2018 (7) TMI 631 - HC - Companies Law

Disqualification as Director Quashed under Companies Act 2013

The Court set aside and quashed the petitioner's disqualification as a director under Section 164(2)(a) of the Companies Act, 2013, due to the company's ... Disqualification of director under Section 164(2)(a) of the Companies Act, 2013 - effect of resignation and failure to file Form 32 with the Registrar of Companies - rectification of Registrar of Companies recordsDisqualification of director under Section 164(2)(a) of the Companies Act, 2013 - effect of resignation and failure to file Form 32 with the Registrar of Companies - Whether the petitioner was correctly disqualified as a director by inclusion of his name in the lists dated 6th and 12th September, 2017 under Section 164(2)(a) despite having resigned on 5th December, 2012 and whether such disqualification should be set aside. - HELD THAT: - The petitioner had been appointed a director on 11th July, 2012 and resigned on 5th December, 2012. The respondent published lists dated 6th and 12th September, 2017 notifying disqualifications under Section 164(2)(a) with effect from 1st November, 2016, which included the petitioner's name. The respondents did not dispute the petitioner's resignation. In these circumstances the inclusion of the petitioner's name in the disqualification lists was incorrect. The court accordingly quashed the notified disqualification and directed correction of the Registrar's records to remove the petitioner's name as a director. [Paras 5]The disqualification of the petitioner as notified in the lists dated 6th and 12th September, 2017 is set aside and quashed; respondent no.2 is directed to delete the petitioner's name from its records and remove the petitioner as a director from all Ministry of Corporate Affairs records within two weeks.Rectification of Registrar of Companies records - Whether the Registrar of Companies must rectify its records to remove the petitioner's name and the timeframe for such rectification. - HELD THAT: - Given the quashing of the disqualification, respondent no.2 (Registrar of Companies/Ministry of Corporate Affairs) is obliged to ensure its records are rectified by deleting the petitioner's name from the impugned lists and removing his name as a director from all Ministry records. The court directed that such action be taken positively within two weeks from the date of the order. [Paras 5]Respondent no.2 shall delete the petitioner's name from the lists dated 6th and 12th September, 2017 and remove the petitioner as a director from all Ministry of Corporate Affairs records within two weeks.Final Conclusion: The writ petition is allowed; the petitioner's inclusion in the disqualification lists is quashed and the Registrar of Companies/Ministry of Corporate Affairs is directed to rectify its records and remove the petitioner's name within two weeks; connected interim application is dismissed as not surviving. Issues:1. Disqualification of the petitioner under Section 164(2)(a) of the Companies Act, 2013.2. Failure of the company to submit Form 32 regarding the petitioner's resignation.3. Legality of the disqualification of the petitioner as a director.Analysis:The writ petitioner was appointed as a Director in a company but later resigned. However, the company failed to submit Form 32 regarding his resignation as required by the Companies Act, 1956. Subsequently, the respondent disqualified the petitioner under Section 164(2)(a) of the Companies Act, 2013, preventing him from being appointed as a director for five years. The petitioner challenged this disqualification, contending that his resignation should not lead to disqualification. The respondents did not dispute this claim.The Court acknowledged that the petitioner's resignation from the directorship should not result in disqualification under Section 164 of the Companies Act. Therefore, the Court set aside and quashed the disqualification of the petitioner as a director, directing the respondent to rectify their records promptly. The respondent was ordered to delete the petitioner's name from the disqualification lists and remove it from all records in the Ministry of Corporate Affairs within two weeks.Additionally, a related application was dismissed as it was no longer relevant after the disposal of the main petition. The judgment was concluded by ordering the issuance of necessary documents under the signatures of the Court Master. The writ petition was disposed of in favor of the petitioner, ensuring the removal of his disqualification as a director due to his resignation from the company and the failure to submit Form 32.