Prof.M.K.Sanoo vs State Of Kerala Represented By Its Secretary

T.R. Ravi, J

The prayers in the above three writ petitions are similar. The writ petitions are hence heard and disposed of together.

The  petitioners  in  all  these  cases  are  members  of  the Aruvipuram Sree Narayana Dharma Paripalana Yogam (SNDP Yogam). The writ petitions are filed, mainly aggrieved by the Order No. IGR/4487/2020/L3 dated 17.02.2024 issued by the Inspector General of Registration, holding that the Directors were not disqualified for the financial years 2014-2015 and 2015-2016.

W.P.(C)No.8198  OF  2024  has  been  filed  praying  to quash Order No. IGR/4487/2020/L3 dated 17.02.2024 of IG of Registration; to declare that respondents 4 to 7 are disqualified under  the  provisions  of  the  Companies  Act,  2013  ('the  2013  Act' for  short)  and  ineligible  to  continue  as  Directors  of  SNDP  Yogam; to  declare  that all  the  Directors  of  SNDP  Yogam  are disqualified under Section 164 of the Companies Act; to appoint an Administrator to run the affairs of the SNDP Yogam including preparation and publication of voters list in the SNDP Yogam, issuance  of  Identity  cards  to  such  voters,  conduct  a free  and  fair election and handover the administration to such elected body; and to declare that the SNDP Yogam has no control over the Unions and Sakhas.

W.P.(C)No.8095 OF 2024 has been filed with similar prayers and with additional prayers for a declaration that the respondents 4 to 7 are disqualified under the provisions of Section 167(1)(a)  of  the  Companies  Act,  2013;  to  restrain  respondents  4 to 7 from functioning as the Directors of the Respondent No.3 Yogam; and to direct respondents 1 and 2 to convene AGM of the 3rd respondent Yogam and conduct election within a time frame to be fixed by this Court.

W.P.(C)No.10526 OF 2024 has been filed with similar prayers and with additional prayers to direct the 2nd respondent  to  identify  those  Directors  of  the  Yogam  who  do  not have a valid Director Identification Number (DIN) and remove them  as  Directors  of  the Yogam  and if  the  2nd respondent  finds that the all the Directors of the Yogam are disqualified under Section  167(1)(a)  of  the  2013  Act  or  are  found  ineligible  in  the absence of possession of a valid DIN, then to direct the 2nd respondent to appoint the required number of Directors who shall hold office till  the Directors  are appointed  by  the Company  in  the general meeting within such period.

The parties are referred to in this judgment as per their status in W.P.(C)No.8198 of 2024. The case of the petitioners is as follows:- The SNDP Yogam was initially registered on 15.05.1903 under the Travancore Regulation No.1 of 1063 and was  subsequently  deemed  to  be  registered  under  the  Companies Act,  1956.  Though  the  Kerala  Non-Trading  Companies  Act,  1961 (hereinafter  referred  to  as  'the  Kerala  Act')  came  into  force  later, the  Yogam  continued  under  the  Companies  Act,  1956  (the  1956 Act for short), until  the  Central  Government  issued  an order  on 23.08.2005  under  Section  399(4)  of  the  1956  Act,  directing  that the Kerala Government had jurisdiction. Thereafter, the Yogam has  been  governed  by  the  Kerala  Act,  with  the  provisions  of  the 2013 Act applying  mutatis mutandis. The Yogam is deemed to be a Public Company under the applicable laws. As per Section 274(1)(g) of the Companies Act, 1956, a person becomes disqualified  to  be  a Director  of  a Public  Company  if  the  Company has not filed annual accounts and returns for any continuous period of three financial years. The petitioners claim that the Yogam  failed  to  file  such  returns  from  2006-07  to  2016-17  until 24.09.2020 and that the Directors have thus incurred disqualification from 2009 onwards.

Though the Yogam later filed the pending returns under the Companies Fresh Start Scheme (CFSS), 2020, and was granted immunity from penalties or prosecution, the petitioners argue that this does not remove the incurred disqualifications. Earlier,  when  the  matter  was  raised  before  the  Inspector  General of Registration, it was  dismissed  on  the ground that the parties should  seek  remedies  before a civil  court. The above  order was set aside by this Court by its judgment dated 30.11.2023, holding that  the  Inspector  General  of  Registration  had  failed  to  exercise jurisdiction.

