2019 (1) TMI 1957 - HC - Companies Law

Disqualification of Directors - 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 - 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. Siddharth Khatana, Adv., accepts notice on behalf of the respondents - Till the next date of hearing, there shall be a stay of the notices dated 6thSeptember, 2017 and 12th September, 2017 whereby the petitioners were declared disqualified as Director under Section 164(2)(a) of the Companies Act, 2013. List on 4th February, 2019.

Summary

Issues:
1. Disqualification of directors under Section 164(2)(a) of the Companies Act, 2013.
2. Striking off the name of the company from the Register of Companies under Section 248(1) of the Companies Act, 2013.
3. Violation of principles of natural justice in the actions of the Registrar of Companies.
4. Retrospective application of provisions of the Companies Act, 2013.
5. Compliance with 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.
6. Adjudication of issues related to Sections 164 and 248 of the Companies Act, 2013.

Analysis:
The High Court considered a writ petition filed by directors of a company challenging their disqualification under Section 164(2)(a) and the striking off of the company's name from the Register of Companies under Section 248(1) of the Companies Act, 2013. The petitioners contended that these actions were in violation of natural justice principles. They also raised concerns about the retrospective application of the Companies Act, 2013, arguing that the consequences were akin to penalties. The petitioners relied on Supreme Court judgments to support their arguments. Additionally, they highlighted non-compliance with the mandatory notice requirements under Section 248(1) and Rule 3(2) of the relevant Rules.

The respondents disputed the petitioners' submissions, stating that notices had been sent to the companies and directors as required under Section 248(1). The Court acknowledged the gravity of the issues raised in the petition concerning the interpretation and application of Sections 164 and 248 of the Companies Act, 2013. Consequently, the Court issued notices to the respondents and granted a stay on the disqualification notices pending further hearings. The Court also ordered the revival of the petitioners' DIN numbers and digital signatures.

Recognizing the importance of consolidating similar cases, the Court directed the filing of individual counter affidavits within two weeks, focusing on factual details related to the issuance and service of notices. The respondents were instructed to produce original records concerning the company and the impugned notices at the next hearing date. The case was listed for further proceedings on 4th February 2019.