TMI Blog2021 (1) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 164 through the proviso therein came into effect from May 7, 2018 and therefore, a person cannot be held to be disqualified on the basis of events happening prior to May 7, 2018. On the other hand, respondents has relied upon an Order dated August 31, 2018 passed in MUKUL SOMANY ANR. VERSUS REGISTRAR OF COMPANIES, WEST BENGAL ANR. [ 2018 (5) TMI 2032 - CALCUTTA HIGH COURT] and submitted that, the Court refused to extend the interim order. He has submitted that, in a writ petition, where the issue of disqualification of Director was involved and where there subsisted an interim Order, the Court, upon finding that the issue of this qualification of Director was pending before the Supreme Court from a judgment of the Bombay High Court, refused to extend the interim Order. HELD THAT:- The defaults for non filing of annual returns are in respect of a company which is governed by the provisions of the Act of 2013 in as much as, the definition of a company as has been provided in Section 2 (20) of the Act of 2013 includes a company incorporated under any previous company law. The Act of 1956 being a previous law governing the affairs of the company will come within th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clarified the position that, financial statements and documents required to be attached thereto, auditor's reports and board's report in respect of financial years commencing earlier than April 1, 2014 shall be governed by the relevant provisions/schedules/rules of the Act of 1956 and that in respect of the financial years commencing on or after April 1, 2014 the provisions of the Act of 2013 shall apply. Such Government Circular has to be read in the context in which it was issued. The relevant all provisions of the Act of 2013, including those relating to the maintenance of books of accounts, preparation, detention and filing of financial statements and documents required to be attached thereto, auditor's reports and board director's report came into effect from April 1, 2014. Provisions of Schedule II and Schedule III of the Act of 2013 also came into effect from April 1, 2014 - Such a Government circular cannot be construed and read to mean that, defaults committed by a company or an individual in filing financial statements and annual returns for the period prior to April 1, 2014 stood condoned or that, such legal entity or the individual should not be prosec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statements and annual returns for the period from April 1, 2014 to March 31, 2017, his DIN stood cancelled immediately upon the defaulting company failing to comply with Section 164(2)(a) of the Act of 2013 and the decision of the Registrar of Companies in placing the petitioner in the list of disqualified directors does not suffer from the vice of breach of principles of natural justice. The views expressed are in conflict with Chetan Chokhani [ 2019 (11) TMI 1388 - CALCUTTA HIGH COURT ] and Subhas Kumar Biswas [ 2020 (3) TMI 806 - CALCUTTA HIGH COURT ] but in consonance with MUKUL SOMANY ANR. VERSUS REGISTRAR OF COMPANIES, WEST BENGAL ANR. [ 2018 (5) TMI 2032 - CALCUTTA HIGH COURT] and Sourajit Ghosh [ 2020 (8) TMI 432 - CALCUTTA HIGH COURT ] - there are therefore, conflicting views of this Court on the same issue. It would therefore be appropriate to invoke the provisions of Rule 26 of the writ rules of the High Court and refer the present writ petition to the Division Bench. Matter referred to Division Bench. - W.P.A. No. 22790 of 2019 - - - Dated:- 15-10-2020 - Debangsu Basak, J. For the Petitioner : Jishnu Chawdhury, Syed Nurul Arefin and Ms. Rima Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014. According to him, the respondents have taken the stand that Section 164(2) and Section 167(1) would apply prospectively from April 1, 2014. According to him, there was no look back period for default. He has drawn the attention of the Court to Paragraph 54 of Mukut Pathak Ors. (supra) and submitted that, the respondent authorities did not argue to the contrary before the Delhi High Court. Consequently, the respondent authority should not be permitted to argue to the contrary before this Court. 4. Learned Advocate appearing for the petitioner has submitted that, the defaults for the year 2014, 2015 and 2016 being periods of time prior to three continuous year of 2014, cannot be taken into consideration. He has submitted that, if the period of three continuous years prior to April 1, 2014 were taken into consideration, that is, defaults for 2011, 2012 and 2013, then on April 1, 2014, the concerned Director would cease to be a Director. Consequently, such Director cannot commit defaults for the years 2014, 2015 and 2016. According to him, such contention was upheld by Mukut Pathak Ors. (supra) and particularly in Paragraph 54 thereof. Therefore, in the event the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out that, Subhas Kumar Biswas (supra) as a decision of the court which disposed of the writ petition. 