Court Rules RoC Cannot Deactivate DINs; Orders Reactivation in 30 Days, Emphasizing Director Compliance Needs.

The HC set aside the disqualification of directors under Section 164(2)(a) of the Companies Act, 2013, and ordered the reactivation of their Director Identification Numbers (DINs) within 30 days. The court ruled that the RoC lacks authority to deactivate DINs, emphasizing the necessity for directors to retain DINs for compliance purposes. The decision provided relief to the petitioners by quashing the disqualification while allowing the RoC to conduct further inquiries into directors' culpability for defaults. The judgment underscored the importance of DINs in rectifying filing deficiencies and clarified the RoC's limited authority concerning DIN deactivation based on disqualifications.

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Issues:
Challenge to disqualification of a director under Section 164(2)(a) of the Companies Act, 2013 for non-filing of financial statements, legality of deactivating Director Identification Number (DIN), interpretation of relevant rules and sections of the Companies Act.

Analysis:
The writ petition challenges the disqualification of the petitioner as a director under Section 164(2)(a) of the Companies Act, 2013, for non-filing of financial statements or annual returns for three continuous financial years by defaulting companies on whose board the petitioner serves as a director. The petitioner argues that the action taken by the second respondent in disqualifying him is arbitrary and unreasonable, leading to the filing of the present writ petition seeking to quash the order and for consequential relief. This issue has been addressed in previous judgments, notably in the case of Bhagavan Das Dhananjaya Das, where the court set aside similar disqualification orders under Section 164(2)(a) of the Companies Act. The court also referred to a subsequent case (Khushru Dorab Madan v. Union of India) where disqualified directors' petitions were dismissed. However, in the case of Meethelaveetil Kaitheri Muralidharan v. Union of India, the court elaborately discussed the deactivation of Director Identification Numbers (DIN) by the Registrar of Companies (RoC) and ruled that the RoC is not empowered to deactivate DINs under the relevant rules. The court emphasized the necessity for directors of defaulting companies to retain their DINs to rectify filing deficiencies and concluded that the deactivation of DINs would be contrary to the provisions of the Companies Act, specifically Sections 164(2) and 167(1).

The court's decision in Meethelaveetil Kaitheri Muralidharan's case was pivotal in allowing the writ petition in the present matter. The court, in line with the previous ruling, set aside the impugned order of disqualification and directed the reactivation of DINs of the affected directors within 30 days. The court clarified that while the DINs would be reactivated, the RoC retains the authority to initiate further action regarding disqualification after conducting an inquiry to determine specific directors' culpability for defaults. The judgment emphasized the importance of retaining DINs for filing obligations and disagreed with the notion that the RoC could deactivate DINs based on disqualifications under Section 164(2) of the Companies Act. The court's decision provided relief to the petitioners by quashing the disqualification and ordering the reactivation of DINs, while also highlighting the RoC's future investigative responsibilities in addressing disqualifications.

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