2019 (11) TMI 1813 - HC - Companies Law

Disqualification of Petitioner to hold the Office of the Directorship of a Company under Section 164 (2) (a) of the Companies Act 2013 - HELD THAT - As the Petitioner in this case is similarly placed to the Petitioners in W.P. No. 25455 of 2017 2018 (8) TMI 436 - MADRAS HIGH COURT relating to the same impugned lists published in the website by the Respondents, he is entitled to identical relief that has been granted to them. Petition allowed.

Summary

Issues:
Challenge to disqualification of director under Section 164(2)(a) of the Companies Act 2013 based on retrospective effect and erroneous disqualification date.

Analysis:
In this case, the primary issue revolves around the challenge to the disqualification of the Petitioner as a director under Section 164(2)(a) of the Companies Act 2013. The Petitioner challenges the list published by the Registrar of Companies disqualifying them from holding the office of directorship based on the date of disqualification and the retrospective effect applied. The Court refers to a previous judgment related to similar challenges and highlights several key points. Firstly, it is noted that the disqualification should not have been applied retrospectively before the deadline commenced, as it wrongly fixed the financial years. The Court emphasizes the correct interpretation of the financial years as per the Act and General Circular, pointing out the legal infirmity in the disqualification process. Additionally, the Court discusses the time limits for filing annual returns and balance sheets under the Act, highlighting the specific dates triggering disqualification. The importance of adherence to principles of natural justice in disqualification cases is also underscored, emphasizing the need for proper notice to directors. The Court further delves into the non-retrospective nature of disqualification clauses under the old Act and the penal provisions for failure to file returns and statements under the new Act. It is noted that the disqualification of directors should not extend to other companies if the directors are compliant with the law. The judgment concludes by setting aside the impugned orders and allowing the writ petition, granting relief to the Petitioner similar to other cases related to the same issue.

Overall, the judgment provides a detailed analysis of the legal provisions, timelines, and principles governing the disqualification of directors under the Companies Act 2013. It clarifies the correct interpretation of financial years, the importance of natural justice, and the proportionality of disqualification penalties. The judgment ensures that directors are not unfairly disqualified and emphasizes the need for procedural fairness in such cases.