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TMI Blog2018 (8) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... d in paras 15 and 22 of the counter affidavit that the default of filing statutory returns for the financial years commenced from 2013-14, 2014-15 and 2015-16 i.e., one year before the Act 2013 came into force. This is the basic incurable legal infirmity that vitiates the entire impugned proceedings. (c) By virtue of the first proviso to Section 96(1) of the 2013 Act, Annual General Meeting for the year ending on 31.3.2017 can be held within six months from the closing of financial year i.e., 30.9.2017, additionally in the light of Section 164(2)(a) referring to annual return and financial statement , the time limit to file annual return under Section 92(4) of 2013 Act is sixty days from Annual General Meeting or the last date on which Annual General Meeting ought to have been held, hence, the time limit to file balance sheet under Section 137(1) of the 2013 Act is again thirty days from Annual General Meeting. In view of these legal position, the disqualification could get triggered off only on or after 30.10.2017 only, if any company fails to file annual forms for three financial years. Importantly, it is to be borne in mind that even beyond that time limit, additional time li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies by the Registrar of Companies and the disqualification of the directors in the defaulting company will go together, as it is inseparable, and the Registrar of Companies need not give fresh notice to the directors for their disqualification from the dormant company, if there is a failure to file the financial statement or annual return for any continuous period of three financial years as per Section 164(2)(a). The impugned orders are set aside and the writ petitions shall stand allowed. Consequently, all the connected writ miscellaneous petitions are closed. - W.P.No.25455 of 2017 - - - Dated:- 3-8-2018 - W.P.Nos.25455, 25456, 25729, 26654, 26655, 26932, 27106 to 27108, 27140, 27293, 27366, 27367, 27369, 27408, 27546, 27547, 27558 to 27561, 27565, 27717, 27852,, 27902 to 27905, 27911 to 27914, 27937 to 27940, 28032 to 28034, 28062 to 28064, 28065, 28066, 28209, 28248, 28280, 28281, 28621, 28622, 28631, 28635, 28643, 28737, 28813 to 28816, 28820, 28821, 28870, 28871, 28931, 29055, 29141, 29147, 29148, 29151 to 29155, 29224, 29499, 29500, 29625 to 29628, 29629, 29630, 29669, 29679, 29683, 29684, 29707, 29708, 29710, 29760 to 29762, 29763, 29836, 29846, 29847, 29917 to 299 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50, 7970, 8021, 8046, 8047, 8079, 8171, 8172, 8216, 8265, 8266, 8309, 8420, 8572, 8590 to 8592, 8620 to 8624, 8703, 8856, 8857, 8938, 8942, 9088, 9139, 9148, 9149, 9156, 9164, 9240, 9277 to 9281, 9282 to 9284, 9331, 9332, 9389, 9404, 9405, 9436, 9437, 9439, 9440, 9458, 9459, 9516, 9517, 9531, 9532, 9579, 9585, 9586, 4305 to 4307, 9646, 9647, 9666, 9667, 9741, 9742, 9766, 9833, 9866 to 9868, 9869 to 9874, 9893, 9914, 9917, 9924, 9925, 9934, 9940, 9957, 9958, 10004, 10016 to 10020, 10057 to 10060, 10158, 10176, 10224, 10225, 10228, 10231, 10244, 10263, 10264, 10268, 10269, 10279, 10372, 10383, 10387, 10384, 10401 to 10403, 10466 to 10468, 10500, 10501 to 10504, 10539, 10557 to 10560, 10582, 10615, 10651, 10655, 10676, 10677, 10715, 10721, 10722, 10724, 10749, 10750, 10751 to 10754, 10768, 10771, 10786, 10803, 10858, 10859, 10873, 10904, 10905, 10916, 10971, 10974, 10982, 11058, 11059, 11060, 11066, 11079, 11089, 11090, 11109, 11117, 11118, 11122 to 11124, 11126, 11127, 11128 to 11130, 11169, 11222, 11223, 11237, 11263, 11297, 11354, 11355, 11359, 11360, 11371, 11386, 11387, 11400, 11411, 11412, 11419, 11472, 11473, 11521, 11525, 11545, 11546, 11550, 11551, 11557, 11558, 11568 to 1157 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 6591, 15883, 15884, 15919, 15920, 15968, 15969, 16035, 16038, 16039, 16096, 7212, 7213, 7214 to 7216, 7234, 7240, 7241, 7249, 7250, 7255, 7256, 7279, 7280, 7309 to 7311, 7338, 7343 to 7347, 7356 to 7360, 7405, 7414, 7419, 7420, 7439, 7440, 13629, 14942, 14943, 14952, 14953, 15014, 15068, 15069, 15238, 15454, 15468 to 15473, 15533, 15540 to 15542, 15552, 15553, 15628, 15664, 15705, 15708 to 15710, 15744, 15826, 15868, 15869, 16034, 16245, 16246, 16350 to 16352, 16463, 16532, 16534, 16539, 16540, 16610 to 16613, 16657, 16658, 16757, 16773, 16840, 16841, 16898, 16902, 16903, 16970, 16995, 16999, 17151, 17161 of 2018 T. Raja, J. For the Petitioner : Mr.P.H.Aravind Pandian Senior Counsel for Mr.C.V.Shailandhran For the Respondents : Mr.G.Rajagopalan Additional Solicitor General of India assisted by Dr.V.Venkatesan Senior Central Government Standing Counsel and Mr.T.V.Krishnamachari Senior Central Government Standing Counsel ORDER The petitioners