2020 (6) TMI 93 - HC - Companies Law

Disqualification from appointment as a Director - change of status of the petitioner in the records of the respondent Nos. 1 and 2 from the list of disqualified directors - unfreezing of Directors Identification Number and the Digital Signature Certificate (DSC) of the petitioner - Section 164(2)(a) of the Companies Act, 2013 - HELD THAT - It is apparent that the petitioner is seeking a writ in the nature of mandamus directing the respondents No. 1 and 2 not to consider the petitioner as a disqualified director under Section 164(2)(a) of the Companies Act, 2013 and for a further direction to change the status of the petitioner in the records of the respondent Nos. 1 and 2 from the list of disqualified directors and consequently unfreeze the Directors Identification Number and the Digital Signature Certificate (DSC) of the petitioner - The pre requisition of issuing a writ in the nature of mandamus is that there must be a legal right of the litigant, such right must be violated by the respondents and upon right being violated, there must be a representation for removal of such violation and upon consideration thereof, such request for removing the violation be refused. In the instant case, the petition is devoid of any material which may indicate as to a legal right in favour of the petitioner for being removed as a disqualified director or to restore the Director Identification Number and Digital Signature Certificate of the petitioner so as to enable the Court to determine his legal right, if any. In the circumstance, it would be appropriate for the petitioner to make a representation before the Registrar of Companies, Guwahati being the respondent No.2 as regards his claim for continuing with the Director Identification Number (DIN) and Digital Signature Certificate (DSC) as well as to exclude his name from the list of disqualified directors - It is provided that the petitioner shall file any such application if so advised within a period of 7 days from today. In the event, such application is not filed, the continuation of the interim order dated 20.02.2020 shall remain withdrawn and the Registrar Companies will be at liberty to take any action against the petitioner. In the event, the application is filed, the interim order shall continue till the passing of the reasoned order by the Director of Companies. Petition disposed off.

Summary

Issues: Petitioner's disqualification as a director under Section 164(2)(a) of the Companies Act, 2013 and the relief sought through a writ petition.

Analysis:
1. Disqualification under Section 164(2)(a): The petitioner, a director of a company, was disqualified under Section 164(2)(a) for the company's failure to file financial statements for three consecutive years. The provision states that a person in such a scenario is ineligible to be reappointed as a director for five years. The petitioner challenged this disqualification through a writ petition, arguing that the inclusion of his name in the list of disqualified directors was arbitrary.

2. Legal Right and Mandamus: The court emphasized the fundamental principles for issuing a writ in the nature of mandamus. It stated that for such a writ to be granted, the litigant must have a violated legal right, a representation for remedying the violation, and a refusal of such request. In this case, the court found the petition lacking material to establish the petitioner's legal right to be removed as a disqualified director and to have his Director Identification Number and Digital Signature Certificate reinstated.

3. Court's Directive: The court directed the petitioner to make a representation before the Registrar of Companies, Guwahati, to address his claim for retaining the Director Identification Number and Digital Signature Certificate and to be excluded from the list of disqualified directors. The Registrar was instructed to provide a detailed reasoned order after hearing the petitioner within 15 days of receiving the application. The petitioner was given a deadline of 7 days to file the application, failing which the interim order favoring him would be withdrawn, allowing the Registrar to take necessary action.

4. Disposition: The writ petition was disposed of with the above directives, emphasizing the importance of following due process and allowing the petitioner an opportunity to present his case before the Registrar of Companies for a reasoned decision on his disqualification status and related matters.