TMI Blog2021 (3) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to activate the Director Identification Number for use for other company - Decided in favor of petitioner. - Writ - C No. - 2038 of 2021 - - - Dated:- 10-2-2021 - Hon'ble Munishwar Nath Bhandari And Hon'ble Rohit Ranjan Agarwal JJ. For the Petitioner : Nishant Mehrotra For the Respondent : A.S.G.I. ORDER 1. Heard learned counsel for the petitioner and Sri Ravind Kumar Mishra, learned counsel for respondent no.1 and 2. 2. This writ petition has been filed to challenge the de-activation of the Director Identification Number by invoking Section 164(2) of the Companies Act, 2013 (hereinafter referred to as 'the Act of 2013') with a direction to activate the Director Identification Number allotted to the petitioners. The activation of the Director Identification Number is required, as the petitioner was dis-qualified to be Director for any of the Companies in reference to the dis-qualification occurred in one company. 3. Similar controversy was raised in other High Courts and after considering the issue at length, the Gujarat High Court decided batch of petitions led by Special Civil Application No. 22435 of 2017 by its order dated 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Rule 14 of the said Rules of 2014, the Director has to inform the company in Form DIR-8 and the company has to inform the Registrar in Form DIR- 9, when its director incurs disqualification under Section 164(2) of the Act. However, the question still remains to be examined as to whether the respondents could have shown the status of the petitioners as disqualified in the impugned list? 21. As per Clause (a) of Sub-section (2) of Section 164, no 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 shall be eligible to be reappointed as a Director of that company or appointed in any other company for a period of five years from the date on which the said company fails to do so. The said provision has come into force w.e.f. 1.4.2014. Hence, three financial years, if counted from the said date would be the financial years 2014-15, 2015-16, and 2016-17. At this stage, it is pertinent to note that the Companies Act, 1956 has stood repealed in view of Section 465 of the Act of 2013, and the corresponding Section 274 of the Act of 1956 regarding disqualification of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st a series of statements, such as one finds in a work of fiction/non fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of ''Interpretation of Statutes'. Vis- vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s applied in the case of Vijay v. State of Maharashtra Ors. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here. 31. In such cases, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmatically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 32. Let us sharpen the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to force, the amending Act also will be part of the existing law. The above summing up is factually based on the judgments of this Court as well as English decisions. 33. A Constitution Bench of this Court in Keshavlal Jethalal Shah v. Mohanlal Bhagwandas Anr., while considering the nature of amendment to Section 29(2) of the Bombay Rents, Hotel and Lodging House Rates Control Act as amended by Gujarat Act 18 of 1965, observed as follows: 8. ...The amending clause does not seek to explain any pre-existing legislation which was ambiguous or defective. The power of the High Court to entertain a petition for exercising revisional jurisdiction was before the amendment derived from Section 115, Code of Civil Procedure, and the legislature has by the amending Act attempted to explain the meaning of that provision. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. 34. It would also be pertinent to mention that assessment creates a vested right and an assessee cannot be subjected to reassessment unless a provision to that effect inserted by amendment is either expressly or by necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the said provision has to be construed as having prospective effect. If retrospective effect is given to it, that would destroy, alter and affect the right of the Directors of private company existing under the Act of 1956. It is also a settled legal position that Section 6 of the General Clauses Act, saves a right accrued and/or a liability incurred, under the repealed Act, whenever any Act is repealed. Learned Advocates for the petitioners have also rightly relied upon the decision of the Supreme Court in case of Dilip Kumar Sharma and Ors. Vs. State of M. P. (supra) and in case of Tolaram Relumal and Anr. Vs. The State of Bombay (supra), in which it has been held inter alia that when two interpretations are possible, one favouring the subject ought to be made applicable especially in case of penal statute. It is also held by the Supreme Court in case of Madhya Pradesh Vs. Narmada Bachao Andolan and Anr. (supra) that an interpretation, which is just, fair and sensible should be made and not an interpretation which results in drastic consequences. 24. In the light of the said legal position, it is required to be held that Sub-section (2) of Section 164 of 2013 could be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stretch of imagination is justified, and could not be said to be in consonance with the provisions contained in Section 164(2) of the Act of 2013. Neither the replies filed by the respondents to the petitions contain any explanation, nor Mr.Vyas in his submissions was able to explain as to how the petitioners could be shown as disqualified Directors for the period from 1.11.2016 to 31.11.2021, when even according to him, the provisions contained in Section 164(2) were applied prospectively, and the default would start after 1.4.2017. The Court, therefore, is of the opinion that the impugned list published on 12.9.2017 by the respondent No.1 deserves to be quashed and set aside. 29. This takes the Court to the next question as to whether the respondents could have deactivated the DINs of the petitioners as a consequence of the impugned list ? In this regard, it would be appropriate to refer to the relevant provisions contained in the Act and the said Rules. Section 152(3) provides that no person shall be appointed as a Director of a company, unless he has been allotted the Director Identification Number under Section 154. Section 153 requires every individual intending to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the impugned list of Directors of struck off companies under Section 248, also was not legally tenable. Of course, as per Rule 12 of the said Rules, the individual who has been allotted the DIN, in the event of any change in his particulars stated in Form DIR-3 has to intimate such change to the Central Government within the prescribed time in Form DIR-6, however, if that is not done, the DIN could not be cancelled or deactivated. The cancellation or deactivation of the DIN could be resorted to by the concerned respondents only as per the provisions contained in the said Rules. 32. Much reliance was placed by the learned ASG Mr.Vyas on the condonation of delay scheme dated 29.12.2017 introduced by the Ministry of Corporate Affairs after the publication of the impugned list, however, the said scheme would not justify the action of the respondents, in publishing the impugned list, which was absolutely contrary to the provisions of the Act of 2013 and the Rules made thereunder. The said scheme was in force from 1.1.2018 to 31.3.2018, which was extended up to May 2018, under which the Directors associated with the struck of companies , which had failed to file financial state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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