8. Learned Advocate appearing for the petitioner has relied upon 210 Company Cases 151 (Bhagavan Das Dhananjaya Das v. Union of India Ors.) and submitted that the action taken by the Registrar of Companies in placing the name of the petitioner in the defaulter's list was without notice. Therefore, such action was in breach of the principles of natural justice. Bhagwan Das Dhananjaya Das (supra) has held that, action by the Registrar of Companies in placing Directors in the defaulters list without notice, is bad in law. Therefore, according to him, the petitioner is entitled to the relief as sought. 9. Learned Advocate appearing for the respondents has submitted that, the petitioner suffered the disqualification for non-filing of returns for the years 2014 to 2017. In response to a query from the court, learned Advocate appearing for the respondents has submitted that, the name of the petitioner was included in the list of defaulting directors published by the Registrar of Companies, West Bengal in the month of November 2017. The petitioner figured in the list of dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is to be strictly construed is not of universal application which must necessarily be observed in every case. 13. Relying upon 1997 Volume 3 Supreme Court Cases 472 (Allied Motors (P) Limited v. CIT) learned Advocate appearing for the respondents has submitted that, literal construction of a statute should be avoided if it defeats the manifest object and purpose of the Act. He has submitted that, the Act of 2013 has been enacted to bring about greater transparency in the functioning of a legal entity. He has submitted that, the provisions for consequences in not adhering to the requirements of the statute are necessary so as to ensure compliance of the requirements of the statute. He has submitted that, provisions of Sections 164 and 167 of the Act of 2013 should be interpreted and construed in a manner so as to advance the object of the Act of 2013 and not defeat the same. 14. Learned Advocate appearing for the respondents has contended that, the principles of natural justice are not attracted to the provisions of the Sections 164 and 167 of the Act of 2013. He has submitted that, the Court should not insist on compliance with the principles of natural justice when only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has submitted that, the present writ petition should also be dismissed. 18. Learned advocate appearing for the parties have submitted that, the petitioner was a director of a company incorporated under the provisions of the Companies Act, 1956, under the name and style of Bala Techno Global Limited. Annual returns for such company had not been filed for the years 2014 to 2017 and that, the petitioner was disqualified to be a director of any company by reason of such non-filing of returns by the defaulting company for that period of time. 19. The interplay of the various provisions of the Act of 2013 in relation to the factual situation with regard to Bala Techno Global Limited, the defaulting company and the liability of the petitioner as a director thereof have to be understood. 20. The statement of objects and reasons of the Act of 2013 has inter alia, stated that, in view of the changes in the national and international economic environment and expansion and growth of the economy, the central government felt the need to repeal the Act of 1956 and enact a new legislation to provide for new provisions to meet the changed national and international, economic environmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been given in a staggered manner. Provisions of Sections 164 and 167 of the Act of 2013 have come into effect on April 1, 2014 by virtue of a notification dated March 26, 2014 published in the Gazette of India extraordinary on March 27, 2014. 25. Section 465 of the Act of 2013 has provided for the repeal of the Companies Act, 1956. The repeal is however subject to the various provisos as has been provided in such section. Section 465 of the Act of 2013 has not been given effect to. Therefore, as on the date of the hearing of the writ petition, although the Act of 1956 has not been repealed the affairs of the legal entity within the scope and ambit of the Act of 2013 is governed by the provisions of the Act of 2013 on and from the respective dates of the provisions of the Act of 2013 coming into effect. 26. Both the Acts of 1956 and 2013 contemplate and has provided for consequences for defaults in complying with the statutory requirements, such as filing of requisite forms with the appropriate authorities. The Act of 1956 had provided for consequences for non-filing of statutory returns with the Registrar of Companies. The Act of 2013 has in fact enhanced the consequences f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect from May 7, 2018, Section 164(2) and Section 167(1)(a) of the Act of 2013 have been as follows:- 164. Disqualifications for appointment of director ** ** ** (2) No person who is or has been a director of a company which- (a) has not filed financial statements or annual returns for any continuous period of three financial years; or (b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so: Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment. 167. Vacation of office of director.