The Ministry of Corporate Affairs (MCA) had published a list of nearly three lakh directors on 12th September, 2018, alleging their disqualification in lieu of their association with “struck-off” companies under Section 248 of the Companies Act, 2013. The Gujarat High court has quashed the list so published stating that the Section 164(2) of the Companies Act, which holds that a director of private limited company incurs disqualification on the default of the company to file annual returns and statements for a period of three consecutive years, is prospective in nature. Such an observation implies that the Act will take effect only from its date of notification, i.e April 1st, 2014.
The same batch of petitions challenge the list so published as well as the deactivation of their DINs (Directors Identification Numbers) as a consequence of the publication of the said list. On this contention, the bench of Justice Bela M. Trivedi held that sriking off of a company under Section 248 of the Companies Act, 2013 will not lead to deactivation of DINs as the circumstances under which such an action is possible has clearly been laid down under the Proviso of Section 155 of the Act read with Rule 11 of the Companies (Appointment of Directors) Rules, 2014.
Further, the Court also noted that there was no corresponding provision in the Companies Act, 1956 to disqualify directors on failure to file returns and statements and neither was there any explicit mention of retrospective effect of the Companies Act, 2013 which deems the statute to hold prospective nature.
Courtesy/By: Shivangi Km Mishra
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27 Dec 2018