Subsequently, W.P.(C) No.22201 of 2022 was filed before this Court seeking the appointment of an Administrator for the  Yogam  and  the  conduct  of  free  and  fair  elections.  The  Court, by its judgment dated 15.01.2024, directed that if the petitioners could establish locus standi, the Inspector General of Registration must  hear  them.  Acknowledging  the  petitioners'  locus  standi, the Inspector General of Registration heard them. The petitioners contend that, without adequately addressing the core issues raised  and  contrary  to  the  directions  of  this  Court,  the  Inspector General of Registration passed a fresh order dated 17.02.2024, stating that the Directors were not disqualified for 2014-2015 and 2015-2016, citing the immunity granted under the CFSS, 2020, and the requirements under the Companies (Appointment and Qualification of Directors) Rules, 2014.

A detailed counter affidavit has been filed on behalf of respondents 3 to 7. The contentions in the counter affidavit are;

(i) Writ  petitions  are  not  maintainable,  since  on  the same set of facts, CP No. 42/KoB/2020 and CP No. 50/KoB/2020 have been preferred before the Company Law Tribunal, and OS No.328 of 2022 is pending before the Munsiff Court, Karunagappally.

(ii) The Yogam has 240 Sakhas and 7 Unions outside Kerala at present, and hence it is no longer governed by the Kerala  Act, but is  governed by the 2013 Act.

(iii) Since it is observed in Ext.P1 judgment (produced in W.P.(C)No.8198 of 2024) that the Yogam can obtain exemption from the appropriate  authority/Government  restricting  the voting rights of members of the Yogam, no appeal was filed against Ext.P1 judgment (after the filing of the counter-affidavit, Ext.P1 judgment was challenged before a Division Bench, and the Division Bench has already set aside Ext.P1 judgment).

(iv) DIN had been allotted to respondents 4 to 7 even before the commencement of the Act. They are not disqualified for non-compliance with Section 152(3) of the Act. The Munsiff Court, Kollam, has already held that respondents 4 to 7 are not disqualified for lack of DIN.

(v) The order  dated  23.8.2005  issued  by  the  Central Government, finding that the Kerala Act applies to the Yogam, has been set aside by the High Court of New Delhi by judgment dated 09.02.2009 in W.P.(C)Nos.22699, 22700 and 22701 of 2005, and the Central Government was directed to decide the issue afresh.

(vi) Since there are no Rules framed by the Kerala Government for the issuance of DIN, there cannot be a disqualification.

(vii) After the order dated 23.08.2005, returns were submitted to the IG of Registration, Kerala, but they  were  returned,  as  the  original  registers  and records  were  not  received,  from  the  office  of  the Registrar of Companies, Kerala.

(viii) This Court, on 26.02.2009, issued orders in CP No.40 of 2008 directing the original registers and records of the Yogam to be kept in a sealed cover under the custody of the Registrar (Judicial) of this Court. In September 2019 the records of the Yogam were received back at the office of the IG of Registration, and thereafter representations were filed for acceptance of the annual returns.

(ix) On 30.12.2019, the Government of Kerala appointed the Deputy Inspector General (Licensing) as the adjudicating officer regarding the fee to be paid for filing the returns. In exercise of powers under Section 460 of the 2013 Act, read with Section 3 of the Kerala Act, the Government  of  Kerala  has  condoned  the  delay  in filing the annual reports by its order dated 24.09.2020,  a copy  of  which  has  been  produced as Ext.R4(j) in W.P.(C)No.8095 of 2024. Thereafter,  the  returns  were  accepted  by  the  IG of Registration.

(x) A fine  of ₹1,00,000/-  imposed  for  accepting  the returns after 2016-2017 was cancelled under the CFSS 2020 scheme, introduced by the Government  thereafter.  The  contention  is  that  all the requirements have been complied with, and returns  have  also  been  filed,  and  hence,  there  is no disqualification.

(xi) The respondents 4 to 7 were elected on 09.08.2015,  and  as  per  Article  18  of  the  Articles of Association, they are entitled to continue till new office bearers are elected.

(xii) The  disqualification  under  Section  164  (2)  is  not automatic,  and  a prior  enquiry  is  required  before disqualifying the Directors. The direction of this Court in Ext.P7 judgment (produced in W.P. (C)No.8198 of 2024) was only to consider the disqualifications,  if  any,  due  to  non-filing  of  DIN or non-intimation of DIN.

(xiii) There is no illegality in condoning the delay in filing  the returns,  since under  Section  458  of  the 2013 Act,  the  power of  the Government can  be delegated to a subordinate authority.

Heard Sri P.B.Krishnan, Senior Advocate, instructed by Sri Sabu George, for the petitioners in W.P.(C)No.8095 of 2024, Sri D.Anil Kumar for the petitioner in W.P.(C)No.8198 of 2024,  Sri  K.T.  Shyamkumar for the petitioner  in  W.P.(C)No.10526 of 20224, Sri Uday Holla, Senior Advocate, instructed by Sri  A.N.Rajan  Babu  for  respondents  3 to  7 in  W.P.(C)Nos.8095  of 2024  & 8198  of  2024  respectively  and  for  respondents  4 to  8 in W.P.(C)No.10526 of 2024, Sri C.E.Unnikrishnan, Special Government Pleader to AG for the official respondents/State.

