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2020 (12) TMI 1246 - HC - Companies LawDisqualification of directors - Seeking permission to get reappointed as Directors of any Company or appointed as Directors in any company without any hindrance - HELD THAT - The Hon ble Division Bench in Meethelaveetil Kaitheri Muralidharan V. Union of India 2020 (10) TMI 595 - MADRAS HIGH COURT dealt with the powers of the RoC in the light of Sections 164 and 167(1) of the Companies Act 2013 and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules 2014 and also has elaborately considered as to whether the RoC is entitled to deactivate the Director Identification Number (DIN) by referring to the Rules 19 10 and 11 of the said 2014 Rules and held that As a corollary to our conclusion on the deactivation of DIN the DIN of the respective directors shall be reactivated within 30 days of the date of receipt of a copy of this order. Petition allowed.
Issues:
Challenge to disqualification of directors under Section 164(2)(a) of the Companies Act, 2013 and the power of the Registrar of Companies (RoC) to deactivate Director Identification Numbers (DIN). Analysis: 1. Challenge to Disqualification Orders: The petitioners challenged the orders of the RoC disqualifying directors under Section 164(2)(a) of the Companies Act, 2013. The court noted that previous notifications disqualifying directors were challenged in a similar case and set aside by the court. However, a subsequent notification dated 17.12.2018 was challenged based on the previous judgment but was dismissed. The matter was then taken up in a batch of writ appeals before a Division Bench, which analyzed the powers of the RoC under Sections 164 and 167(1) of the Companies Act, 2013, and Rule 14 of the Companies (Appointment and Qualifications of Directors) Rules, 2014. 2. Analysis of RoC's Powers: The Division Bench considered Rules 9, 10, and 11 of the 2014 Rules, which deal with the allotment, validity, and cancellation/deactivation of DIN. The court highlighted that neither cancellation nor deactivation of DIN is provided for upon disqualification under Section 164(2) of the Companies Act, 2013. It was emphasized that a director of a Defaulting Company may vacate office in other companies due to disqualification but may need to retain the DIN to rectify the default by filing necessary documents. The court concluded that the RoC does not have the power to deactivate DIN and such deactivation would be contrary to the relevant sections of the Companies Act, 2013. 3. Court's Decision and Order: The Division Bench allowed the appeals, setting aside the impugned order and quashing the publication of the list of disqualified directors by the RoC. The deactivation of DIN was also revoked, and the directors were directed to reactivate their DIN within 30 days. The court clarified that the RoC could initiate action regarding disqualification subject to an inquiry to determine specific directors' default attribution. The judgment followed the decision in a previous case, and the writ petition was allowed accordingly. 4. Conclusion: The judgment emphasized the importance of following the legal provisions and rules regarding the disqualification of directors and the powers of the RoC. It provided clarity on the RoC's authority to deactivate DIN and highlighted the necessity for due process in cases of director disqualification. The decision upheld the rights of the petitioners and set a precedent for similar cases involving director disqualification under the Companies Act, 2013.
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