in this bunch of writ petitions have challenged the respective impugned orders dated 8.9.2017, 1.11.2017 etc., passed by the Registrar of Companies, Tamil Nadu, Chennai, the second respondent herein, uploaded in the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y rose to ₹ 9,70,000/- and as per the share holding pattern, Mr.Swaminatha Balasubramanian Swaminathan was having 33,000 shares, Mr.Jayanan Sadagopal was having 32,000 shares, Mr.Bhagavan Das Dhananjaya Das was having 32,000 shares totalling to 97,000 shares. Even after the change in the new management, the proposed revival plan did not fructify, as a result the Birdies Eagles Sports Technology Private Limited was unable to commence its business activities. Therefore, when there was no business activity, the annual returns also were not filed with the Registrar of Companies, Chennai from the financial year 2012-13. The last financial return filed with the Registrar of Companies related to the financial year 2011-12. While so, the first respondent issued a show cause notice vide letter No.ROC/S.248/Stk1/2017/SK/BS/VR dated 18.3.2017 under Section 248(1) of the Companies Act, 2013 to Birdies and Eagles Sports Technology Private Limited for striking off the name of the company from the Register of members for non-filing of the annual returns for a continuous period of three financial years. On receipt of the show cause notice, the company conveyed its no objection for striking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, when Section 164 of the new Act came into effect from 1.4.2014 clearly referring to financial statements or annual returns for any continuous period of three financial years , the first financial year for the purpose of Section 164(2)(a) of the Companies Act, 2013 would be 31.3.2015 viz., 1.4.2014 to 31.3.2015 and as such, the second and third financial years would be for the period 1.4.2015 to 31.3.2016 and 1.4.2016 and 31.3.2017 respectively. By virtue of the first proviso under Section 96(1) of the 2013 Act, the Annual General Meeting for the year ending on 31.3.2017 can be held within six months from the closing of the financial year i.e., 30.9.2017. However, for private companies, the third financial year would be 2016-17 ending on 31.3.2017 and the last date for conducting the Annual General Meeting is 30.9.2017. Therefore, the last date for filing the annual return is 29.10.2017 and for filing the balance sheet is 30.10.2017. By virtue of the aforementioned provision, any disqualification for not filing the annual returns for a period of three years would commence only on or after 30.10.2017. Sadly and against the law, the second respondent even before the deadline, er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IN numbers had become inactive now. As a matter of fact, as per the General Crcular No.08/2014 dated 4.4.2014, the financial year earlier than 1.4.2014 shall be governed by the relevant provisions/schedules/rules of the Companies Act, 1956, whereas in respect of financial year commencing on or after 1.4.2014, the provisions of the new Act shall apply. In view of this vast difference, the impugned order disqualifying the petitioner to be appointed as director in any company or continuing as director in any other company is wholly arbitrary, unreasonable and unconstitutional for being against the established principles of natural justice, as laid down by the Apex Curt in Maneka Gandhi v. Union of India, (1978) 2 SCC 248. Once a company was struck off, no notice was issued to any of the directors holding directorship in any other company for their disqualification. This is against the principles of natural justice. 6. In order to maintain the present writ petitions, Mr.Aravind Pandian further contended that the petitioners do not have an alternative remedy much less any effective, efficacious remedy to challenge the action of the Registrar of Companies, the second respondent herein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 1.4.2015 to 31.3.2016 and 1.4.2016 to 31.3.2017 respectively. If that legal position is correctly applied in the cases on hand, the disqualification under Section 164(2)(a) of the new Act will have effect to vacate the office of directorship only on or after 31st October, 2017. As it was already argued, the time limit to file the annual returns under Section 92(4) of the 2013 Act being sixty days from the date of annual general meeting or the last date on which the annual general meering ought to have been held, the time limit to file the balance sheet under Section 137(1) of the 2013 Act being thirty days from the annual general meeting, under the new Section 164 which came into force from 1.4.2014, for any company the third financial year for 2016-17 would be the year ending on 31.3.2017 and the last date for convening the annual general meeting is 30.9.2017 and hence the last date for filing the annual returns is 29.11.2017 and the balance sheet to be filed only on 30.10.2017. Therefore the disqualification could take place only on or after 30.10.2017 and not before that, he pleaded. 