSC accepts notice on behalf of the respondents. Till the next date of hearing, there shall be a stay of the notices dated 6th September, 2017 and 12th September, 2017 whereby the petitioner was declared disqualified as Director under Section 164(2)(a) of the Companies Act, 2013. 13. The DIN numbers as well as digital signatures of the petitioner shall be forthwith revived. List on 24th July, 2018.

Summary

Issues involved:
- Disqualification of the petitioner as Director under Section 164(2)(a) of the Companies Act, 2013
- Striking off the name of the company from the Register of Companies under Section 248(1) of the Companies Act, 2013
- Violation of principles of natural justice
- Retrospective application of provisions of the Companies Act, 2013
- Compliance with the mandatory requirements under Section 248(1) and Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016
- Adjudication of issues raised in the writ petition

Detailed Analysis:

1. Disqualification of the petitioner as Director under Section 164(2)(a):
The petitioner, a director in multiple companies, challenged the disqualification notices issued under Section 164(2)(a) of the Companies Act, 2013 due to defaults in filing statutory returns. The petitioner sought quashing of these notices, contending that the disqualification was in violation of natural justice principles.

2. Striking off the name of the company under Section 248(1):
In addition to the disqualification, the Registrar of Companies struck off the name of the petitioner's company from the Register of Companies under Section 248(1) of the Act. The petitioner raised legal and factual challenges against this action, arguing that it was also in violation of natural justice principles.

3. Violation of principles of natural justice:
The petitioner contended that both the disqualification and striking off actions were against the principles of natural justice. The petitioner raised questions of fact and law challenging these acts, emphasizing the need for fair procedures and compliance with legal requirements in such matters.

4. Retrospective application of provisions of the Companies Act, 2013:
A challenge was made regarding the retrospective application of the Companies Act, 2013 provisions, especially considering the penal consequences faced by the petitioner and the companies involved. Legal arguments were presented citing relevant Supreme Court judgments to support the contention against retrospective application.

5. Compliance with mandatory requirements under Section 248(1) and Rules:
The petitioners argued that the Registrar of Companies failed to comply with the mandatory requirements under Section 248(1) and Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. It was asserted that proper notices were not issued and served as required by law, questioning the validity of the disqualification and striking off actions.

6. Adjudication of raised issues:
The High Court acknowledged the gravity and importance of the issues raised in the writ petition concerning the interpretation and application of Sections 164 and 248 of the Companies Act, 2013. Notices were issued to the respondents, and a stay was ordered on the disqualification notices until the next hearing date. The Court directed the filing of counter affidavits and production of original records for further examination and adjudication.

In conclusion, the judgment highlighted the significance of upholding procedural fairness, legal compliance, and the need for a thorough examination of the legal issues raised in the petition concerning the disqualification and striking off actions under the Companies Act, 2013.