TMI Blog2021 (7) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... tors of struck off companies, who are also directors in active companies, may be reactivated qua the active companies, in line with the spirit of the CFSS-2020. Directors of active companies who have been disqualified - HELD THAT:- In cases where directors of active companies have been disqualified, CFSS-2020 would squarely apply. Such directors would be entitled to avail of CFSS-2020 and file documents of the defaulting company. Disqualified directors of struck off companies seeking appointment as directors in other/new companies - HELD THAT:- This scheme has been introduced in view of the COVID-19 pandemic with the aim to enable a fresh start to defaulting companies and directors of such companies. The disqualification of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Identification Number (hereinafter, DIN ) and Digital Signature Certificate (hereinafter, DSC ) were also deactivated. The Petitioners now wish to start a new business and accordingly, pray for reactivation of their DIN/DSC. 3. The legal aspects arising out of disqualification of directors under Section 164 and 167 of the Companies Act, 2013 and the deactivation of their DIN and DSC numbers have been dealt with in the following judgements: i. Mukut Pathak Ors. v. Union of India Ors., 265 (2019) DLT 506, ii. Sandeep Agarwal Anr. v. Union of India Anr. [W.P.(C)5490/2020, decided on 2nd September, 2020] and iii. Radhika Byrne v. UOI Anr. [W.P.(C) 5534/2020, decided on 28th December, 2020]. 4. There are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 167(1)(a) would not apply and the directors would continue to be directors in companies other than the defaulting company. The disqualification of such directors qua active companies would therefore be liable to be set aside and their DIN and DSC s reactivated. b) Directors who have been disqualified post 7th May 2018, qua other `active companies: As held in Mukut Pathak (supra), in all cases where the directors have been disqualified on or after 7th May, 2018, the proviso to Section 167 (1) (a) would apply and such directors would cease to be directors in all companies including the defaulting company. In March, 2020, in light of the COVID19 pandemic, the Ministry of Corporate Affairs vide General Circular No. 12/2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lings of belated documents, it provides that the same shall not be launched and immunity has been provided; vi) Applications can be made for seeking immunity in respect of belated documents. Once the documents are taken on file or approved by the designated authority, such applications would have to be filed within six months from the date of closure of the Scheme; vii) To avail benefit of the Scheme, the defaulting company would have to withdraw any appeal that it may have filed against prosecution launched or orders passed by a court or adjudicating authority under the Act; viii) If a final notice of striking off of a company has already been initiated or in certain other situations as enumerated in Clause 6(ix), the Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider this Scheme. Applying the scheme to the facts of the case, this Court in Sandeep Agarwal (supra) directed reactivation of the DINs and DSCs of directors of two companies one whose name had been struck off and one, which was still active. Thus, the DINs and DSCs of disqualified directors of struck off companies, who are also directors in active companies, may be reactivated qua the active companies, in line with the spirit of the CFSS-2020. c) Directors of active companies who have been disqualified: In cases where directors of active companies have been disqualified, CFSS-2020 would squarely apply. Such directors would be entitled to avail of CFSS-2020 and file documents of the defaulting company. In Radhika By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies who seek to be appointed as directors of other/new companies, ought to be provided an opportunity to avail of this scheme, provided that they have undergone a substantial period of their disqualification. The scheme clearly seeks to provide a fresh start for directors of defaulting companies who seek appointment in other companies or wish to start new businesses. Therefore, if a substantial period has passed since the disqualification of such directors, they ought to be given an opportunity to avail of the scheme. 6. The CFSS-2020 was last extended till 31st December 2020. If the scheme is extended beyond 30th December, 2020, directors who fall in any of the categories mentioned above ought to be given an opportunity to avail of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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