Court Orders Reactivation of Deactivated Director Identification Numbers

The court allowed the writ petition challenging the deactivation of the Director Identification Number (DIN) under Section 164(2) of the Companies Act, 2013. It directed the authorities to reactivate the DIN for use in other companies. The court emphasized the prospective application of Section 164(2) from 01.04.2014 and deemed the deactivation of DINs of directors of "struck off" companies as illegal. The list of disqualified directors published prematurely was declared invalid, and the condonation of delay scheme introduced was found irrelevant in justifying the deactivation.

---

---

Issues Involved:
1. Challenge to the de-activation of the Director Identification Number (DIN) under Section 164(2) of the Companies Act, 2013.
2. Prospective vs. Retrospective application of Section 164(2) of the Companies Act, 2013.
3. Validity of the list of disqualified directors published on 12.09.2017.
4. Legality of deactivation of DINs of directors of "struck off" companies.
5. Relevance of the condonation of delay scheme dated 29.12.2017.

Issue-wise Detailed Analysis:

1. Challenge to the de-activation of the Director Identification Number (DIN) under Section 164(2) of the Companies Act, 2013:
The petitioner challenged the deactivation of their DIN, arguing it was necessary for their role as a director in other companies. The court noted that similar issues had been considered by other High Courts, including the Gujarat High Court, which had ruled in favor of reactivating DINs under similar circumstances.

2. Prospective vs. Retrospective application of Section 164(2) of the Companies Act, 2013:
The court analyzed Section 164 of the Companies Act, 2013, which deals with disqualifications for appointment as a director. It was clarified that Section 164(2) applies prospectively from 01.04.2014. The financial years considered for disqualification under this section should be 2014-15, 2015-16, and 2016-17. The court emphasized that applying this section retrospectively would be unfair and against established legal principles, citing Supreme Court judgments to support this view.

3. Validity of the list of disqualified directors published on 12.09.2017:
The court found the list of disqualified directors published on 12.09.2017 to be premature and legally untenable. It stated that disqualification under Section 164(2) would only take effect after the due dates for filing annual returns and financial statements for the financial year 2016-17 had passed, which would be after 30.11.2017. Therefore, the list showing disqualifications from 01.11.2016 to 31.10.2021 was invalid.

4. Legality of deactivation of DINs of directors of "struck off" companies:
The court examined the relevant rules and found that Rule 11 of the Companies (Appointment and Qualification of Directors) Rules, 2014, does not provide for the deactivation of DINs of directors of "struck off" companies. The DIN, once allotted, is valid for the lifetime of the applicant and cannot be deactivated except under specific circumstances outlined in Rule 11, none of which applied in this case. Therefore, the deactivation of the petitioner's DIN was deemed illegal.

5. Relevance of the condonation of delay scheme dated 29.12.2017:
The court noted that the condonation of delay scheme introduced by the Ministry of Corporate Affairs could not justify the publication of the impugned list. The scheme was intended to allow directors of "struck off" companies to rectify defaults, but the premature deactivation of DINs prevented them from availing of this scheme. The court reiterated that the financial years for disqualification should be counted from 2014-15, not 2013-14, making the scheme inapplicable in justifying the list.

Conclusion:
The writ petition challenging the deactivation of the DIN was allowed. The court directed the authorities to reactivate the DIN for use in other companies, while maintaining the liberty to take legal action against the petitioner for any statutory defaults or non-compliance with the Companies Act, 2013, in accordance with the law.

---