- (1) The office of a director shall become vacant in case- (a) he incurs any of the disqualifications specified in Section 164: Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend declared and such failure to pay or redeem continues for one year or more. In the facts of the present case, the disqualification prescribed under section 164 (2) of the Act of 2013 in relation to non-filing of annual returns by a company has been invoked. As noted above, it has been admitted at the bar that, factually, Bala Techno Global Limited, the defaulting company, had defaulted in filing annual returns for the period commencing from April 1, 2014 till March 31, 2017. There has however not been any clarity as to whether, such company had filed annual returns for the subsequent period or not. The pleadings of the parties have not clarified as to whether the subject company was in default of non-filing of annual returns under the Act of 1956 or not also. One of the conditions required for attracting Section 164 (2) of the Act of 2013 has therefore been satisfied for a person who was or is a director of such company to attract the disqualification prescribed therein. 36. It has been admitted at the bar that, the petitioner was a director of the defaulting company. Although the petitioner's claim that, the petitioner was not aware of the reason why the name of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed not be a director of a defaulting company for a continuous period of three financial years for which such defaulting company did not file the annual return, for him to be subjected to the disqualification provided under sub-section. The legislature has used the words is and has been to describe a person as a director of the defaulting company. Meaning has to be ascribed to each and every word used in the statute as it has been a recognised tool of construction of a statute that, no words used in the statute should be treated as surplusages. In the extent, the word is is taken in the present tense and the words has been as past participle, none of the words would need to be construed restrictively. The other alternative is to treat the entire Section 164(2) as one to have come into effect from April 1, 2014 and therefore being incompetent to take into consideration periods prior to April 1, 2014 to compute the continuous financial years. 40. Section 164 (2)(a) of the Act of 2013 has not limited the disqualification to a person who has been a director of a company for the entire period of three continuous years for which the company was in default of non-filing of annu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant. Every law that takes away a right vested under the existing law is retrospective in nature. (See Govt. of India v. Indian Tobacco Assn. [2005] 7 SCC 396) The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective, but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events. The reason why penal statutes are so construed was stated by Erle, C.J., in Midland Rly. Co. v. Pye (CB NS at p.191) in the following words: Those whose duty it is to administer the law very properly guard against giving to an Act of Parliament a retrospective operation, unless the intention of the legislature that it should be so construed is expressed in clear, plain and unambiguous language; because it manifestly shocks one's sense of justice that an act, legal at the time of doing it, should be made unlawful by some new enactment. This principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvicted of certain offences. It has laid down that, if a person has been convicted of the offences as stipulated therein then, such person may be removed outside the area within the local limits of the jurisdiction of the sub-divisional magistrate by such route and within such time as such officer may prescribe and that person will not to enter or return to the area from which he was directed to be removed. The High Court had held that, the legislature had used the present participle has been and not the past participle in the opening portion of the section. The High Court had held that, the section was intended to be used only where a person was convicted subsequent to the coming into the force of the Act. The High Court had held that, the section being a panel one, it had to be interpreted prospectively. 44. In Vishnu Ramchandra (supra) the Supreme Court has held that, the cardinal principle is that statute must always be interpreted prospectively, unless the language of the statutes make them retrospective, either expressly or by necessary implication. When a statute which create new offences it is always prospective. But when a statutes which create disabilities, though or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act of 2013 is read in isolation and construed to have effect only on and from April 1, 2014 then, by the same logic, sub-section (1) of Section 164 should also be read cater to events occurring subsequent to April 1, 2014. In other words, in a given case, where an application for being adjudicated as an insolvent was made by a person prior to April 1, 2014, then such person can successfully contend that, the application for adjudication as insolvent of the person being made prior to April 1, 2014, such person is not disqualified to be a director under section 164 (1)(c) of the Act of 2013, if the proposition of strict compartmentalisation is applied. 