7. Again indicating the stand taken by the respondents in paragraphs 22 and 23 of the count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring to Circular No.08/2014 dated 4.4.2014 issued by the Assistant Director (Policy) of Ministry of Corporate Affairs, the learned senior counsel submitted that the said circular has been specifically issued making the things absolutely clear that the financial statement, auditor's report and the board's report in respect of financial years that commenced earlier than first day of April, 2014 shall be governed by the relevent provisions/schedule/rules of the Companies Act 1956 and that in respect of financial years commencing on or after first day of April, 2014, the provisions of the newe Act shall apply. Having issued such a circular, for the purpose of disqualifying the directors, the first financial year to be taken only from 1.4.2014 upto 31.3.2015, because the provisions have come into force only with effect from 1.4.2014. Therefore, the disqualification issued contrary to the said circular deserves to be set aside forthwith. 8. Similarly, arguing on behalf of some of the petitioners, the learned counsel Mr.T.K.Bhaskar, comparing both the provisions under the old Act of 1956 and the new Act of 2013, placed three-fold arguments. Firstly, he emphatically argued th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en filed on payment of such additional fee. This provision has been now substituted by the Companies (Amendment) Act, 2017 with effect from 7.5.2018. By virtue of the amendment, as on the date of impugned list released by the second respondent, the petitioners had additional time of 270 days to file their returns with the second respondent, therefore, they should not be disqualified until 27.7.2018, for the simple reason that the second respondent has not rightly taken into account the 270 days for consideration. He further argued that Section 274(1) of the old Act was introduced on 13.12.2000 and the sub clause (g) states that a person who is already a director of public company which has not filed any accounts or annual accounts for any continuous period of three financial years commencing on or after the first day of April 1999, shall not be eligible for appointment in other public companies. Mr.Bhasker heavily submitted that there is nothing under Section 164(2)(a) of the new Act which expressly or by implication covers the previous financial years to be taken into consideration so as to attract disqualification of the petitioners as directors as and when the provision has come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the law of the land, but supplement it. Placing reliance again on the judgment of the Apex Court in Dharampal Sathyapal Limited v. Deputy Commissioner of Central Excise and others, (2015) 8 SCC 519, he has pleaded that the Apex Court in the said judgment has held that the show cause notice and personal hearing is necessary before saddling an assessee with additional demand. Therefore, it is a trite law that when a statute is silent with no positive words in the Act or Rules spelling out the need to hear the party whose right or interest is likely to be affected, the requirement to follow a fair procedure before taking a decision must be read into the statute, unless the statute provides otherwise. Arguing on the principles of statutory interpretation, as contained in the principles of statutory interpretation by Justice G.P.Singh, 14th edition and the judgments in Queen v. Vine, (1875) 10 QB 195 and in Re A Solicitor's Clerk, (1957) 3 All ER 617(DC), submitted that the facts in both cases are totally different from the present case, inasmuch as in the aforementioned cases, the persons stood disqualified were found convicted for an offence of felony. However, in the cases on h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions not challenging the provision of Section 164(2)(a) but challenging only the retrospective effect are liable to be dismissed. He further submitted that when the directors of struck off companies were consequently disqualified, they cannot challenge only the retrospective effect. Explaining further the facts and circumstances under which the impugned proceeding disqualifying the directors of the companies were issued, the learned Additional Solicitor General pleaded that Section 164 of the Companies Act, 2013 was brought into force with effect from 1.4.2014, repealing the corresponding section 274(1)(g) of the Companies Act, 1956. Since