RELEVANT FACTS :-

The  Yogam  was  originally  incorporated  as  a Company under Regulation 1 of 1063 of Travancore Regulations, which was the equivalent of the Indian Companies Act, 1882, with effect from  15.05.1903. As  per  the  Byelaw,  the  Yogam  was  formed  to promote and encourage religious and secular education and industrious habits among the 'Ezhava' community and to do all such other things as are incidental or conducive to the attainment of the said objects. After the 1956 Act came into force, the Yogam was governed by the provisions of the said Act. The Kerala Act came into force with effect from 01.03.1962. As per the preamble of the Kerala Act, its purpose is to provide for the incorporation, regulation and winding up of Companies, other than trading corporations (including banking, insurance and financial corporations), with objects confined to the State of Kerala.

The Articles of Association of the Yogam were amended in  1966,  and  Clause  47,  which  was  introduced,  provided  that  in the  general  meeting  of  the  Yogam,  the  members  of  the  Director Board, Union Presidents, Union Secretaries and 1% of the permanent members of the Unions who are selected in the manner prescribed, will be entitled to participate. That is, if there are 100 permanent members in a Union, one person will be entitled to represent the Union at the general meeting. Clause 47 was challenged before this Court and a Division Bench of this Court in the decision dated 28.11.1972 in P.C.Aravindhan v. M.A.Kesavan  &  Ors.  reported  in  [1973  KLT  70]  declared  that Clause 47 of the Articles of Association of the Yogam is violative of the provisions of Table C of Schedule 1 of the 1956 Act, and hence void. The  Division  Bench  proceeded  on  the  basis  that  the  1956 Act  governs  the  Yogam,  and  the  effect  of  the  Kerala  Act  was  not considered.  In  paragraph  21  of  the  judgment,  the  Division  Bench observed that it is open to the Yogam to take advantage of Section 25(6) of the 1956 Act.

Based  on  the  observation  in  the  judgment,  the  Yogam approached the Central Government under Section 25(6) of the 1956 Act, requesting to exempt the Yogam from the provisions of Section 172(2), 219 and Article 14 of Table C of the Act.

Though exemption was obtained under the 1956 Act, the  Yogam  held  out  that  it  was  governed  by  the  Kerala  Act.  On 02.10.2005, the Yogam filed an application before the Registrar of Companies, Ernakulam, requesting that all records relating to the Yogam be transferred to the Office of the IG of Registration, State of  Kerala.  The  reason  stated  in  the  application  is  that  the  Kerala Act  governs  the  Yogam.  An  application  filed  before  the  Company Law Board, Chennai, complaining of mismanagement was rejected on 21.04.2015, on a finding that the Yogam was governed by the Kerala Act and the Company Law Board lacks jurisdiction. In C.P.No.18 of 2008 and F.A.O.No.18 of 2020 before this Court, the Yogam  took  the  stand  that  the  Kerala  Act  applies  to  the  Yogam. On  26.12.2019,  the  Kerala  Government  issued  orders  authorising the Registration Deputy  Inspector General (Licensing) to serve as the Adjudicating Authority for the filing of the Yogam's annual returns. The order would show that the Yogam and the Government  were  of  the  view  that  the  Kerala  Act  applies  to  the Yogam. It was in the above background that the writ petition, which led to Ext.P1 judgment, was filed before this Court.

In Ext.P1 judgment, this Court, after considering the admitted  facts,  held  that  the  Kerala  Act  governs  the  Yogam,  and that the exemption granted by the Central Government under the 1956 Act, was without jurisdiction. This Court followed the judgment of the Division Bench of this Court in  P.C. Aravindhan (supra) and held that all members are entitled to vote.

