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2021 (1) TMI 1335 - HC - Companies LawChallenge to disqualification of the petitioner as Director under Section 164(2)(a) of the Companies Act 2013 on the ground that he has not submitted financial statements for three consecutive financial years - impugned order challenged on the ground that without affording opportunity to the petitioner the said order has been passed - violaton of principles of natural justice - 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 it has been held that apart from the fact that the AQD Rules do not empower the ROC to deactivate the DIN we find that such deactivation would also be contrary to Section 164(2) read with 167(1) of CA 2013 inasmuch as the person concerned would continue to be a director of the Defaulting Company. 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. Pearl Auto Service Pvt. Ltd and M/s. Le Grand Impex Pvt. Ltd. The impugned order dated 13.12.2019 passed by the second respondent disqualifying the petitioner as Directors of M/s. Pearl Auto Service Pvt. Ltd and M/s. Le Grand Impex Pvt. Ltd. under Section 164(2)(a) of the Companies Act 2013 is hereby set aside - Petition allowed.
Issues:
Challenge to disqualification of petitioner as Director under Section 164(2)(a) of the Companies Act, 2013 due to non-submission of financial statements for three consecutive years without prior notice. Analysis: The judgment involves a writ petition challenging the disqualification of the petitioner as a Director under Section 164(2)(a) of the Companies Act, 2013. The petitioner contested the order dated 13.12.2019, arguing that it was passed without affording an opportunity to be heard. The counsel for the petitioner contended that the impugned order violated the provisions of the Companies Act, 2013. The matter was taken up for final disposal with the consent of both parties at the time of admission itself. The judgment referred to a previous decision by the Hon'ble Division Bench of the Court in a related matter, where it was highlighted that the rules regarding Director Identification Number (DIN) and disqualification under Section 164(2) of the Companies Act, 2013 do not provide for deactivation of DIN upon disqualification. The judgment emphasized that a disqualified director may need to retain the DIN to rectify the default by filing necessary documents, and deactivation of DIN would be contrary to the relevant provisions of the Act. The previous decision set aside the impugned order and quashed the deactivation of DIN, directing reactivation within 30 days, while allowing the concerned authority to initiate action for disqualification after an inquiry. Applying the principles established in the previous decision to the present case, the Court found that no notice was given to the petitioner before disqualifying them as Directors of the respective companies. Consequently, the Court set aside the impugned order dated 13.12.2019 disqualifying the petitioner as Directors, in line with the earlier judgment. The writ petition was allowed, and no costs were imposed. The connected miscellaneous petitions were closed as a result of the decision.
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