2019 (8) TMI 272 - HC - Companies Law

Court Overturns Rejection, Restores Director's Rights

The court ruled in favor of the petitioner, overturning the Registrar of Companies' rejection of his resignation from the company due to non-compliance ... Disqualification of Director - Resignation of petitioner from the post of Director of the company - resignation on the ground that the said company had not filed a Form-32 and the petitioner had not filed Form DIR-11 with the ROC - HELD THAT:- The essential facts of the case are not disputed. There is no dispute that the petitioner was a Nominee Director and had no equity stake in the Company. There is also no material to doubt the petitioner’s claim that he had tendered his resignation and despatched the same by a registered post as well as an e-mail. Since the petitioner had resigned from the Board of Directors prior to 01.11.2014, he cannot be held to have been disqualified under Section 164(2)(a) of the Companies Act, 2013 on account of defaults committed by the said company for a period of three consecutive years commencing from 01.11.2014. This Court is informed that the petitioner’s DIN and DSC have been restored - petition allowed. Issues:1. Validity of the petitioner's resignation from the company.2. Disqualification of the petitioner as a director under Section 164(2)(a) of the Companies Act, 2013.3. Requirement of filing Form DIR-11 for resignation.4. Compliance with court directions regarding the petitioner's contention.5. Restoration of petitioner's DIN and DSC.6. Authority of ROC to take action based on doubt regarding petitioner's claims.Analysis:1. The petitioner challenged an order by the Registrar of Companies (ROC) rejecting his resignation from the company, CTM Business Private Limited, due to non-filing of Form-32 and Form DIR-11. The petitioner claimed to have resigned on 29.03.2013, supported by evidence of sending resignation via registered post and email. Despite the company's failure to inform ROC, the petitioner was listed as a director, leading to disqualification due to company defaults.2. The company's non-compliance led to disqualification of directors, including the petitioner, under Section 164(2)(a) of the Companies Act, 2013. The petitioner's inclusion in the list of disqualified directors was based on the company's filing defaults from 01.11.2014. The petitioner's challenge in court led to directions for ROC to reconsider his resignation claim.3. The ROC's rejection of the resignation was based on non-filing of Form DIR-11, which the petitioner argued was not required at the time of resignation in 2013. The court noted that the rules mandating Form DIR-11 came into effect on 1st April 2014, after the petitioner's resignation, absolving him of fault for non-filing.4. Following court directions, ROC reconsidered the petitioner's case and reiterated the rejection based on Form DIR-11. However, the court found the reasoning flawed as the requirement for Form DIR-11 did not exist at the time of resignation, leading to the setting aside of the impugned order.5. The court noted the restoration of petitioner's Director Identification Number (DIN) and Digital Signature Certificate (DSC), indicating no further orders were necessary. The petitioner's disqualification was overturned, and his status as a director was reinstated.6. The judgment clarified ROC's authority to investigate and potentially revoke the petitioner's DIN and DSC if doubts arose regarding his resignation or statements made. The petitioner's claims were upheld, and the petition was allowed, ensuring his compliance with legal requirements and reinstatement as a director.