the new provision under Section 164(2)(a) of the 2013 Act came into effect from 1.4.2014 has introduced 'company' in lieu of 'public company' under Section 274(1)(g) of the 1956 Act indicating therein that no person who is or has been a director of a company which has not filed the financial statement or annual return for any continuous period of three financial years shall be eligible to be reappointed as director of any other company for a period of five years from the date on which the said company fails to do so, the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le their annual financial statements and annual returns with the respondents. That clearly shows that sufficient opportunities were given to the petitioners to rectify the defaults. The petitioners should appreciate that the said scheme was introduced with a view to give an opportunity to the non compliant defaulting companies to rectify the defects and was never meant for the companies which have already been struck off. The scheme was also made applicable to all defaulting companies viz., other than the companies which were struck off and whose names have been removed from the Register of companies under Section 248(5) of the Act. Therefore, a defaulting company was permitted to file its overdue documents which were due for filing till 30.6.2017 in accordance with the provisions of the scheme. Pursuant thereto, several writ petitions came to be filed and one such writ petition is W.P.No.25455 of 2017 on 21.9.2017. This Court also passed an interim order directing the Registrar of Companies, the second respondent herein to reactivate the DIN number of the director. Again in W.P.Nos.6896, 3268 and 3269 of 2018, this Court passed an order on 23.3.2018 granting the petitioners to ava ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y cannot be found fault with. Taking support from the judgment of the Calcutta High Court in Nabendu Dutta v. Arindam Mukherjee, (2004) 55 SCL 146 (Cal.), it has been submitted that the Calcutta High Court has held that on the date of commencement of the amending Act, if any person has been a director in a defaulting company, he shall also be debarred to be appointed as director of any company for a period of five years. Therefore, when Section 164(2)(a) have two limbs, the words no person who is or has been director of a company which are used in the present continous and present perfect continuous form, respectively and the words has not filed financial statements or annual returns for any continuous period of three years which are used in present perfect tense, meaning thereby that in case any company has defaulted in filing its financial statement or annual return for a continuous period of three years, then no person who is occupying the position of director shall be eligible for reappointment as director of that company and he shall be debarred to be appointed as director in any company for a period of five years. In the light of the above, actions have been taken by the answ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been deactivated to prevent such directors to be appointed or reappointed as directors. Only under this background, their names have been displayed on the Ministry's website for public information. Therefore, all the writ petitions are liable to be dismissed, he pleaded. 16. Heard learned counsel for the parties. 17. All the parties have admitted that no person who is or has been a director of a company which has not filed the financial statements or annual returns for a continuous period of three financial years, shall be eligible to be reappointed as a director of that company or appointed in any other company for a period of five years from the date on which the said company fails to do so. To disqualify a director under Section 164(2)(a), it has to be established that three consecutive defaults have occurred for not filing the financial statements. To find out the three consecutive defaults, it is necessary to find out which is the first default. The expression financial year as defined under Section 2(41) of the 2013 Act in relation to any company or body corporate, means the period ending on 31st day of March every year and where it has been incorporated on or af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h came into effect from 13.12.2000, clearly states that three financial years commencing on and after the first day of April, 1999 , whereas the new Section 164(2)(a) of the Companies Act 2013 uses the expression for any continous period of three financial years . Therefore, when it is an admitted fact that Section 164(2)(a) was made effective from 1.4.2014, as per Section 2(41) of the 2013 Act, the first financial year for the purpose of Section 164 of the 2013 Act would be 31.3.2015 viz., from 1.4.2014 to 31.3.2015. Therefore, the second financial year would be from 1.4.2015 to 31.3.2016 and the third financial year would be from 1.4.2016 to 31.3.2017. While so, the respondents in para-22 of the counter affidavit have stated that all the petitioners have committed default with regard to the filing of the statutory returns for the financial years 2013-14, 2014-15 and 2015-16. The relevant averment in paragraph-22 of the counter reads as follows:- 22....Therefore, the petitioners have not approached this Hon'ble Court with clean hands as the petitioners are at default with regard to filing of the statutory returns for the financial years 2013-14, 2014-15 and 2015-16. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tutory body in miscalculating the three consecutive financial years contemplated under Section 164(2)(a) can be again seen in paragraph-15 of the counter affidavit, which reads as follows:- 15. I submit that the petitioner/petitioners, as on the date of disqualification, was/were directors in defaulting companies. On verification of the statutory returns filing position for the financial years 2013-14, 2014-15 and 2015-16, it was found that the defaulting companies in which the petitioners are directors, failed to file the statutory returns for the financial years 2013-14, 2014-15 and 2015-16. In view of the said failure the petitioners have become disqualified due to the operation of law under section 164(2)(a) of the Companies Act, 2013. 21. A careful reading of the above paragraph clearly shows that the second respondent has wrongly applied Section 164(2)(a) of the 2013 Act to disqualify the petitioners as eligible to be appointed as director of that company or reappointed in any other company for a period of five long years, hence, the impugned orders, per se, on the face of it, glaring apparently, are liable to be set aside. 22. Even the disqualification cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. It is relevant to extract the contents of the said circular as follows:- A number of provisions of the Companies Act, 2013 including those relating to maintenance of books of account, preparation, adoption filing of financial statements (and documents required to be attached thereto), Auditors reports and the Board of Directors report (Board's report) have been brought into force with effect from 1st April, 2014. Provisions of Schedule II (useful lives to compute depreciation) and Schedule III (format of financial statements) have also been brought into force from that date. The relevant Rules pertaining to these provisions have also been notified, placed on the website of the Ministry and have come into force from the same date. The Ministry has received requests for clarification with regard to the relevant financial year with effect from which such provisions of the new Act relating to maintenance of books of account, preparation, adoption and filing of financial statements (and attachments thereto), auditors report and Board's report will be applicable. Although the position in this behalf is quite clear, to make things absolutely clear it is he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow s backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips vs. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 43. There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz., the understanding of CBDT itself regarding this provision. It is contained in CBDT Circular No.8 of 2002 dated 27.8.2002, with the subject Finance Act, 2002 Explanatory Notes on provision relating to Direct Taxes . This cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any such document, fact or information may, without prejudice to any other legal action or liability under the Act, be also submitted, filed, registered or recorded, after the first time specified in first proviso on payment of fee and additional fee specified under this section. , to file any document from the date by which it should have been filed on payment of additional fee, cannot also be easily brushed aside, for the reason that although the additional period of 270 days granted to file any document has been substituted by the Act 1 of 2018 now, the fact remains that on the date of passing of the impugned orders, the first and second provisos under Section 403 granting additional time to the directors to file the returns with the second respondent were very much available. But this was also again overlooked by the respondents. 