2021 (6) TMI 105 - HC - Companies Law

Disqualification of Directors under Section 164(2)(a) of the Companies Act, 2013 - direction to respondents herein to permit the petitioners to get reappointed as Directors of any company or to get appointed as Directors of any company without any hindrance - HELD THAT - The issue involved in these writ petitions is no more a res integra. It is to be stated that the Registrar of Companies (RoC) has been disqualifying the Directors under Section 164(2)(a) of the Companies Act, 2013 by order dated 08.09.2017. Another list was published in the website of the first respondent on 01.11.2017 disqualifying the Directors. Yet another list of Directors were disqualified on 17.12.2018 by the RoC. The notification dated 17.12.2018, which was uploaded in the website by the first respondent on 18.12.2018 was challenged on the strength of the judgment of this Court in BHAGAVAN DAS DHANANJAYA DAS VERSUS UNION OF INDIA, REGISTRAR OF COMPANIES, TAMILNADU CHENNAI 2018 (8) TMI 436 - MADRAS HIGH COURT . However, they were dismissed by this Court, and such orders were passed on 27.01.2020 and 10.02.2020, etc. The said orders were put to challenge in a batch of writ appeals, which were dealt with by the Hon'ble First Bench of this Court in MEETHELAVEETIL KAITHERI MURALIDHARAN, KAMAL ANEESMOHAMED, SATHISH KUMAR GOPAL, GOVINDASAMY BALASUBRAMANIAM, PAARI SENTHIL KUMAR, PAARI DHANALAKSHMI, VERSUS UNION OF INDIA, THE REGISTRAR OF COMPANIES TAMIL NADU, CHENNAI, 2020 (10) TMI 595 - MADRAS HIGH COURT where it was held that the publication of the list of disqualified directors by the ROC and the deactivation of the DIN of the Appellants is hereby quashed. Petition allowed.

Summary

Issues:
Challenge to orders disqualifying directors under Section 164(2)(a) of the Companies Act, 2013 and seeking reappointment without hindrance.

Analysis:
The writ petitions challenged the orders disqualifying directors under Section 164(2)(a) of the Companies Act, 2013. The issue revolved around the disqualification of directors by the Registrar of Companies (RoC) through various notifications. The RoC had disqualified directors under different notifications, leading to legal challenges. A previous judgment in Bhagavan Das Dhananjaya Das V. Union of India allowed a batch of writ petitions and set aside the disqualification notifications/orders issued by the RoC. However, a subsequent notification dated 17.12.2018 faced challenges but were dismissed by the court. The powers of the RoC under Sections 164 and 167(1) of the Companies Act, 2013, and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 were extensively discussed in a judgment by the Hon'ble Division Bench in W.A.No.569 of 2020. The court analyzed the rules regarding Director Identification Number (DIN) and concluded that the RoC did not have the authority to deactivate the DIN upon disqualification under Section 164(2) of the Companies Act, 2013.

The judgment emphasized that Rule 11 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 did not provide for the deactivation of DIN upon disqualification. It further highlighted the importance of DIN for filing financial statements and annual returns, especially in cases where a director was disqualified from one company but continued to be a director in another. The court concluded that the deactivation of DIN by the RoC was contrary to the relevant sections of the Companies Act, 2013. As a result, the court allowed the appeals, set aside the impugned orders, quashed the publication of the list of disqualified directors, and ordered the reactivation of DIN within 30 days. The judgment clarified that the RoC could initiate action for disqualification after an inquiry to determine specific default attribution to directors. The court's decision aligned with a previous ruling in Meethelaveetil Kaitheri Muralidharan V. Union of India, following which the writ petitions were allowed, and connected miscellaneous petitions were closed without costs.