2021 (11) TMI 487 - HC - Companies Law

Seeking recall of order - reactivation of the Directors Identification Number (DIN) of the writ petitioner - applicant was not impleaded as a party to the writ petition - HELD THAT - Although the portion of the order under recall, by which the deactivation of the writ petitioner s DIN was set aside, was justified since there was due compliance of the liabilities of the writ petitioner as director of the company-in-question, the latter portion of the order under recall, setting aside the operation of the order dated June 24, 2016 of the ROC, was in contravention of the Circular dated February 10, 2012 and, thus, bad in law. Since the review applicant was not impleaded as a party to the writ petition, there was no opportunity for the said applicant to point out the aforesaid flaw in the order under recall and/or any scope of arguing the question as raised in the review application at the relevant juncture, the portion of the order under recall setting aside the order dated June 24, 2016 is required to be recalled/set aside - Application is allowed, thereby recalling and setting aside the finding that it was beyond the scope of the jurisdiction of the ROC to direct that the documents filed by the directors would not be approved/registered/recorded and thus would not be available in the registry for public viewing and setting aside of the operation of a portion of the order dated June 24, 2016 by the ROC, Kolkata. The deactivation of the DIN of Krishna Kumar Rungta, the writ petitioner, is set aside and such DIN is re-activated - application allowed.

Summary

Issues:
1. Application for recall of an Order dated March 8, 2021 passed in WPA No. 4347 of 2020.
2. Interpretation of Circular dated February 10, 2012 regarding management disputes and filing requirements with the Registrar of Companies (ROC).
3. Validity of setting aside the operation of an order dated June 24, 2016 by the ROC.
4. Scope of jurisdiction of the ROC in directing approval/registration/recording of documents in case of management disputes.
5. Deactivation and re-activation of Directors Identification Number (DIN).
6. Compliance of statutory requirements by directors in filing documents with the ROC.

Analysis:

1. The application for recall of the Order dated March 8, 2021 was filed due to the applicant not being impleaded as a party to the writ petition, leading to the inability to properly represent the points raised in the recall application before the court during the passing of the original order.

2. The interpretation of the Circular dated February 10, 2012 was crucial in determining the requirements for filing documents with the ROC in cases of management disputes. The Circular specified that in the presence of a management dispute, certain documents would not be approved/registered/recorded and made available for public viewing until the dispute is settled.

3. The validity of setting aside the operation of the order dated June 24, 2016 by the ROC was questioned, as it was argued that the order had no nexus with the re-activation of the DIN and that the management dispute concerning the company in question persisted.

4. The scope of jurisdiction of the ROC in directing the approval/registration/recording of documents in cases of management disputes was analyzed, with emphasis on the restrictions imposed by the Circular, which empowered the ROC to withhold such approvals until the dispute is resolved.

5. The issue of deactivation and re-activation of the DIN was central to the case, with the court ultimately setting aside the deactivation and re-activating the DIN of the writ petitioner to allow them to discharge their duties as a director of the company.

6. Compliance with statutory requirements by directors in filing documents with the ROC was highlighted, with the court emphasizing the need for adherence to filing obligations despite the presence of a management dispute, as outlined in the Circular dated February 10, 2012.

In conclusion, the judgment allowed the recall application, modified the original order to re-activate the DIN of the writ petitioner, but upheld the withholding of document approvals until the management dispute is settled, in line with the Circular's provisions.