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2019 (10) TMI 377

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..... son not possessing a DIN under Section 154 of the Act is not eligible to be appointed as a Director or to continue as a Director of a Company as he incurs a disqualification for appointment as a Director in terms of Section 164(1)(h) of the Act and in terms of Section 167 of the Act, the office of such a Director becomes vacant as he incurs the disqualification specified under Section 164 which inter alia includes ineligibility for appointment as a Director of a Company in the absence of allotment of DIN read with Rule 2(1)(d) of the Rules, which defines DIN as an identification number allotted to an individual intending to be appointed as director or to any existing director of a company for the purpose of his identification as a director of a company. Order set aside - the execution application is held to be non maintainable - M/s H.S. Tuli & Sons Builders Pvt. Ltd. (decree holder) shall be at liberty to recover the amount owed to it by the petitioner in accordance with law. - CR NO.14395 OF 2018 (O&M) - Dated:- 7-2-2019 - MR B.S. WALIA, J. For The Petitioner : Mr. Arun Gosain, Advocate, Counsel For The Respondent : Mr. Harkrishen Singh Tuli JUDGMENT B.S. WALIA, J., 1. Challe .....

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..... s Pvt. Ltd. were competent to transact any business on behalf of the respondent/decree-holder. Learned counsel contended that despite the plea of incompetence to file the execution application having been raised in the objections and elaborated in the written submissions/ arguments filed before the Executing Court on 23.03.2018 as were taken on record vide order dated 18.08.2018, the same had not been dealt with by the learned Executing Court while deciding the objections. 4. Learned counsel for the petitioner relied on the provisions of Section 149 to 172 of the Act as also Rule 2(1)(d) of the Act (Appointment and Qualification of Director), Rules, 2014 as referred to in the written submissions / arguments. Learned counsel made categorical reference to Section 152 of the Act as per which no person can be appointed as a Director of a company in the absence of allotment of DIN under Section 154 besides Section 164 which stipulates disqualifications for appointment as a Director and Section 167 which stipulates the situations in which the office of Director shall become vacant and in view of the above, reiterated prayer as made in the objections / written submissions/arguments for di .....

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..... rs Pvt. Ltd. Original Register containing resolution book of M/s H.S. Tuli and Sons Builders Pvt. Ltd. containing resolution dated 03.03.2016 was shown to learned counsel for the petitioner besides, photocopy of the same duly signed by Shri Tuli was handed over to learned counsel for the petitioner. On perusal of the original register containing the resolution of M/s H.S. Tuli and Sons Builders Pvt. Ltd. dated 03.03.2016 learned counsel for the petitioner stated that he did not press the objection w.r.t. resolution not being of M/s H.S. Tuli and Sons Builders Pvt., Ltd. 7. Plea of the petitioner that none of the Directors of M/s H.S. Tuli & Sons Builders Pvt. Ltd. possessed DIN or had applied for the same was frankly conceded by Shri Tuli to be the correct factual position. However, he argued that the objection with regard to non possession of DIN was not taken in the objections dated 21.10.2017 and that an objection not taken before the Executing Court could not be raised before the High Court in revision. Sh Tuli further contended that preliminary objection No.1 taken was with regard to the execution application being not maintainable as the case had not been presented by the .....

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..... e completed by 11.10.1980. 10. Union of India cancelled the contract on 04.10.1980, took over all stocks and material lying at the site and got the unfinished work executed through another contractor allegedly on account of the respondent/decreeholder having failed to execute the work as per the terms and conditions of the contract. Dispute between the parties was referred to arbitration leading to passing of award dated 19.02.2001 by Shri S.S. Goyal. Claims raised therein were partly allowed and ₹ 8,18,247.09 was awarded along with interest @ 12% per annum on the awarded amount w.e.f. 04.10.1980 to the date of decree / date of realisation whichever was earlier. 11. It needs noticing here that on the death of Shri Harbans Singh Tuli, Sole Proprietor, all his legal heirs joined together and incorporated M/s Harbans Singh Tuli & Sons Builders Pvt. Ltd on 30.01.1985 and took over the assets and liabilities of the Sole Proprietorship. Said company i.e. M/s. Harbans Singh Tuli & Sons Builders Pvt. Ltd. was dissolved on 16.06.2007 but before its dissolution, another Company by the name of M/s. H.S.Tuli & Sons Builders Pvt. Ltd was incorporated on 27.02.2006 and all asse .....