The hearing of these writ petitions proceeded based on the above facts and the specific contention in the counter affidavit of the respondents 4 to 7 was that Ext.P1 judgment was not challenged in view of the observation that the Yogam can approach the appropriate authority for restriction of voting rights. Since one of the prayers in the writ petitions was  for the conduct of  the  election  to  the  SNDP  Yogam,  as  agreed  to  by  the  Counsel for the petitioners and respondents, this Court issued certain directions, as preparatory to the conduct of elections to the SNDP Yogam.  The  3rd respondent  was  directed  to  collect  the  members' list  with  details  like  address,  identification  documents,  etc. from all its Sakhas and consolidate the same as a single list. Based on lists  of  persons  who  can  be  appointed  to  assist  the  Observer  and Returning Officer, to be appointed to conduct the election, this Court ordered that Sri Sinil Mundappalli, Advocate, Sri A.Somarajan, Sri N.D.Premachandran, Advocate and Sri P.P.Madhusoodanan, can be included in the committee to be formed for assisting the election to the SNDP Yogam. The time granted to the Yogam to prepare the list was being extended from time to time. Finally, this Court appointed Mr.Justice K.Ramakrishnan, Former Judge of this Court, as Chairperson of the  Committee  to  oversee  the  election,  to  function  with  the  help of  the persons mentioned  above and  directed  the Yogam to  place the lists prepared till then before the Committee.  The Yogam was thereafter directed to provide sufficient office space for the functioning  of  the  Committee.  After  several  postings  and  orders, on 28.11.2024, the Chairman of the Committee reported that the preparation  of  the  list  of  members  is  going  at  a snail's  pace,  and this Court issued specific directions to the Yogam to speed up the process. When the process initiated by this Court did not draw the desired  results,  it  was  finally  decided  to  hear  and  dispose  of  the writ petitions on merits, instead of venturing to conduct the election.

ARGUMENTS ON BEHALF OF PETITIONERS:

Sri P.B.Krishnan, Senior Counsel, and Sri D.Anil Kumar, appearing for the petitioners, contended as follows:

(a) The respondents 4 to 7 who were Directors of the Yogam for several terms, were last re-elected for a 5-year term on 09.08.2015, and even after their 5-year term expired,  they  are continuing in office without conducting an Annual General Meeting.

(b) Section 92 of the Companies Act mandates the filing of returns. As per Section 96 of the Companies Act, an AGM should be conducted every year, and the period between two AGMs should not exceed 15 months.

(c) Section  164  of  the  Companies  Act  says  that  the Directors  of  the Company  who  do not file annual returns and financial statements for 3 financial years are disqualified for 5 years. Section 167(1) (a)  of  the  Act  also  contemplates  disqualification. The relevant years for judging the applicability of Section 164(2) are 2014-15 to 2022-23.

(d) The Central Government had notified the CFSS 2020  scheme in exercise of power under Section 460 read  with  Section  403  of  the Companies  Act with effect from 1.4.2020. The scheme enabled the defaulting companies to file their returns/belated  documents  and  secure  immunity from prosecution and penalty.

(e) While W.P.(C) No.19266 of 2020 was pending, the  2nd respondent  issued  an  adjudication  order on 24.09.2020, exercising power under Section 460 read with Section 92(5) of the Act, condoning  the  delay  in  filing  for  the  period  from 2006-2007 to  2016-2017 on payment  of₹1lakh and specifying the regular filing fee as₹6,600/-.

(f) The direction to pay Rs.1 lakh was waived by the IG of Registration, by order dated 05.11.2020, passed on an application dated 21.10.2020, filed by the Yogam under the CFSS 2020. On that day, after paying the filing fee of ₹ 6,600/-, the returns  for  the  period  from  2006-2007  to  2016- 17 were filed. The immunity certificate issued on 05.11.2020  has  been  produced  as  Ext.P2  in  W.P. (C)No.8095 of 2024.

(g) On 24.01.2022, this Court rendered Ext.P1 judgment.  On  8.2.2022,  by  Ext.P8  (produced  in W.P.(C)No.8095 of 2024), the Government condoned the delay in filing returns for 2017- 2018 to 2019-2020. This was in exercise of power under Section 460 of the 2013 Act, and not under the CFSS 2020. On 27.05.2022, by the judgment in Ext.P2, the Division Bench upheld the finding of the trial court that a scheme for the administration of the Yogam in accordance with the requirements of the relevant statute governing Companies is to be framed.

(h) The counsel submitted that the condonation of delay and CFSS 2020 only averts penalty and prosecution and does not remove any disqualification  of  the  Directors.  It  is  pointed  out that the disqualified Directors of the Company were not applicants under the CFSS 2020. The CFSS 2020 was framed by the Government, under Section 460 of the 2013 Act, and it cannot

override the statutory consequences flowing from Section 164(2) of the 2013 Act. It is hence submitted that once a disqualification is incurred, there is no provision to reverse it.

(i) It  is  submitted  that  the  last  election  of  Directors was  at  the 110th AGM held  on  09.08.2015.  The 113th AGM was held on 07.02.2019, and the election of Directors was not conducted. Even after the 113th AGM, more than 6 years have elapsed. It is pointed out that as far as the returns for the  period  2017-2018  to 2019-2020 are concerned, condonation of delay was not under the CFSS  2020,  and  the  so-called  benefits claimed under the scheme will not be available merely because the delay was condoned in exercise  of  the power  under Section  460  of  the 2013 Act.

