2018 (7) TMI 1022 - HC - Companies Law

Disqualifying the petitioner as Directors in the Companies - Held that - Drawing our attention to the mandatory requirement under Section 248(1) upon the Registrar of Companies to send a notice to the company and all directors of the company it has been contended by the petitioners that such notice had to be issued and served in the manner prescribed by law i.e. in compliance with Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules 2016. The petitioners contend that this has not been done and that the action of the respondents in disqualifying the petitioners in striking off the name of the company from the register of companies cannot be sustained for this reason as well. 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. 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. The DIN numbers as well as digital signatures of the petitioners shall be forthwith revived. It also cannot be denied that so far as the legal submissions are concerned several other writ petitions have raised identical questions of law and for this reason are required to be heard together. We therefore direct that an individual counter affidavits dealing with the factual averments in this writ petition shall be filed separately within a period of ten days as prayed. The full details of the issuance and service of the notice(s) shall be placed on record with copies of the supporting documents. Rejoinder thereto if any shall be filed before the next date of hearing. The respondents shall produce the original records relating to this company with regard to the impugned notices before this court on the next date of hearing.

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.
4. Retrospective application of provisions of the Companies Act, 2013.
5. Compliance with legal requirements for issuing notices under Section 248(1).
6. Adjudication of issues related to Sections 164 and 248 of the Companies Act, 2013.
7. Stay of disqualification notices dated 6th September, 2017, and 12th September, 2017.
8. Revival of DIN numbers and digital signatures of the petitioners.
9. Filing of individual counter affidavits within ten days.
10. Production of original records before the court on the next date of hearing.

Detailed Analysis:

1. Disqualification of Directors: The petitioners, who were directors in multiple companies, challenged their disqualification under Section 164(2)(a) of the Companies Act, 2013 due to defaults in filing statutory returns for three financial years. They sought the quashing of the disqualification notices dated 6th and 12th September 2017.

2. Striking off Company Name: Additionally, the Registrar of Companies had struck off the name of one of the companies from the Register of Companies under Section 248(1) of the Act. The petitioners contended that this action, along with the disqualification, violated principles of natural justice and questioned the retrospective application of the Companies Act, 2013.

3. Legal Challenges: The petitioners raised questions of fact and law, arguing that the actions of the Registrar of Companies were in violation of natural justice principles. They also disputed the retrospective application of the Act, citing relevant legal precedents to support their arguments.

4. Compliance Issues: The petitioners highlighted non-compliance with legal requirements for issuing notices under Section 248(1), emphasizing the necessity for proper service of notices as prescribed by law. They argued that the disqualification and striking off the company's name were invalid due to procedural lapses.

5. Adjudication and Stay: The court acknowledged the importance of adjudicating the issues raised in the writ petition concerning Sections 164 and 248 of the Companies Act, 2013. A stay was granted on the disqualification notices pending further hearings, and the DIN numbers and digital signatures of the petitioners were ordered to be revived.

6. Procedural Directions: The court directed the filing of individual counter affidavits within ten days, focusing on factual averments and the issuance and service of notices. It also required the production of original records related to the company before the next hearing date, emphasizing the need for detailed documentation and compliance with legal procedures.

This judgment addresses significant legal issues regarding director disqualification, company name striking off, procedural compliance, and the retrospective application of the Companies Act, 2013, emphasizing the importance of upholding principles of natural justice and legal requirements in such matters.

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