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..... kh was recoverable by the decree holder. Eventually, Hon ble the Supreme Court vide order dated 26.10.2018 was pleased to direct the Executing Court to pass orders as to whether the deposit already made by the respondents before it was in tune with the orders passed by the Supreme Court within 10 days from 26.10.2018. Thereupon, vide order dated 05.11.2018 the Executing Court held that as on 29.10.2018 an amount of ₹ 30,54,570.17 was the amount payable by the petitioner-JD to the respondent/decree-holder, accordingly, the amount paid by the judgment-debtor to the decree-holder was not in tune with the orders passed by Hon ble the Supreme Court. 16. I have considered the position as noted above as also the submissions of learned counsel for the petitioner as well as Shri H.S. Tuli appearing on behalf of the decree-holder. 17. Plea of the petitioner of the execution application not having been filed by the competent person in view of resolution dated 03.03.2016 being of M/s Harbans Singh Tuli and Sons Builders Pvt Ltd need not be dealt with in view of statement of counsel for the petitioner of his not pressing said objection on perusal of the original resolution of M/s H.S. Tul .....

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..... viduals prior to the notification of these rules shall be the DIN for the purpose of the Companies Act, 2013: Provided further that "Director Identification Number" (DIN) includes the Designated Partnership Identification Number (DPIN) issued under section 7 of the Limited Liability Partnership Act, 2008 (6 of 2009) and rules made thereunder; A perusal of Section 266 A of the Companies Act, 2006 reveals that every person intending to be appointed as a Director of a company or a Director of Company appointed before commencement of the Companies Amendment Act, 2006 was required to make an application for allotment of Director Identification Number to the Central Government and that every director appointed before the commencement of the Companies Amendment Act, 2006 was required to make the application within 60 days of the commencement of the said Act to the Central Government. Further Rule 2(1)(d) of the aforementioned Rules stipulates Director Identification Number as a requirement not only for any person to be appointed as Director but also for an existing Director of a company for the purpose of his identification as a Director of a company. 19. Further, Section 152(3) .....

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..... n one lakh rupees but which may extend to five lakh rupees, or with both. (3) Where all the directors of a company vacate their offices under any of the disqualifications specified in sub-section (1), the promoter or, in his absence, the Central Government shall appoint the required number of directors who shall hold office till the directors are appointed by the company in the general meeting. (4) A private company may, by its articles, provide any other ground for the vacation of the office of a director in addition to those specified in subsection (1). 21. Thus, a person not possessing a DIN under Section 154 of the Act is not eligible to be appointed as a Director or to continue as a Director of a Company as he incurs a disqualification for appointment as a Director in terms of Section 164(1)(h) of the Act and in terms of Section 167 of the Act, the office of such a Director becomes vacant as he incurs the disqualification specified under Section 164 which inter alia includes ineligibility for appointment as a Director of a Company in the absence of allotment of DIN read with Rule 2(1)(d) of the Rules, which defines DIN as an identification number allotted to an individual inte .....

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..... h passed the resolution dated 03.03.2016 was not a valid Board on account of the Directors of M/s H.S. Tuli & Sons Builders Pvt. Ltd having incurred disqualifications of not possessing DIN, thereby vacating their office in terms of Section 167 read with Section 164(1) (h), Section 152(3) and Section 154 of the Act. Accordingly, it is held that the execution application filed on behalf of M/s H.S. Tuli & Sons Builders Pvt. Ltd could not have been entertained nor proceedings continued without removing the disqualifications noticed above nor could Sh H.S. Tuli act as Managing Director of M/s H.S. Tuli and Sons Builders Pvt. Ltd. on account of not possessing DIN and thereby having vacated his office. 25. As regards objection qua calculations made by the Executing Court not being correct on account of addition of interest on the principal amount as on date of award and further awarding interest on the said clubbed amount, till date of realization, it needs to mention here that the aforementioned aspect of the matter was decided by the learned Civil Judge (Junior Division), Chandigarh vide order dated 04.10.2006 in favour of the respondent/decree-holder. As per affidavit dated 04 .....

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