9911796707
TMI Blog2020 (3) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019, 1241/2019, 1372/2019, 1448/2019, 1450/2019, 1456/2019, 1478/2019, 1495/2019, 1503/2019, 1524/2019, 1525/2019, 1533/2019, 1562/2019, 1563/2019, 1564/2019, 1584/2019, 1587/2019, 1591/2019, 1696/2019, 1767/2019, 1784/2019, 1964/19, 1969/2019, 2005/2019, 2014/2019, 2108/2019, 2322/2019, 2439/2019, 2465/2019, 2537/2019, 2590/2019, 2697/2019, 2718/2019, 2721/2019, 2723/2019, 2812/2019, 3034/2019, 3088/2019, 3089/2019, 3117/2019, 3493/2019, 60/2020, 75/2020, 181/2020, 304/2020, 379/2020 R.I. Chagla And S.C.Dharmadhikari, JJ. P.C. :- 1. The matters were placed before us for considering the prayer for interim relief. 2. On these petitions, on 15th October, 2019, an order was passed by a Division Bench, to which, one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative act of filing the financial statements or annual returns. If they are not filed continuously for a period of three years, then, the disqualification is invited or incurred. He would submit that the provisions have been construed and interpreted by the above High Courts and in that process, the argument of the Central Government has been noted. In that regard, our attention is invited to the judgment and order of the High Court of Karnataka at Bengaluru reported in Indian Law Reporter 2019 Karnataka 3768 (Yashodhara Shroff and Ors. Vs. Union of India and Ors.). Mr.Singh has invited our attention to para 191 of this judgment to urge that the Government argued that the proviso to Section 164(2) is only clarificatory in nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking that order and the queries further it is clear that Section 164 of the Companies Act, 2013 provides for disqualifications for appointment of director. By sub-section (1), the eligibility for appointment of the director of a company is the aspect dealt with. By sub-section (2), it is said that no person, who is or has been a director of a company, which has not filed financial statements or annual returns for any continuous period of three years, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so. Then, there is a proviso, which has been inserted by Act 1 of 2018. 10. Sub-section (2) of Section 164 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment and not from continuing as a director of the defaulting company would mean that a director would continue until the end of the extant term, but would not be eligible for reappointment for another five years thereafter. Further, if such a director had been appointed within six months of the company becoming a defaulting company, he would not incur disqualification. The query that we raised with regard to interpretation of Section 167 sub-section (1) clause (a) is also in consonance with the intent of the legislation and we are of the opinion that the stand of the Central Government before the Karnataka High Court would sufficiently protect the interest of the petitioners before us. Section 167(1)(a) is also considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al returns for any continuous period of three financial years, on the date on which the company fails to do so, the disqualification is incurred. It is a ministerial or administrative act of filing which is to be performed by the Company. Therefore, if such financial statements or annual returns for any continuous period of three financial years have not been filed, then, the action is triggered. 13. Prima facie, we do not think that the Circular which has been issued by Ministry of Corporate Affairs and the notice dated 7th September, 2017 is in any way inconsistent or contravening the position emerging from the plain reading of this section. In the event, there is any inconsistency, then, statute must prevail. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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