48. The contention that, events occurring prior to April 1, 2014 cannot be taken into consideration for the purpose of considering Section 164 of the Act of 2013, ordains strict compartmentalisation of the Act of 1956 and 2013. Such contention envisages strict watertight compartments between the two Acts with no events flowing out of the Act of 1956 into the Act of 2013. This, in my view, is not the scheme of the Act of 2013. The Act of 2013 recognises and allows a company incorporated under any previous company law in force, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for any continuous three financial years commencing on and after the first day of April, 1999; or (B) has failed to repay its deposit or interest thereon on due date or redeem its debentures on due date or paid dividend and such failure continues for one year or more: Provided that such person shall not be eligible to be appointed as a director of any other public company for a period of five years from the date on which such public company in which he is a director failed to file annual accounts and annual returns under sub-clause (a) or has failed to repay its deposit or interest or redeem its debentures on due date or paid dividend referred to in clause (B). 52. If one was to compartmentalise the Act of 1956 and the Act of 2013 into two separate watertight compartments with the Act of 1956 coming to an end on March 31, 2014 and the Act of 2013 coming into effect on and from April 1, 2014 then, in a given case, a person who is a director of a company, which such company had failed to file annual accounts and annual returns for continuous two financial years commencing from April 1, 2012, and such company failing to file annual returns for the financial year commencin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-filing of annual returns committed under the Act of 1956. Therefore, defaults under that the Act of 1956 continues to be visited with consequences. The question is whether such consequences are to be imposed under the provisions of the Act of 1956 or the Act of 2013 with the coming into effect of the provisions of the Act of 2013. In my view, a person having incurred a default of non-compliance of a statutory provision under the Act of 1956 cannot claim that, with the coming into effect of the Act of 2013, such defaults stand obliterated. On the same reasoning, since, Section 167 (1) of the Act of 2013 has provided for the consequences of a person suffering a disqualification specified in Section 164 of the Act of 2013, necessarily and by implication, Section 167 (1) of the Act of 2013 brings within its purview, scope and ambit, events happening prior to Section 167 of the Act of 2013 coming into effect. In other words, should there be a company, governed by the provisions of the Act of 2013, having defaulted in filing annual returns for three continuous years even prior to the Act of 2013 coming into force, and such defaults not being condoned under the provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... articles of association of the company. The persons agree and subscribe to the capital of the company. Subscribers to the capital of the company are called shareholders. A shareholder holds shares of the company to the extent he paid for it. A company is run and managed by its board of directors. A shareholder has the right to elect directors and thus participate in the management of the company through them. A director owes fiduciary duties to the company. A director is obliged to take actions which are in the benefit of the company. Actions taken by a director which are to the detriment and prejudice of the company and not in the interest of the company are actions which are in breach of the fiduciary duties that the director owes to the company. Both the Act of 1956 as well as the Act of 2013 obliges the company to file financial statements and annual returns. A director being in charge of the management of the company would fail in the discharge of his fiduciary duties in the event the company defaults in filing the statutory returns with the Registrar of Companies. 57. Returning to the proposition of strict compartmentalisation between the Act of 1956 and 2013, such proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason of Section 164(2) thereby preventing the defaulting company from curing the defaults. It is not the intention of the legislature that, defaults committed under the provisions of the Act of 1956 or the Act of 2013 cannot be cured at all. The Act of 2013 in Section 460 has permitted the Central Government, for reasons to be recorded in writing, to condone the delay in filing any document required to be filed under the provisions of the Act of 2013 with the Registrar. The power of the Court to grant relief for any negligence, default, breach of duty, misfeasance or breach of trust, has been retained in the Section 463 of the Act of 2030. Defaults committed can be cured. The defaulters must have recourse to cure the defaults. The proviso introduced to Section 164(2) of the Act of 2013 allows the defaulting company to have directors for six months from the date of default to cure the defaults if it wanted to. 60. The proviso to Section 167(1)(a) of the Act of 2013 was given effect from May 7, 2018 being the same date on which, the proviso to Section 164 (2) of the Act of 2013 was given effect to. The proviso to Section 167 (1)(a) of the Act of 2013 has stipulated that, when a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany may be wound up if it has made a default in filing the financial statements or annual returns for the