(j) It is submitted that the stand of persons who were not properly elected in the first place, whose term has also expired in 2020, and who are disqualified under Section 164(2) and 167(1) (a) of the Companies Act, 2013, cannot be treated as the stand of the Yogam or its members. It is submitted that the Yogam is a public trust, and this Court should exercise its parens patriae jurisdiction.

(k) The Yogam has more than 32 lakhs members, and it administers multiple educational and other institutions,  and micro  finance credit  and finance distribution  of  around₹4,500/-  Crores,  and  the public  interest  lies  in  ensuring  that  the  Yogam  is governed legally and properly, and not for satisfying private interests of the office bearers.

Regarding the order Ext.P15 (produced in in W.P. (C)No.8095 of 2024), it is submitted that the finding that the Directors  are  not  disqualified  for  the  period  2014-2015  to  2015- 2016 was not proper, particularly since this Court had directed consideration of disqualification for the period 2016-2017 to 2022-2023 also. It is submitted that the above aspect has not been considered in Ext.P15.

ARGUMENTS ON BEHALF OF RESPONDENTS 4 to 7:

Sri Udaya Holla, Senior Counsel and Sri Rajan Babu appearing for the respondents 4 to 7, raised the following contentions:

(a) The writ petitions are not maintainable since there is  a statutory remedy available under  the 2013 Act. Two Company Petitions before the National Company Law Tribunal, Kochi Bench, and OS No.328 of 2022 before the Munsiff Court, Ernakulam, are pending, for the very same relief. When Legislation provides a statutory remedy by way of an application before the National Company Law Tribunal, the writ remedy stands ousted.

(b) The  Yogam  did  not  fail  to  file  the  annual  returns continuously for 3 years, and there was no conscious  or  wilful  default.  Reference  is  made  to the  documents  produced  along  with  the  counter affidavit to show the filing of the returns. The returns were not accepted by the IG of Registration, since the original records had not been  received  from  the  Registrar  of  Companies. The  original  records  were  in  this  Court’s  custody from February 2009 till September  2019. When there is an impossibility of performance, that would be a valid excuse for non-performance. Reliance  is  placed  on  the  legal  maxims‘lex  non cogit ad impossibilia’ and ‘impotentia excusat legem'.

(c) The  continuation  of  respondents  4 to  7 as  Office Bearers is not unauthorised or illegal, since Sections 164(2) and 167(1) of the Companies Act permit the existing Directors to continue in office.

(d) The continuous period of 3 years can be counted only after Section 164(2) came into force with effect from 01.04.2014. In Ext.P5 judgment (produced  in  W.P.(C)No.8095  of  2024),  the  only direction was to consider disqualification with respect to the years 2013-14 to 2015-16, and no other enquiry was contemplated.

(e) There is no disqualification since the delay in filing the returns was condoned by the Government  under  Section  460  of  the  2013  Act. Once the delay is condoned, the difference in status between returns filed within time and outside time stands obliterated.

(f) Section 167(1)(a) is clarificatory in nature and hence retrospective, and no disqualification can be attributed to respondents 4 to 7 under Sections 164 (2) and 167(1)(a). Moreover, the respondents  4 to  7 have  been  allotted  DIN,  and hence no disqualification can be attributed for not possessing a valid DIN.

(g) In view of the orders of the Hon'ble Supreme Court condoning the delay in all cases up to February 2022, considering the COVID pandemic,  it  cannot  be  said  that  there  was  any delay in filing the returns for the period 2017- 2018 to 2019-2020. Moreover, the annual returns for the years 2020-2021 to 2020-2023 have been filed on time.

(h) There  are  170  Directors,  of  whom  more  than  60 Directors have a valid DIN and others have applied. The quorum for a meeting is either 8 members or 25% of its total strength, whichever is  less,  and  hence  the  Directors  will  not  have  to vacate the office for non-possession of DIN.

(i) Since the Kerala Government has  not issued  any Rules for the allotment of DIN, the question of non-possession of DIN does not arise.

(j) The  Articles  of  Association  say  that  one-third  of the Directors should retire every year, and the petitioners are bound to ascertain who the present Directors are, and implead all of them in the party array, failing which the writ petition should fail for non-joinder of parties.

(k) In the alternative, even if it is assumed that respondents 4 to 7 became disqualified in September 2016 for failure to file annual returns for 3 years continuously, the 5-year period of disqualification for re-appointment is already over  by  2021  or  2022,  and  hence  no  declaration can be granted that respondents 4 to 7 are ineligible to seek re-election.

