2019 (1) TMI 1386 - HC - Companies Law

Disqualifying the petitioners in striking off the name of the company from the register of companies - Mandatory requirement under Section 248(1), upon the Registrar of Companies to send a notice - Held that - Mandatory requirement under Section 248(1), upon the Registrar of Companies to send a notice to the company and all directors of the company, it has been contended by the petitioners that such notice had to be issued and served in the manner prescribed by law i.e. in compliance with Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. The petitioners contend that this has not been done and that the action of the respondents in disqualifying the petitioners in striking off the name of the company from the register of companies cannot be sustained for this reason as well. On behalf of the respondents, the learned counsel disputes all these submissions made on behalf of the petitioners. It is submitted, upon instructions from the Registrar of Companies, that notices under Section 248(1) have been sent to the Companies and the directors. It cannot be denied that the issues raised in this writ petition require adjudication and are of grave importance so far as the working of the spirit, intendment and object of the Companies Act, 2013, more specifically the manner in which the respondents would operate Sections 164 and 248 of the enactment. Issue notice to the respondents. The learned counsel accepts notice on behalf of the respondents. Till the next date of hearing, there shall be a stay of the notices dated 6th September, 2017 and 12th September, 2017 whereby the petitioners were declared disqualified as Director under Section 164(2)(a) of the Companies Act, 2013. The DIN numbers as well as digital signatures of the petitioners shall be forthwith revived. It also cannot be denied that so far as the legal submissions are concerned, several other writ petitions have raised identical questions of law and for this reason, are required to be heard together. We, therefore, direct that an individual counter affidavit dealing with the factual averments in this writ petition shall be filed separately within a period of two weeks from today. The full details of the issuance and service of the notice(s) shall be placed on record with copies of the supporting documents. Rejoinder thereto, if any, shall be filed before the next date of hearing.

Summary

Issues:
Challenge to disqualification as Directors under Section 164(2)(a) of the Companies Act, 2013 and striking off the company's name under Section 248(1) of the Companies Act, 2013.

Analysis:
1. The writ petition was filed by directors of a company under the Indian Companies Act, 1956, challenging their disqualification as directors in various companies due to defaults in filing statutory returns. The petition sought to quash the notices disqualifying them under Section 164(2)(a) of the Companies Act, 2013.

2. Additionally, the Registrar of Companies had struck off the name of the company from the Register of Companies under Section 248(1) of the Companies Act, 2013. The petitioners contended that these actions were in violation of natural justice principles and challenged the retrospective application of the Act's provisions, citing relevant Supreme Court judgments.

3. The petitioners argued that the Registrar's actions were invalid due to non-compliance with the prescribed procedures, specifically Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. They emphasized the need for proper issuance and service of notices under Section 248(1).

4. The respondents, representing the Registrar of Companies, disputed the petitioners' contentions and claimed that notices had been duly sent to the companies and directors. The court acknowledged the gravity of the issues raised, especially concerning Sections 164 and 248 of the Companies Act, 2013, and issued notice to the respondents for further proceedings.

5. Pending adjudication, the court granted a stay on the disqualification notices and directed the revival of the petitioners' DIN numbers and digital signatures. It also ordered the filing of separate counter affidavits within two weeks, detailing the issuance and service of notices, with supporting documents, to facilitate a comprehensive review of the case.

6. Recognizing the similarity of legal issues in other writ petitions, the court directed the filing of individual counter affidavits and scheduled a hearing for the production of original records related to the impugned notices. The case was listed for further proceedings on a specified date to ensure a thorough examination of the matter.