2018 (7) TMI 631 - HC - Companies Law

Disqualification as director - Held that - The petitioner has resigned from the directorship of the company in question, the petitioner would not incur a disqualification under Section 164 of the Companies Act. Consequently, the disqualification of the petitioner as notified in the lists dated 6th September, 2017 and 12th September, 2017 by the respondent no.1 was incorrect and illegal. In view of the above, the disqualification of the petitioner as notified in the impugned list as disqualification of the petitioner as a director of the company and the resultant prohibition under Section 164(2)(a) by virtue of the petitioner s name featuring in the list dated 6th and 12th September, 2017 is hereby set aside and quashed. The respondent no.2 shall also ensure that its records are properly rectified to delete the name of the petitioner from the lists dated 6th September and 12th September, 2017.

Summary

Issues:
1. Disqualification of the petitioner under Section 164(2)(a) of the Companies Act, 2013.
2. Failure of the company to submit Form 32 regarding the petitioner's resignation.
3. Legality of the disqualification of the petitioner as a director.

Analysis:
The writ petitioner was appointed as a Director in a company but later resigned. However, the company failed to submit Form 32 regarding his resignation as required by the Companies Act, 1956. Subsequently, the respondent disqualified the petitioner under Section 164(2)(a) of the Companies Act, 2013, preventing him from being appointed as a director for five years. The petitioner challenged this disqualification, contending that his resignation should not lead to disqualification. The respondents did not dispute this claim.

The Court acknowledged that the petitioner's resignation from the directorship should not result in disqualification under Section 164 of the Companies Act. Therefore, the Court set aside and quashed the disqualification of the petitioner as a director, directing the respondent to rectify their records promptly. The respondent was ordered to delete the petitioner's name from the disqualification lists and remove it from all records in the Ministry of Corporate Affairs within two weeks.

Additionally, a related application was dismissed as it was no longer relevant after the disposal of the main petition. The judgment was concluded by ordering the issuance of necessary documents under the signatures of the Court Master. The writ petition was disposed of in favor of the petitioner, ensuring the removal of his disqualification as a director due to his resignation from the company and the failure to submit Form 32.