Directors seek relief under Companies Fresh Start Scheme, 2020: Court allows nomination under Companies Act.

Directors facing disqualification sought relief under the Companies Fresh Start Scheme, 2020. The court clarified that disqualified directors acting as promoters could nominate directors under Section 167(3) of the Companies Act, 2013, to benefit from the Scheme. The court advised the petitioners to follow this procedure and found it unnecessary to issue further directions. The petitioners were allowed to nominate directors and pursue relief under the Scheme without additional court intervention, with further questions to be addressed after the respondents' response.

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Issues:
Directors disqualified seeking relief under Companies Fresh Start Scheme, 2020.

Analysis:
The petitioners, directors facing disqualification, sought relief under the Companies Fresh Start Scheme, 2020. The Scheme, valid until 30 September 2020, aimed to provide a fresh start to companies. The petitioners challenged their disqualification, seeking activation of their DIN to apply under the Scheme. However, the Additional Solicitor General argued that under Section 167(3) of the Companies Act, 2013, the promoter could appoint directors when all directors vacate their offices due to disqualification. This provision allowed the promoter to nominate directors to benefit from the Scheme, even if disqualified directors were also promoters. The petitioners raised concerns about their eligibility to nominate directors if they were both disqualified directors and promoters. The Additional Solicitor General clarified that a person acting as a director cum promoter, if disqualified as a director, could still act as a promoter to nominate directors under Section 167(3). The petitioners were advised to follow this course of action, and the court found it unnecessary to issue further directions. The court emphasized that the petitioners could persuade other directors or promoters to nominate directors to apply under the Scheme. The court also noted the delay in approaching the court and the need for evidence to prove discord between directors. The court decided that the petitioners could nominate directors under Section 167(3) and pursue relief under the Companies Fresh Start Scheme, 2020, without requiring additional directions. Further questions raised by the petitioners would be considered in due course after the respondents filed their response.

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