2020 (12) TMI 1295 - HC - Companies Law

Seeking direction to respondents to permit the petitioner to get reappointed as Director of any Company or appointed in any other Company without any hindrance - HELD THAT - 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. Issue decided in the case of MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, 2020 (10) TMI 595 - MADRAS HIGH COURT where it was held 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. Following the decision of the Hon'ble First Bench of this Court in Meethelaveetil Kaitheri Muralidharan's case, the Writ Petition is allowed.

Summary

Issues:
Challenge to order disqualifying directors under Section 164(2)(a) of the Companies Act, 2013 and seeking reappointment without hindrance.

Analysis:
The writ petition challenges the order disqualifying directors under Section 164(2)(a) of the Companies Act, 2013. The Registrar of Companies (RoC) had been disqualifying directors through various notifications. Several disqualified directors challenged these notifications previously. In a notable case, the court set aside the notifications/orders disqualifying directors. However, a subsequent notification was challenged, but the court dismissed the challenge. The matter was then taken up in a batch of writ appeals before a Division Bench, which analyzed the powers of the RoC under Sections 164 and 167(1) of the Companies Act, 2013, and relevant rules. The Division Bench concluded that the RoC cannot deactivate the Director Identification Number (DIN) upon disqualification under Section 164(2) of the Companies Act, 2013. The court held that the deactivation of DIN would be contrary to the Act since the disqualified director might continue in office in certain companies, necessitating the retention of DIN for compliance purposes.

The Division Bench allowed the appeals, setting aside the impugned order and quashing the publication of the list of disqualified directors and the deactivation of DIN. The court ordered the reactivation of DIN for the respective directors within 30 days. However, the RoC was permitted to initiate further action regarding disqualification after an enquiry to determine specific directors' default attribution. The court emphasized that the RoC could proceed with disqualification subject to a proper investigation based on the judgment. No costs were awarded in this regard.

Following the decision in the aforementioned case, the writ petition was allowed in line with the judgment. The court granted the relief sought by the petitioner, aligning with the principles established in the earlier case. The connected miscellaneous petitions were closed accordingly, and no costs were imposed in this matter.