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TMI Blog2020 (3) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... lly and heard and given an opportunity to establish that he was not liable for the alleged default committed by the company. This court is of an opinion that an opportunity of hearing had to be given to the petitioners prior to the deactivation of their DINs, even in respect of the defaulting company, which has not been given in the present case. Further, the RoC cannot deactivate the DIN only on the ground that a director has incurred disqualification under Section 164(2)(a) or his office has become vacant under Section 167(1)(a). Since such DIN is allocated under Section 154 of the 2013 Act, and there is no provision in the Act for the deactivation of the DIN of a director only on the ground of such disqualification under Section 164(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, prior to the 2018 Amendment of the Companies Act, 2013 (hereinafter referred to as the 2013 Act ) and as such, the provisions of the 2018 Amendment would not be applicable thereto. 6. By relying on the provisions of Section 164 of the 2013 Act, learned counsel for the petitioners argues that the disqualification contemplated in the said section was restricted to the defaulting company only and not to the other companies, in which the directors of the defaulting company were also directors. 7. By placing particular reliance on sub‐section (2) of Section 164, learned counsel submits that the restriction as to such director was limited to eligibility to be reappointed as a director of the defaulting company but envisaged the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of striking off of a company by itself cannot prejudice a director for the purpose of Sections 164(2) and 167(1) of the 2013 Act. A prior notice, it was held, would be necessary to find out whether the alleged disqualification which was incurred by the directors, as alleged by the Registrar of Companies, was an undisputed fact or, if disputed, opportunity to the concerned person was given to establish otherwise. 11. Moreover, if a director, despite knowing about his disqualification, continues to act as a director, he would incur penalty, but the continuance of a person as a director, in office of the director could not be said to be bad in law. 12. It was further held in the said judgment that various High Courts had examined re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be deactivated in their entirety, thereby denuding the petitioners powers as a director in companies other than the defaulting company. 14. In reply, learned counsel for the respondents places reliance on a division bench judgment of the Bombay High Court dated February 7, 2020 in W.P. No. 1224 of 2018 [Satish Kumar Gupta vs. Union of India and Anr. ], wherein it was held tentatively that at the time of admission of an appeal, the statutory provisions prevailed over the government circulars. In this context, it was held that, prima facie, Section 164 could operate retrospectively, in view of the filing of financial statements or annual returns of a company, as contemplated in Section 164(2)(a) of the 2013 Act, being the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualify the said director from acting in the said capacity in the other companies, which did not allegedly commit default. 17. As such, in any event, the disqualification of the DIN of the petitioners could not operate in respect of other companies than the defaulting company. In the event the DIN of a director is to be deactivated and not merely the name of the company struck out from the RoC, the said person has to be given notice individually and heard and given an opportunity to establish that he was not liable for the alleged default committed by the company. Subscribing to such view, as iterated in the division bench judgment of the Allahabad High Court cited by the petitioners, this court is of a similar opinion that an opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reby setting aside the impugned orders of the RoC in the said respective writ petitions, deactivating the DINs, bearing No.00031327 of the petitioner in W.P. No.268 of 2019 and No.00031338 of the petitioner in W.P. No.273 of 2019. The respondents are directed to immediately reactivate and/or allocate new DIN numbers if their previous numbers have been allocated to some other directors, within a fortnight from the date of communication of this order by the respective petitioners in the writ petitions to the respondents and to take all consequential action necessary to give effect to such reactivation/allocation of DINs. 20. There will be no order as to costs. 21. Urgent certified website copies of this order, if applied for, be made av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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