(l) Under Section 463 of the 2013 Act, this Court can  excuse  the  Directors  of  the  Yogam,  as  they have acted honestly and reasonably and have taken all efforts to file the annual returns.

CONSIDERATION:

As  already  observed,  the  Yogam  had  initially  accepted Ext.P1  judgment.  Some  members  of  the  Yogam  had  earlier  filed O.S.No.45 of 1999 before the District Court, Ernakulam under Section 92 of the Code of Civil Procedure for the removal of certain persons from the administration of the Yogam and for framing a scheme for its administration. The suit was decreed on 08.04.2009. An appeal, RFA No.843 of 2009, was filed before this Court by the Yogam and the 4th respondent. The said appeal had been pending before this Court since 2009. It was during the pendency of O.S.No.45 of 1999 that the Ministry of Company Affairs, Government of India, had passed the order dated 23.08.2005 stating that the Kerala Act governs the Yogam. The Yogam thereafter started submitting the annual returns to the Inspector General of Registration, under the Kerala Act. The order dated 23.08.2005 was challenged in W.P.(C). No.22699 of 2005 before the High Court of Delhi. The High Court of Delhi, by judgment dated 07.2.2009, allowed the writ petition and directed the Central Government to reconsider whether the Kerala Act governs the Yogam. The stand of the Yogam before the Delhi High Court was that it is governed by the Kerala Act.

On  29.08.2013,  the  2013  Act  came  into  force.  Section 164  of  the  2013  Act,  relating  to  disqualification  of  Directors,  was brought  into force with effect  from 01.04.2014 as per notification dated  26.03.2014.  Respondents  4 to  7 were  elected  as  Directors at  the  110th Annual  General  Meeting  on  09.08.2015.  Despite  the judgment  of  the  High  Court  of Delhi  and  the  coming  into  force of the 2013 Act, the Yogam submitted the annual returns for the years  2013-14,  2014-15,  2015-16  and  2016-17  before  the  IG  of Registration on 17.08.2015, 31.10.2016, 09.01.2018 and 16.01.2019, thus holding out that the Yogam was governed by the  Kerala  Act.  It  is  also  admitted  that  the  original  documents  of the Yogam were returned to the IG of Registration (whose authority was only under the Kerala Act) in September 2019. It is thereafter that the writ petitions which led to Ext.P1 were filed before this Court.

Meanwhile,  a representation  had  been  filed  before  the IG of Registration praying to remove respondents 4 to 7 as Directors. A copy of the representation has been produced as Ext.P1  in  W.P.(C)  No.8095  of  2024.  This  was  followed  by  W.P.(C) No.19266  of  2020  seeking  directions  to  the  IG  of  Registration  to consider the representation. While so, on 24.09.2020, orders were passed under Section 460  of the 2013  Act, condoning the delay in filing the annual returns from 2006-07 to 2016-17 by fixing  a fine  of₹1lakh.  On  05.11.2020,  the  Yogam  filed  returns from  2006-07  to  2016-17  under  the  CFSS  2020  scheme  and  the IG of Registration granted immunity certificate, copy of which has been produced as Ext.P2 in W.P.(C) No.8095 of 2024. W.P.(C) No.19266 of 2020 was disposed of by this Court, directing the IG of Registration to consider the representation submitted. Respondents  4 to  7 filed  a review  petition  as  R.P.No.113  of  2021 seeking review of the judgment in W.P.(C) No.19266 of 2020. The Review Petition was disposed of, directing the IG of Registration to consider the representation untrammeled by the observations made in the judgment, and the relevant years for deciding on the disqualification were from 2014-15 and not 2013-14.

The Yogam notified that the Annual General Meeting will  be  held  on  14.04.2021  for  the  election  of  office  bearers,  but the same was stayed by this Court by order in W.P.(C)No.10796 of 2021 on 14.5.2021. The petitioners filed W.A.No.688 of 2021, challenging the order in W.P(C)No.19266 of 2020 and Review Petition No.113 of 2020. On 24.01.2022, this Court passed Ext.P1 judgment (produced in W.P.(C)No.8198 of 2024), holding that the Yogam was governed by the Kerala Act. On 30.01.2022, the IG of Registration passed an order relegating the parties to approach the Civil Court for an appropriate remedy. On 08.02.2022, the State Government passed an order under Section 460 of the 2013 Act, condoning the delay in submitting annual returns and financial statements for the years 2017-18 to 2019-20. The petitioners filed W.P.(C) No.6322 of 2022 challenging the order dated 30.01.2022 passed by the IG of Registration. On 13.04.2022,  the  Additional  Chief  Secretary  wrote  a letter  to  the IG  of  Registration  stating  that  the  rule  prescribing  the  procedure for issuing DIN is yet to be framed, and in the interim, the applications allotting DIN may be kept pending until new rules are framed.  On  30.11.2023,  by  a common  order  in  W.P.(C)  No.6322 of 2022 and connected cases, this Court set aside the order dated 30.01.2022 issued by the IG of Registration and remanded the matter to the IG of Registration to reconsider, after adverting specifically to the directions in Writ Appeal No.602 of 2021 and Writ Appeal No.688 of 2021, and to examine whether the disqualification under Section 167 (2) would apply against the Directors of the Company and whether they have valid DIN and if not would they face disqualification on that ground also. It is thereafter  that  on  17.02.2024,  the  IG  of  registration  passed  the impugned order.

