2021 (1) TMI 192 - HC - Companies Law

Petitioner denied non-disqualified director status, DIN activated. Legal clarity on Companies Act disqualification.

The court rejected the petitioner's plea to be considered a non-disqualified director but ordered the activation of the DIN. The judgment clarified the ... Seeking permission to operate and access the website of the Ministry of Corporate Affairs, Government of India - restraint respondents from treating or taking any steps treating the petitioners as disqualified Directors - HELD THAT:- There is no dispute that the Kerala Housing Finance Limited had defaulted in filing its annual returns for three consecutive years. Further, Shrek and Lee Debt Company Private Limited has also been struck off from the Register of Companies on account of its defaults in filing the requisite returns under the Companies Act, 2013 - The petitioner claims that he had resigned from the Board of Directors of Kerala Housing Finance Limited with effect from 26.05.2016. However, he had not filed the necessary form with the Registrar of Companies at the material time. Insofar as the petitioner’s prayer that his Director Identification Number (DIN) be directed to be activated is concerned, the said issue is also covered by the decision of this Court in Mukut Pathak & Ors. [2019 (11) TMI 319 - DELHI HIGH COURT]. It is not disputed that the petitioner’s DIN had been deactivated only on account of his being disqualified to act as a Director. As held in Mukut Pathak’s case, the said action is not sustainable. The DIN could be deactivated in terms of Rule 11 of the Companies Act (Appointment and Qualification of Director) Rules, 2014. But admittedly, the petitioner’s DIN has not been deactivated in terms of the said Rules. The petitioner’s prayer that the respondent be restrained from treating the petitioner as a disqualified director, is rejected. However, the respondents are directed to activate the petitioner’s DIN - petitioner’s prayer that he be permitted to access the website of Ministry of Corporate Affairs, Ministry of India cannot be acceded to - Petition disposed off. Issues:1. Disqualification of the petitioner as a Director under Sections 164(2) and 167(1) of the Companies Act, 2013.2. Deactivation of the petitioner's Director Identification Number (DIN) and the legality of such action.Analysis:1. The petitioner, a former independent director of Kerala Housing Finance Limited, filed a petition seeking a writ of mandamus to enable his DIN and prevent being treated as a disqualified Director. The respondent argued that the petitioner was also a director in another company, Shrek and Lee Debt Company Private Limited, which was struck off for defaults. The petitioner relied on a Securities Appellate Tribunal order absolving him of liability under certain provisions. The court noted the issues before the Tribunal were different from the disqualification reasons. The crucial questions were the legality of disqualification and deactivation of DIN.2. The respondent contended that due to defaults by both companies, the petitioner was disqualified under Sections 164(2) and 167(1) of the Companies Act, 2013. The court highlighted the petitioner's resignation from Kerala Housing Finance Limited but noted the absence of filing necessary forms with the Registrar of Companies. The court referenced a prior judgment for the disqualification criteria. Regarding the DIN deactivation, the court referred to the same judgment, stating that deactivation without following Rule 11 of the Companies Act was unsustainable. The court directed the activation of the petitioner's DIN but rejected access to the Ministry of Corporate Affairs' website due to disqualification.In conclusion, the court rejected the petitioner's plea to be considered a non-disqualified director but ordered the activation of the DIN. The judgment clarified the legal aspects of disqualification under the Companies Act and the procedural requirements for deactivating a DIN.