2020 (9) TMI 166 - HC - Companies Law

Maintainability of petition - condoantion of delay in filing petition - Disqualification of Directors - Section 164 of Companies Act - publication of their names in the List of disqualified Directors - unfreeze their Director Identification Number (DIN) and Digital signatures certificates - only explanation sought to be offered by Mr. Verma, learned counsel appearing for the petitioners is that they were unaware of the publication of the aforesaid List till recently. He however concedes that there is no explanation offered in the petition for the delay. HELD THAT - The aforesaid submission is not acceptable. Ignorance cannot bestow any benefit on a litigant and nor can it be a ground to condone a delay of almost three years in approaching the court for relief. The petitioners had been disqualified for a period of five years commencing from 01.11.2016 and continuing to remain in force till 31.10.2021. By now, a little over one yeare of the period of disqualification is left to expire. But no steps have been taken by the petitioners to seek legal recourse in all this duration. Powers of judicial review vested in the court are discretionary in nature and in particular facts and circumstances, the court can decline to exercise the said power more so, when a party approaches the court for relief with a delay of almost three years, without an explanation worth the name for the said delay. The present petitions dismissed on the ground of delay.

Summary

Issues:
Petitioners seeking relief from being treated as disqualified directors under Section 164 of Companies Act and quashing publication of their names in the List of disqualified Directors.

Analysis:
The judgment by the High Court of Delhi, delivered by Hon'ble Ms. Justice Hima Kohli and Hon'ble Mr. Justice Subramonium Prasad, pertains to petitions filed by the petitioners requesting relief from being considered "disqualified Directors" under Section 164 of the Companies Act. The petitioners also sought a writ of mandamus to prevent the publication of their names in the List of disqualified Directors, which was uploaded on the respondents' website in September 2017. Additionally, the petitioners requested directions to unfreeze their Director Identification Number (DIN) and Digital signatures certificates to enable them to file necessary documents for the companies they were serving as Directors.

The court, at the outset, questioned the maintainability of the petitions due to the significant delay in approaching the court for relief. The court noted that the List of disqualified Directors had been available on the respondent's website since September 2017, yet the petitioners only recently became aware of it. However, the petitioners failed to provide a satisfactory explanation for the prolonged delay in seeking legal recourse.

The court emphasized that ignorance cannot justify a substantial delay in seeking relief and condoning nearly three years of inactivity. Despite the petitioners being disqualified until October 2021, they failed to take any steps to address their disqualification during this period. The court highlighted that the powers of judicial review are discretionary and may be declined, especially when a party approaches the court after an unjustifiable delay without a valid explanation.

Ultimately, the court dismissed the petitions on the grounds of delay, emphasizing that the discretionary power of judicial review may be withheld in situations where parties fail to promptly seek legal remedies. The court's decision was based on the lack of a satisfactory explanation for the prolonged delay in approaching the court for relief, leading to the dismissal of the petitions and any pending applications.