As  stated  earlier,  on  24.01.2022,  by  Ext.P1  judgment, this  Court  held  that  the  Kerala  Act  governs  the  Yogam,  set  aside the order issued by the Central Government and declared that clause 44 of the Articles of Association of SNDP Yogam is ultra vires the statutory provisions contained in the 1956 Act, read with the provisions of the Kerala Act. This Court declared that all members  of  the Yogam have a right  to  vote in  any election  to  be held by the Yogam. The Court had relied on the earlier declaration of law in Aravindan (supra).

A Division Bench of this Court later heard and disposed of RFA No.843 of 2009 by Ext.P2 judgment dated 27.05.2022 (produced in W.P.(C)No.8198 of 2024). The Division Bench dismissed the appeal filed by the Yogam. While doing so, the Division Bench considered Ext.P1 judgment and, in paragraphs 25 and 26, held as follows:

“25. It is seen that Ext.B5 order has been challenged before this court by some of the members of the Yogam in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 and it was found in the said case  that  in  the  light  of  the  provisions  contained  in  the  Kerala Act,  the  registration  of  the  Yogam  as  a Non  Trading  Company under  the  Companies  Act,  1882  is  deemed  to  be  a registration in the State of Kerala under the Kerala Act and that the application under Section 25(6), in the circumstances, should have been preferred by the Yogam before the State Government. On the above findings, this Court set aside Ext.B5 order. The relevant findings contained in paragraphs 20 and 21 of the judgment in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 read thus:

“20. Ext.P5 purports to have been issued on an application submitted before the Central Government under Section 25(6) of The Companies Act, 1956. The  application has  been  preferred  admittedly  after the Kerala Act came into force in 1962. The apparent reason for preferring the application before the Central  Government  is  the  observation  contained  in the judgment in Aravindhan (supra). In the said judgment, this Court had only observed that the Yogam is not without remedy and they can always approach the Central Government under Section 25. This Court had not considered whether such an application has to be preferred before the Central Government or the State Government in view of the Kerala Act. As a matter of fact it was not even brought to the notice of the Court that the Kerala Act applies to the Yogam. Thus Ext.P5 cannot be justified as an order issued on the basis of directions issued by this Court.

By operation of Sections 3 to 6 of the Kerala Act, the registration of Yogam as a non-trading company under the Companies Act, 1956 is deemed to be  a registration  in  the  State  of  Kerala.  The  Kerala  Act  is a statute falling under Entry 32 of List II of the Seventh  Schedule  of  the  Constitution  and  the  State Legislature has exclusive power to make laws with respect to the matter. After coming into force of the Kerala  Act,  the  Companies  Act,  1956  can  no  longer govern the Yogam. Sections 3 to 6 of the Kerala Act in effect facilitates the transfer of governance from under the Companies Act, 1956 to the Kerala Act. Section  3 specifically  says  that  the  operation  of  the Companies Act, 1956 with regard to companies coming under the Kerala Act, will be subject to such modifications specified in the Schedule to the Kerala Act.  One  such  modification  made by  the  Schedule  is that references to “the Central Government” and“Government” where it refers to the Central Government  shall  be  construed  as  references  to  the Government of Kerala”. Section 25 of the Companies Act,  1956  will  thus  have  to  be  read  with  the  above modification and the necessary result is that an application  under  Section  25(6)  has  to  be  preferred before the State Government and not the Central Government, in the case of the Yogam, after 1.3.1962. Admittedly, Ext.P5 was issued on the basis of  an  application  preferred  much  after  1962.  Ext.P5 is  hence  not  issued  by  the  competent  authority  and hence cannot stand the test of law.”

