TMI Blog2020 (2) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... law is clear on this aspect. Petition is dismissed. - W. P.No.1400 of 2020 And W.M.P.Nos. 1647 & 1648 of 2020 - - - Dated:- 14-2-2020 - Mr. C.V.Karthikeyan, J. For Petitioner: Mr. D.Peruman Saranyan For Respondents: Mr.S.Janarthanam Senior Panel Counsel ORDER In a similar issue, this Court has passed a common order dated 13.01.2020 made in W.P.No. 13616 of 2018 batch and the relevant portion of the said order is as follows:- 21.Even before entering into any discussion, it must be mentioned that the vires of the proviso under Section 167(2)(a) of the Act which was inserted to the Companies (Amendment Act 2017) had been challenged and a Division Bench of this Court in W.P.No. 32763 of 2019 G.Vasudevan Vs. Union of India had upheld the vires of the said provision. 22. The Companies Act 2013 had come into effect from 12.09.2013. It had brought about sweeping changes with respect to the filing of Annual Returns and Financial Status, brining strict compliance thereof. The equivalent provision to Section 164 of the 2013 Act was Section 274 of the Companies Act 1956. One important change which had been brought about was that under Section 274 of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) is seen to be the same as that of Section 164(2) both of which exist in the interest of transparency and probity in governance. Owing to these justifications, the Court thus holds that the proviso to Section 167(1)(a) is neither manifestly arbitrary nor does it offend any of them in W.P.No.32763 of 2019 fundamental rights guaranteed under Part III of the Constitution of India. 29. We are persuaded to agree with the views of the Hon'ble Single Judge of the Karnataka High Court that present an accurate interpretation of the impugned law. The impugned provisions are intravires for all the reasons herein above. The writ petition is accordingly dismissed. No Costs. 26. After the arguments had concluded, the learned Senior counsel for the petitioners drew attention of this Court to the Division Bench Judgement of the Allahabad High Court dated 16.01.2020 in Jaishankar Agrahari Vs. Union of India and other, Writ-C.No. 12498of 2019 (batch); wherein also the very same issue had beenagitated. The Allahabad High Court by order dated 16.01.2020 had struck down disqualification as Directors of the petitioners. A careful reading of the Judgement of the Allahabad High Court shows t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given to file the annual returns. Here the three financial years had come to an end. The said period of six months had also been completed. The further period of 30 days/60days had also been completed and when annual returns or financial statements have not been filed, a plain reading of the provision of law would indicate that disqualification automatically follows. There cannot be any alternate interpretation of the said provision. It is clear crystal clear. Issuance of notice would be of no avail since only one conclusion is possible. 28. The principle of natural justice cannot be stretched to extreme limits when issue of notice would be an empty formality. The law is clear. The three financial years are 2014-2015; 2015-2016 and 2016-2017. If annual returns are not filed for the said three consecutive years, then disqualification is the only option available. The other provisions relating to penalty /punishment relied on by the petitioners would be attracted when for a single year annual returns/financial statements are not filed. But when they are not filed for three consecutive years then the Directors are automatically disqualified. 29. In (2000) 7 SCC 529 { Aligarh M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eloped in several cases. In K.L. Tripathi Vs. State Bank of India ( 1984(1) SCC 43), Sabyasachi Mukherji, J. ( as he then was) also laid down the principle that not mere violation of natural justice but de facto prejudice (other than non-issue of notice) had to be proved. It was observed: quoting Wade Administrative Law, (5th Ed.PP.472-475) as follows: ( para 31) ....it is not possible to lay down rigid rules as to when principles of natural justice are to apply, nor as their scope and extent ....There must have been some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the facts and circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter to be dealt with and so forth . Since then, this Court has consistently applied the principle of prejudice in several cases. The above ruling and various other rulings taking the same view have been exhaustively referredto in State Bank of Patiala Vs. S.K. Sharma (1996(3) SCC 364). In that case, the principle of 'prejudice' has been further elaborated. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted. If only one conclusion is possible, a writ would not issue only because there was a violation of the principles of natural justice. 31. A Division Bench of this Court in a Judgement reported in 2006 4 LLN 358 [Dr.C.Chendroyaperumal Vs. National Institute of Port Management] had also expressed their views on this aspect. 9. Coming to the legal aspects canvassed by the learned counsel for the appellant, it is seen that they revolve around violation of the principles of natural justice. Even at the outset, we are not impressed with the said argument, since in our opinion, Principles of natural justice is for thoroughbred horses and not wild horses. Wild horses understand only the language of the whip and hence there is no use trying to tame them with persuasion. The principles of natural justice themselves have traversed a long way from the stage at which they were treated as a tharaka manthra or panacea for all diseases, to the present stage where the Courts have started looking at the credentials of the person using them as a shield or sword and accepting the fact thatthey are not indispensable. 32. The march of law expanding the interpretation of the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn the notification issued in the year 2017. On facts, the impugned notifications in the instant Writ Petition stand on a totally different footing in the sense that in the instant writ petitions three financial years have been completed and annual returns/financial statements from the financial year 2014-2015 have not been filed by the defaulting companies. Therefore, the claim of the petitioners that prior notice should have been given is rejected as notice would have been an empty formality. 37. To reiterate, the conclusion, the Judgments relied on by the petitioners pertain to a fact situation where the three financial years commenced prior to 2014-2015 and since the Act is prospective in nature, the Courts have held that the notification has to be struck down and prior notice has to be given. 38. In the present writ petition, the three financial years 2014-2015, 2015-16 and 2016-17 have been completed and since annual returns / financial statements have not been filed, disqualification automatically follows and when disqualification is incurred, deactivation of Director Identification Number also automatically follows. The DIN number can exist only during the life time o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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