TaxTMI 
TaxTMI 
2021 (1) TMI 817
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....ded batch of petitions led by Special Civil Application No. 22435 of 2017 by its order dated 18.12.2018. The Special Civil Application has been allowed. Therein also, the name of the petitioner was struck off from the list of Director of various companies. The publication of which was made under Section 248 of the Act of 2013. A direction to activate the Director Identification Number of the petitioner forthwith has been given, if not activated so far. It was however with the liberty to take legal action against the petitioner for any statutory default or non-compliance of the provisions of the Companies Act. 4. In the light of the aforesaid and taking into consideration that the similar issue has been decided by eight other High Courts taking similar view, we need to refer certain paras of the judgment of its application in this case also. 5. The relevant paras of the judgment of the Gujarat High Court in Special Civil Application No. 22435 of 2017 are quoted hereunder:- 20. So far as Section 164 of Act of 2013 is concerned, it is titled as "Disqualifications for appointment of Director". On close reading of the said Section 164, it transpires that Sub-section (1) t....
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.... and the corresponding Section 274 of the Act of 1956 regarding disqualification of the directors did not prescribe disqualification for the Directors of a private company for not filing financial statements or annual returns for continuous period of three financial years. Of course, it was incumbent on the part of every company not having a share capital, to file with the Registrar annual returns as per Section 160 and failure to file such returns entailed penal consequences as per Section 162 of the Act of 1956. However, no such disqualification as under Section 164(2) of the Act of 2013, was being incurred by the Directors of private company under Section 274 of the Act of 1956, inasmuch as, Clause (g) of Sub-section (1) of Section 274 of the Act of 1956 contemplated disqualification of a Director of a public company only. It is only by virtue of Section 164(2) the Director of any company would become ineligible to be reappointed as Director in the defaulting company or appointed as Director in other company, if the defaults under the said provision applied. The said provision having come into force w.e.f. 1.4.2014, the three financial years contemplated in the said provision wo....
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....ded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips vs. Eyre, a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of 'fairness', which must be the basis of every legal rule as was observed in the decision reported in L'Office Cherifien des Phosphates v. YamashitaShinnihon Steamship Co.Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obv....
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....matically framed, the rule is no more than a presumption, and thus could be displaced by out weighing factors. 32. Let us sharpen the discussion a little more. We may note that under certain circumstances, a particular amendment can be treated as clarificatory or declaratory in nature. Such statutory provisions are labeled as "declaratory statutes". The circumstances under which a provision can be termed as "declaratory statutes" is explained by Justice G.P. Singh in the following manner: "Declaratory statutes The presumption against retrospective operation is not applicable to declaratory statutes. As stated in CRAIES and approved by the Supreme Court : "For modern purposes a declaratory Act may be defined as an Act to remove doubts existing as to the common law, or the meaning or effect of any statute. Such Acts are usually held to be retrospective. The usual reason for passing a declaratory Act is to set aside what Parliament deems to have been a judicial error, whether in the statement of the common law or in the interpretation of statutes. Usually, if not invariably, such an Act contains a preamble, and also the word 'declared' as well as the....
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....ates a vested right and an assessee cannot be subjected to reassessment unless a provision to that effect inserted by amendment is either expressly or by necessary implication retrospective. 35. We would also like to reproduce hereunder the following observations made by this Court in the case of Govinddas v. Income-tax Officer, while holding Section 171(6) of the Income Tax Act to be prospective and inapplicable for any assessment year prior to 1st April, 1962, the date on which the Income Tax Act came into force: "11. Now it is a well settled rule of interpretation hallowed by time and sanctified by judicial decisions that, unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that ''all statutes other than those which are merely declaratory or which relate onl....
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....interpretation which results in drastic consequences. 24. In the light of the said legal position, it is required to be held that Sub-section (2) of Section 164 of 2013 could be made applicable only prospectively and not retrospectively. Therefore, the financial years contemplated in the said provision have to be counted from 1st of April 2014 i.e. financial years 2014-15, 2015- 16, and 2016-17. The disqualification under the said provision would be attracted, or the Director of a company would become ineligible to be reappointed as the Director of the defaulting company or appointed in other company for a period of five years, only if the company in which he was the Director had not filed the financial statements or annual returns for continuous period of three financial years from 2014-15. 25.As discussed herein above, the annual general meeting has to be held within six months from the date of closing of the financial year. In case of Financial Year 2016-17, AGM could be held up to 30th September 2017, and the annual returns could be filed within 60 days and financial statements within 30 days of holding of such AGM i.e. up to 30th of November and 30th of Octob....
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....t no person shall be appointed as a Director of a company, unless he has been allotted the Director Identification Number under Section 154. Section 153 requires every individual intending to be appointed as Director of a company to make an application for allotment of DIN to the Central Government in such form and manner as may be prescribed. Section 154 states that the Central Government shall within one month from the receipt of the application under Section 153 allot a DIN to an applicant in such manner as may be prescribed. Section 155 prohibits any individual, who has already been allotted a DIN under Section 154 from applying for or obtaining or possessing another DIN. Rules 9 and 10 of the said Rules of 2014 prescribe the procedure for making application for allotment and for the allotment of DIN, and further provide that the DIN allotted by the Central Government under the said Rules would be valid for the lifetime of the applicant and shall not be allotted to any other person. 30.Rule 11 provides for cancellation or surrender or deactivation of DIN. Accordingly, the Central Government or Regional Director or any authorized officer of Regional Director ma....