immediately preceding five consecutive financial years. For a director to incur the disqualification under section 164 of the Act of 2013, a continuous period of three financial years of non-filing is required. For a company to be directed to be wound up by the Tribunal, the company must be in default in filing its financial statements or annual returns for the immediately preceding five consecutive financial years. Apparently, the scheme of the Act of 2013 is such that, a director suffers disqualification for a company not filing financial statements or annual returns for a continuous period of three financial years with the company itself suffering an order of winding up if such defaults continues for immediately preceding five consecutive financial years of the date of presentation of the petition for winding up. 62. The other exit point of a company governed by the Act of 2013 is the process of voluntary liquidation. In the facts of the present case, the same need not be discussed in details as such provisions are not attracted. 63. As was the scheme under the Act of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ors. (supra) in Sandeep Agarwal Anr. (supra). One of the issues that has been decided in Mukut Pathak Ors. (supra) is that, whether the directors of the defaulting companies would be disqualified under the provisions of Section 164 (2)(a) of the Act of 2013 on account of defaults committed by such company in respect of financial years ending March 31, 2014 and the preceding financial years. It has answered such issue by disagreeing with the views of the Karnatak High Court in Yashodhara Shroff (supra), the Madras High Court Bhagavan Das Dhananjaya Das (supra) and the Gujarat High Court in Gaurang Bavantlal Shah (supra). It has held that, Section 164 (2) of the Act of 2013 operates prospectively. However, such prospective operation would entail taking into account failure to file the financial statements pertaining to the financial year ending March 31, 2014 on or before October 30, 2014. It has held that, taking into account defaults occurring prior to April 1, 2014 does not amount to a retrospective application of Section 164 of the Act of 2013. 67. On the issue as to whether, defaults committed prior to the provisions of Sections 164 and 167 of the Act of 2013 coming into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent authorities in treating the petitioner to be disqualified under section 164 of the Act of 2013 cannot be faulted. The petitioner is therefore not entitled to any relief on such score. 70. In Mukut Pathak (supra) the Delhi High Court has answered the issue as to whether the Director Identification Number and Digital Signature Certificate of directors that have incurred disqualification under section 164 (2) of the Act of 2013 can be cancelled, or not, by holding that the same cannot be done. It has noticed the provisions of Section 152 (3) of the Act of 2013 and the Companies (Directors Identification Number) Rules, 2006. It is also considered the Companies (Directors Identification Number) (Amendment) Rules, 2013 and held that, neither any of the provisions of the Act of 2013 nor the rules framed thereunder stipulate cancellation or deactivation of Director Identification Number on account of directors suffering a disqualification under section 164 (2) of the Act of 2013. 71. The Central Government had issued a general circular bearing No. 34/2014 dated August 12, 2014 granting opportunity to the defaulting companies to enable them to make good there defaults by fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication bearing number GSR 259 (E) dated March 31, 2014, the Central Government has promulgated the Companies (Appointment and Qualification of Directors) Rules, 2014. The Rules of 2014 has been promulgated in exercise of powers under the provisions of the Act of 2013. It has superseded the Rules prescribed under the Act of 1956. 76. The Rules of 2014 have defined Director Identification Number as follows: - 2. Definitions. - (1) in these rules, unless the context otherwise requires, - ** ** ** (d) Director Identification Number (DIN) means an identification number allotted by the Central Government to any 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 the company: Provided that the Director Identification Number (DIN) obtained by the individual prior to the notification of these rules shall be the DIN for the purpose of the Companies Act, 2013: Provided that the 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any, in Form DIR-8 before he is appointed or re-appointed. (2) Whenever a company fails to file the financial statements or annual returns, or fails to repay any deposit, interest, dividend, or fails to redeem its debentures, as specified in sub-section (2) of section 164, the company shall immediately file Form DIR-9, to the Registrar furnishing therein the names and addresses of all the directors of the company during the relevant financial years. (3) When a company fails to file the Form DIR-9 within a period of thirty days of the failure that would attract the disqualification under sub-section (2) of section 164, officers of the company specified in clause (60) of section 2 of the Act shall be the officers in default. (4) Upon receipt of the Form DIR-9 under sub-rule (2), the Registrar shall immediately register the document and place it in the document file for public inspection. (5) Any application for removal of disqualification of directors shall be made in Form DIR-10. 