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2019 (12) TMI 343 - HC - Companies LawDisqualification of Petitioner to hold the Office of the Directorship of a Company - Section 164 (2) (a) of the Companies Act 2013 - HELD THAT - The lists dated 08.09.2017 and 01.11.2017 published by the Registrar of Companies, Tamil Nadu, Chennai were the subject matter of challenge before this Court in a batch of cases in BHAGAVAN DAS DHANANJAYA DAS VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES, TAMILNADU CHENNAI 2018 (8) TMI 436 - MADRAS HIGH COURT and came to be disposed by this Court where it was held that Section 164(2)(a) is read down to the extent it disqualifies the directors in other companies which are scrupulously following the requirements of law, making it clear that no directors in other companies can be disqualified without prior notice. As the Petitioner in this case is similarly placed to the Petitioners in the aforesaid batch of cases relating to the same impugned lists published in the website by the Respondents, she is entitled to identical relief that has been granted to them. Petition allowed.
Issues involved:
Challenge to disqualification of petitioner as Director under Section 164(2)(a) of the Companies Act 2013 based on lists published by Registrar of Companies. Application of retrospective effect by second respondent. Compliance with principles of natural justice in disqualification process. Interpretation of Section 164(2)(a) regarding disqualification of directors in defaulting companies. Analysis: The judgment addressed the challenge to the disqualification of the petitioner as a Director under Section 164(2)(a) of the Companies Act 2013. The petitioner contested the list published by the Registrar of Companies, Tamil Nadu, Coimbatore, disqualifying them from holding the office of a Director based on the list dated 01.11.2017. The court considered the retrospective effect applied by the second respondent, noting errors in disqualifying directors before the deadline commenced, which was wrongly fixed for the first financial year. The judgment highlighted the legal infirmity in disqualifying directors for the financial years preceding the enactment of the Companies Act 2013, emphasizing the need for adherence to the principles of natural justice in such disqualification processes. Moreover, the judgment delved into the interpretation of Section 164(2)(a) concerning the disqualification of directors in defaulting companies. It discussed the timeline for triggering disqualification, emphasizing that the disqualification could only occur after a specific date if a company failed to file annual forms for three financial years. The court underscored the importance of following legal provisions diligently and ensuring that disqualification did not occur without prior notice to directors. The judgment also differentiated between striking off a company's name for non-operation and disqualifying directors, advocating for a balanced approach in enforcing regulatory measures. Furthermore, the judgment compared the penalties for failure to file statutory returns under Sections 92 and 137 of the Companies Act 2013, highlighting the compoundable nature of such offenses. It critiqued the disproportionate nature of Section 164(2)(a) in disqualifying directors not only in defaulting companies but also in other compliant companies, stressing the need for a nuanced application of the provision. The judgment ultimately set aside the impugned orders, granting relief to the petitioner similar to that provided in previous cases related to the same issue, and emphasized the inseparability of removing company names and disqualifying directors in defaulting companies.
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