2021 (2) TMI 58 - HC - Companies Law

Disqualification of the petitioners as Directors - Section 164(2)(a) of the Companies Act, 2013 - Allegation that the Directors has not submitted financial statements for three consecutive financial years - opportunity of hearing not given to petitioner - HELD THAT - The issue raised in this writ petition was considered by the Hon'ble Division Bench of this Court in the case of Meetgelaveetil Kaitheri Muralidharan Versus Union of India Another 2020 (10) TMI 595 - MADRAS HIGH COURT where it was held that The case on hand stands on the same footing. In the instant case also, no notice was given to the petitioner before disqualifying him as Director of M/s. Aventa Technologies Limited. The impugned order passed by the second respondent disqualifying the petitioner as Director of M/s. Aventa Technologies Limited under Section 164(2)(a) of the Companies Act, 2013 is hereby set aside - Petition allowed.

Summary

Issues:
Challenge to disqualification of directors under Section 164(2)(a) of the Companies Act, 2013 due to non-submission of financial statements for three consecutive financial years.

Analysis:
The writ petition challenged the disqualification of the petitioners as Directors under Section 164(2)(a) of the Companies Act, 2013, citing lack of opportunity before the impugned order was passed. The petitioner contended that the order violated provisions of the Companies Act, 2013. The Hon'ble Division Bench's judgment in a related case highlighted the rules regarding Director Identification Number (DIN) allotment, cancellation, and disqualification under Section 164(2) of the Companies Act, 2013. The judgment emphasized that disqualification doesn't automatically lead to DIN deactivation and directors may retain DIN to rectify defaults.

The case at hand was found to align with the principles established in the aforementioned judgment. Notably, the petitioner was disqualified as a Director without prior notice, similar to the circumstances addressed in the previous ruling. Consequently, the impugned order disqualifying the petitioner as Director of the company was set aside in line with the earlier judgment. The judgment emphasized the importance of providing directors with opportunities to rectify defaults and clarified that disqualification should not automatically lead to DIN deactivation. The decision allowed for the reactivation of DINs within a specified timeframe and permitted regulatory action based on specific inquiries into default attribution.

In conclusion, the writ petition challenging the disqualification of the petitioner as a Director under Section 164(2)(a) of the Companies Act, 2013 was allowed, setting aside the impugned order. The judgment underscored the necessity of affording directors opportunities to address defaults and highlighted the procedural aspects related to DIN deactivation and disqualification under the Companies Act, 2013.