79. The Rules of 2014 have prescribed Form DIR-10 as follows: - FORM 'DIR-10' FORM OF APPLICATION FOR REMOVAL OF DISQUALIFICATION OF DIRECTORS [Pursuant to Section 164( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for appointment as a director of a company. Rule 11 of the Rules of 2014 has taken cognizance of some of the grounds of disqualification prescribed under section 164 of the Act of 2013 and not all. For example, Rule 11 of the Rules of 2014 does not deal with Section 164 (1) (c), (d) (e) (f) (g) and (h). A person incurring any of the grounds specified in Section 164 (1) (c), (d), (e), (f), (g) and (h) of the Act of 2013 stands disqualified as a director. Yet the Rules of 2014 does not make any express provision for cancellation of the DIN of a person suffering a disqualification thereunder in Rule 11. The Rules of 2014 are subordinate to the Act of 2013. The Act of 2013 prescribes the various grounds for disqualification for appointment of director. The Rules of 2014 have come into being in exercise of powers under the Act of 2013. Therefore, the Rules of 2014 have to be read in conjunction with and as subordinate to the Act of 2013. Rule 11 of the Rules of 2014 not having taken cognizance of or provided for all the eventualities of disqualification prescribed under section 164 of the Act of 2013, a plausible inference can be drawn that, on a person incurring a disqualification unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IN under the Rules of 2014 is an existing director of a company. Again, in the example under consideration, a person who has suffered an order of a Court disqualifying him from being appointed as a director of a company cannot surely, contend that, he is an existing director of a company. In such a factual matrix would, Rule 11 of the Rules 2014, come in the way of cancellation of the DIN existing in favour of such a person. The answer to such a question obviously must be in the negative. Any other answer will militate against the provisions of Section 164 of the Act of 2013 and allow a primacy to the Rules of 2014 in the sense that, it will override the provisions of Section 164 of the Act of 2013. Again, the Rules of 2014 being a subordinate legislation, must abide by the provisions of the Act of 2013. 86. Rule 14 of the Rules of 2014, has dealt with disqualification of directors under sub-section (2) of Section 164 of the Act of 2013. Such Rule obliges every director to inform the company concerned about his disqualification under sub-section (2) of Section 164. It also obliges the company in default to file form DIR-9 to the Registrar furnishing therein the names and address ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice and upheld the vires of the provisions of Section 274(1)(g) of the Act of 1956. 90. The Government Circular No. 8/2014 dated April 14, 2014 has clarified the position that, financial statements and documents required to be attached thereto, auditor's reports and board's report in respect of financial years commencing earlier than April 1, 2014 shall be governed by the relevant provisions/schedules/rules of the Act of 1956 and that in respect of the financial years commencing on or after April 1, 2014 the provisions of the Act of 2013 shall apply. Such Government Circular has to be read in the context in which it was issued. The relevant all provisions of the Act of 2013, including those relating to the maintenance of books of accounts, preparation, detention and filing of financial statements and documents required to be attached thereto, auditor's reports and board director's report came into effect from April 1, 2014. Provisions of Schedule II and Schedule III of the Act of 2013 also came into effect from April 1, 2014. With the coming into effect of such provisions of the Act of 2013 and schedules thereto, the manner and method of preparatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice. Moreover, a person affected by the decision must establish a prejudice that he suffered by the decision-making authority not affording an opportunity of hearing to him. 93. In the present case, the fact that, the defaulting company was in default in filing annual returns for continuous three financial years commencing from April 1, 2014 till March 31, 2017 has not been disputed. The decision of the Registrar of Companies is of November 2017 that is subsequent to the period of continuous three financial years having elapsed from April 1, 2014. In such factual matrix, no other inference than as expressed by the Registrar of Companies impugned herein can be legitimately drawn. The petitioner had suffered the disqualification as prescribed under section 164 (2) of the Act of 2013 by the time the Registrar of Companies intimated its decision. The petitioner has not shown any prejudice that it had suffered by not being heard by the Registrar of Companies, in the sense that, the petitioner has not brought any materials on record to establish that, a different view is possible on the prevailing facts. In fact, the prevailing facts do not accommodate any other view th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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