Court orders reactivation of Director Identification Numbers (DINs) under Companies Act, 2013

The court allowed the writ petitions, directing the reactivation of the petitioners' Director Identification Numbers (DINs). The judgment emphasized the prospective application of Section 164(2) of the Companies Act, 2013, and invalidated the premature publication of the disqualification list. The court held that the deactivation of DINs due to disqualification under Section 164(2) was not legally permissible.

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Issues Involved:
1. Challenge to the deactivation of Director Identification Number (DIN) under Section 164(2) of the Companies Act, 2013.
2. Retrospective application of Section 164(2) of the Companies Act, 2013.
3. Legal validity of the impugned list of disqualified directors.
4. Deactivation of DINs and its legal implications.

Issue-wise Detailed Analysis:

1. Challenge to the Deactivation of Director Identification Number (DIN) under Section 164(2) of the Companies Act, 2013:
The petitioners challenged the deactivation of their DINs, which was based on their disqualification as directors in one company. The court noted that Section 164(2) of the Companies Act, 2013, disqualifies directors from being reappointed in the same company or appointed in other companies if the company has not filed financial statements or annual returns for three consecutive financial years. The court referenced the Gujarat High Court's judgment, which allowed similar petitions and directed the reactivation of DINs, with the liberty for authorities to take legal action for any statutory defaults.

2. Retrospective Application of Section 164(2) of the Companies Act, 2013:
The court examined whether Section 164(2) could be applied retrospectively. It was established that the provision came into force on April 1, 2014, and thus, the three financial years should be counted from 2014-15, 2015-16, and 2016-17. The court emphasized that legislation is presumed to be prospective unless explicitly stated otherwise. Retrospective application would alter the rights of directors under the previous Companies Act, 1956, which did not impose such disqualifications on private company directors.

3. Legal Validity of the Impugned List of Disqualified Directors:
The court found that the impugned list published on September 12, 2017, which disqualified directors for the period from November 1, 2016, to October 31, 2021, was premature and not in accordance with the law. The disqualification under Section 164(2) would only be applicable after October 30 or November 30, 2017, for defaults occurring after April 1, 2014. The court held that the publication of the list was not justified and quashed it.

4. Deactivation of DINs and Its Legal Implications:
The court analyzed the provisions related to the allotment and deactivation of DINs under the Companies Act, 2013, and the relevant rules. It was noted that the DIN, once allotted, is valid for the lifetime of the applicant and can only be canceled or deactivated under specific circumstances outlined in Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014. The court concluded that the deactivation of DINs due to disqualification under Section 164(2) was not legally tenable as it was not one of the grounds mentioned in Rule 11. The court directed the reactivation of the petitioners' DINs.

Conclusion:
The court allowed the writ petitions, directing the reactivation of the petitioners' DINs. The authorities were given liberty to take legal action for any statutory defaults or non-compliance with the provisions of the Companies Act, 2013, in accordance with the law. The judgment emphasized the prospective application of Section 164(2) and invalidated the premature publication of the disqualification list.

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