MEETHELAVEETIL KAITHERI MURALIDHARAN Vs. UNION OF INDIA

JUDGEMENT

(1.) This batch of writ appeals arise out of a common order dated 13.01.2020 whereby the separate writ petitions filed by each Appellant herein to quash the respective disqualification by the Registrar of Companies (the ROC) and for consequential reactivation of the Director Identification Number (DIN) or permission for appointment/reappointment as director were dismissed.

(2.) The Companies Act, 2013 (CA 2013) deals with disqualifications for appointment as a director in Section 164 which came into force on 01.04.2014. Section 164(1) thereof sets out eight grounds of disqualification that are individual director-specific and broadly corresponds to Section 274(1)(a)-(f) of the earlier Companies Act, 1956 (CA 1956). Section 164(2), which bears some resemblance to Section 274(1)(g) of CA 1956 but is wider in scope, on the other hand, deals with default by the company concerned in fulfilling its obligations and the attribution of such default to the directors, thereby resulting in their disqualification. In these cases, we are concerned with Section 164(2)(a) which prescribes that a 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 financial years is not eligible to be re-appointed as a director of the company or appointed as a director of any other company for five years from the date of default. In each of these cases, on the ground specified in Section 164(2)(a) of CA 2013, the name of each Appellant was included in a list of disqualified directors, which was published on the website of the first Respondent. The DIN of each Appellant/director was consequently deactivated. Such disqualification and deactivation were challenged in the writ petitions. The two main grounds on which the disqualification and deactivation were challenged are : (i) prior notice was not issued to the Appellant concerned calling upon him to show cause as to why he should not be disqualified as a director; and (ii) the ROC is not entitled to deactivate the DIN of these directors as per CA 2013 and the rules framed thereunder.

(3.) By the impugned order, in paragraph 27, the learned single Judge concluded that a notice would be an empty formality in the facts and circumstances because the disqualification occurs ipso facto and the issuance of a notice would make no difference.