2018 (2) TMI 1572 - HC - Companies Law

Director Disqualified for Non-Filing Resignation: Compliance, Condonation of Delay

The petitioner, a Director in multiple companies, was disqualified for not filing his resignation with the Registrar of Companies, leading to challenges ... Director disqualified for violation of Section 164(2)(a) of the Companies Act, 2013 - petitioner found that the resignation which he had tendered to the company had not been filed with the Registrar of Companies - benefit of CODS-2018 Scheme avalability - Held that:- (i) The petitioner may file all the requisite returns in relation to the company in order to enable him to avail the benefits under the CODS-2018 Scheme; (ii) The petitioner would also submit the necessary application under CODS-2018 Scheme along with its requisite charges; (iii) The aforesaid documents and applications will be submitted online to the Registrar of Companies. It is clarified that if the petitioner does not avail of the CODS-2018 or file the necessary documents as required, in addition to other consequences, the petitioner would also be liable to be prosecuted for Contempt of Court. Issues:1. Disqualification of petitioner under Section 164(2)(a) of the Companies Act, 2013.2. Failure to file resignation with Registrar of Companies.3. Impact of disqualification on petitioner's functioning in other companies.4. Challenge to disqualification on grounds of natural justice.5. Constitutionality challenge of Sections 164(2)(a) and 167(1)(a) of the Companies Act, 2013.6. Condonation of Delay Scheme-2018 (CODS-2018 Scheme) and petitioner's desire to avail its benefits.Issue 1: Disqualification under Section 164(2)(a) of the Companies Act, 2013The petitioner, a promoter Director in multiple real estate companies, was disqualified as a Director of M/s Arnav Buildwell Pvt. Ltd. due to non-filing of his resignation with the Registrar of Companies. The petitioner challenged this disqualification, alleging a lack of natural justice and failure to issue a show cause notice. It was argued that the petitioner should have been given an opportunity to rectify the defect as he had tendered his resignation.Issue 2: Failure to file resignation with Registrar of CompaniesDespite tendering his resignation on 20th February, 2015, the petitioner's resignation was not filed with the Registrar of Companies, leading to his disqualification under Section 164(2)(a) of the Companies Act, 2013. This non-filing had significant repercussions on the petitioner's role in other companies and their relationships with financial institutions, as he held decision-making authority in those companies.Issue 3: Impact of disqualification on petitioner's functioning in other companiesThe disqualification severely affected the petitioner's functioning in other companies where he held key decision-making responsibilities. This disqualification hindered his ability to perform his duties effectively and maintain relationships with financial institutions, impacting the day-to-day affairs of those companies.Issue 4: Challenge on grounds of natural justiceThe petitioner challenged the disqualification on the grounds that the principles of natural justice were not followed, and no show cause notice was issued to him. It was contended that he should have been given a reasonable opportunity to rectify any defects, especially since the fault lay in the non-filing of his resignation.Issue 5: Constitutionality challenge of Sections 164(2)(a) and 167(1)(a)The petitioner contested the constitutionality of Sections 164(2)(a) and 167(1)(a) of the Companies Act, 2013, which led to his disqualification as a Director. The challenge was based on the impact of these provisions on his ability to hold office in any company due to the disqualification specified in Section 164(2)(a).Issue 6: Condonation of Delay Scheme-2018 (CODS-2018 Scheme)The respondents referred to the CODS-2018 Scheme, offering a chance for condonation of delay. The petitioner expressed a desire to avail the benefits of this scheme and committed to completing all necessary steps under the Companies Act, 2013 to rectify the situation promptly. The court directed the petitioner to file requisite returns and applications under the scheme to avail its benefits, with a warning of potential consequences, including prosecution for Contempt of Court if the directives were not followed.This judgment provides a detailed analysis of the petitioner's disqualification, challenges raised, impact on his functioning in other companies, and the recourse available through the CODS-2018 Scheme, ensuring a fair opportunity for rectification while emphasizing compliance with legal procedures and consequences for non-compliance.