27. Coming to the violation of the principles of natural justice before invoking Section 248(1) of the Companies Act, 2013 for striking off and Section 164(2)(a) dealing with the disqualification of directors, the respondents have no doubt issued public notice from 5.7.2017. Illustratively, in W.P.No.25455 of 2017, when a notice under Section 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, if the company has not been carrying on business for two financial years viz., year ending on 31.3.2015 and 31.3.2016, after giving due notice, the name of the company can be struck off, whereas the director cannot be disqualified, because only two financial years have ended. But for disqualification, there should be three financial years. This vital aspect also has been completely lost sight of by the second respondent and to avoid any such grave injustice, the second respondent, in my considered opinion, ought to have sent show cause notices to the petitioners before taking any action, as it affect their right to continue as directors in other companies which are complying with the provisions of law. Here again, the Constitution Bench of the Apex Court in A.K.Kraipak and others v. Union of India, AIR 1970 SC 150, reiterating the rule of the principles of natural justice, observed as follows:- The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ..It is also trite that when a statute is silent, with no positive words in the Act or the Rules spelling out need to hear the party whose rights or interests are likely to be affected, requirement to follow fair procedure before taking a decision must be read into the statute, unless the statute provides otherwise. 28. It is on the aforesaid jurisprudential premise that the fundamental principles of natural justice, including audi alteram partem, have developed. It is for this reason that the courts have consistently insisted that such procedural fairness has to be adhered to before a decision is made and infraction thereof has led to the quashing of decisions taken. In many statutes, provisions are made ensuring that a notice is given to a person against whom an order is likely to be passed before a decision is made, but there may be instances where though an authority is vested with the powers to pass such orders, which affect the liberty or property of an individual but the statute may not contain a provision for prior hearing. But what is important to be noted is that the applicability of principles of natural justice is not dependent upon any statutory provision. The pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n six months from the closing of financial year i.e., 30.9.2017, additionally in the light of Section 164(2)(a) referring to annual return and financial statement , the time limit to file annual return under Section 92(4) of 2013 Act is sixty days from Annual General Meeting or the last date on which Annual General Meeting ought to have been held, hence, the time limit to file balance sheet under Section 137(1) of the 2013 Act is again thirty days from Annual General Meering. Therefore, in view of these legal position, the disqualification could get triggered off only on or after 30.10.2017 only, if any company fails to file annual forms for three financial years. Importantly, it is to be borne in mind that even beyond that time limit, additional time limit of 270 days was available by virtue of the then first proviso to Section 403. (d) Although there is no statute or provision expressly spelling out the observance of the principles of natural justice against disqualification of directors, as the legal right of the petitioners to continue as director in other company or reappointed in any other company, which are scrupulously following the provisions of the Companies Act, have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave not followed the principles of natural justice, extinguishing the corporate life of the directors to the extent of disqualifying them to hold the directorship in the other companies, the said provision is liable to be read down, hence, Section 164(2)(a) is read down to the extent it disqualifies the directors in other companies which are scrupulously following the requirements of law, making it clear that no directors in other companies can be disqualified without prior notice. (g) However, it is made clear beyond any pale of doubt that the mischief of removal of the names of the companies by the Registrar of Companies and the disqualification of the directors in the defaulting company will go together, as it is inseparable, and the Registrar of Companies need not give fresh notice to the directors for their disqualification from the dormant company, if there is a failure to file the financial statement or annual return for any continuous period of three financial years as per Section 164(2)(a). 30. For all the aforementioned reasons, the impugned orders are set aside and the writ petitions shall stand allowed. Consequently, all the connected writ miscellaneous petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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