High Court quashes MCA list of disqualified directors of struck off companies

High Court quashes MCA list of disqualified directors of “struck off companies” u/s 248. Section 164(2) would have prospective and not retrospective effect

ABCAUS Case Law Citation:
ABCAUS 2683 (2018) (12) HC

The Petitioners have challenged the action of the Ministry of Corporate Affairs (MCA) in publishing the list dated 12.9.2017 of Directors associated with “struck off companies” under Section 248 of the Companies Act, 2013 (the Act) on the Website of the Ministry of Corporate Affairs, Government of India, to the extent, the said list shows the status of the petitioners as “disqualified” Directors.

The petitioners had also challenged the deactivating their DINs (Directors Identification Numbers) as a consequence of the publication of the said list.

According to the petitioners, the said company having been struck off from the register of companies and dissolved on 21.6.2017, the question of filing financial statements and annual returns did not arise, and therefore, the question of disqualification as contemplated under Section 164(2)(a) of the Act of 2013 also did not arise.

However, the names of the petitioners were included in the list of disqualified Directors associated with the “struck off companies”, dated 12.9.2017 published on the Website of the Ministry of Corporate Affairs.

Also, the DINs i.e. Director Identification Numbers of the petitioners were also disabled though the petitioners had not incurred any disqualification. As a result thereof, the petitioners were unable to utilize their DINs for filing the documents so far as the other non-defaulting companies in which they were the Directors were concerned.

The summary of the conclusions reached by the  Hon’ble High Court was as under:

(i) Section 164(2) of the Act of 2013, which had come into force from 1.1.2014 would have prospective and not retrospective effect.

(ii) The defaults contemplated under Section 164(2)(a) with regard to non-filing of financial statements or annual returns for any continuous period of three financial years would be the defaults to be counted from the financial year 2014-15 only and not 2013-14.

(iii) The MCA could not have treated the Directors as disqualified/ineligible for a period of five years from 1.11.2016 to 1.11.2021, while publishing the impugned list under Section 248 of the Act of 2013.

(iv) Even if the Registrar of Companies removes the name of a company from the register of companies, and even if such company would stand dissolved under Section 248, the statutory liabilities/obligations of such struck of company and its Directors would still remain to be discharged, in view of Section 250 of the said Act of 2013.

(v) The MCA could not have deactivated the DINs allotted to the Directors under Section 154 of the said Act, except under the circumstances mentioned in Rule 11 of the said Rules of 2014.

The Hon’ble High Court quashed and set aside the impugned list dated 12.9.2017 of the Directors associated with the “struck off companies” under Section 248 published by the MCA. MCA and the Union of India were directed to activate the respective Director Identification Numbers of the petitioners forthwith.

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