A perusal of the judgment in the said case also reveals that the Yogam has not disputed in the case the fact that it is governed by the Kerala Act, with effect from its promulgation namely, 01.03.1962.  It  is  also  revealed  from  the  judgment  that  in  the light  of  the  provisions  contained  in  the  Kerala  Act,  the  Yogam has  even  preferred  applications  before  the  competent  authority under the central statute to transfer the records relating to it to the State Government. Another issue considered in the said case was whether the passage of time and continued acceptance of Ext.B5 order for several years would legitimise the order, and the said issue was answered by the court in the negative. It is however seen that even though the order of exemption granted by the Central Government was set at naught by this court in terms of the judgment in W.P. (C)Nos.8382  of  2020  and  1385  of  2021,  having  regard  to  the ramification of that decision, this court did not set aside all actions that had been carried out on the basis of the order that was set aside by clarifying that the judgment will not in any way nullify  the  meetings  held  by  the  Yogam  or  elections  conducted earlier.  Nevertheless,  it  is  reiterated  in  the  Judgment  that  the decision taken in the meetings to restrict the voting right  will not gain sanctity  of law.  The operative  portion of the judgment reads thus:

“... .... .... In the result, Ext.P5 order is set aside. It is declared that clause 44 of the Articles of Association of the SNDP Yogam is ultra vires the statutory provisions contained in the Companies Act, 1956 read with the provisions of the Kerala Non-Trading Companies Act,1961. It is declared that all the members of the Yogam have a right to vote in any election to be held by the Yogam”.

It is admitted by the parties that the judgment in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 has become final. We have perused the judgment in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 and we are in agreement with the findings and conclusion therein.  In  other  words,  the  case  set  out  by  the  plaintiffs  that the exemption granted by the Central Government to the Yogam from the provisions of the Companies Act, 1956, on the strength of which the members  of the Yogam are deprived of their right to participate in its annual general meeting and elect the  office  bearers  of the Yogam  is  bad  in law  is  to be accepted as correct. Needless to say, the finding to the contrary rendered by  the  court  below  and  challenged  by  plaintiffs  5 and  6 in  the cross objection is unsustainable in law.

The only inference possible from the finding that denial of opportunity  to  the  members  of  the  Yogam  to  participate  in  its annual general meeting and elect the office bearers of the Yogam  is  bad  in  law,  is  that  the  Yogam  was  not  managed  and administered by duly elected office bearers right from 19.03.1966. The judgment in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 was rendered on 24.01.2022. The contesting defendants have no case that they have obtained exemption from the State Government from the requirements of the company law in terms of the Kerala Act so as to justify convening of a representative annual general meeting of the members of the Yogam. On the other hand, it has come out that the office bearers of the Yogam who have assumed office as early  as  on  9.8.2015  are  continuing  even  now  on  the  strength of the invalid provisions in the Articles of Association. Of course, it  is  open  to  the  contesting  defendants  to  argue  that  since  the elections of office bearers of the Yogam held prior to the judgment in W.P.(C) Nos.8382 of 2020 and 1385 of 2021 have not been set at naught by this court, though held to be invalid, the Yogam could obtain exemption from the relevant provisions of the Company Law from the State Government in terms of the Kerala Act. But, what would be the situation if the State Government does not exempt the Yogam from the provisions of the said statute? Even if the State Government grants exemption as done by  the Central Government, the questions viz, whether the members  of  the  Yogam could be  deprived  of their  right to  participate  in  the  annual  general  meeting  to  elect its  office bearers and whether the  election of the office bearers of the Yogam by the representatives of the members of the Yogam would be sufficient for the due administration of the Yogam so as to achieve its objects etc. would remain unanswered. True, the inability of the Yogam to convene the annual general meeting of all its members running to several lakhs is a genuine difficulty to be addressed. Whether a representative  annual  general  meeting  would  be  a solution  for the said difficulty, is another question which needs to be addressed.  That  apart,  the  fact  that  the  Articles  of  Association of the Yogam have been subsequently amended and large number of persons other than the representatives of the Yogam have been permitted to participate in the annual general meeting which elects the office bearers of the Yogam is not disputed by he contesting defendants. The specific case pleaded by the plaintiffs in this regard is that Article 44 of the Articles of Association which permits such participation is against the provisions of the Companies Act and not conducive for a proper administration of the Yogam. The court below has accepted the said case of the plaintiffs. Paragraph 51 of the impugned judgment dealing with the said aspect reads thus:

“Section 41 of the Companies Act defines member of the company. There is no dispute to the fact that the annual general body meeting of the company means the meeting of the members of the company. Therefore reading of Section 41 along with section 166 of the Companies Act show that only members of the company can participate the general body meeting. Clause 44 of Ext.A4 authorises some other persons like Ex-President, Vice President, Devaswom Secretary, Yogam Directors, Union President, Union Secretary, Union Council  etc.  to  participate  the  annual  general  body meeting even if they are not elected by the members  from  their  respective  unions,  sakhas  etc. It  seems  that  these  provisions  in  the  Clause  44  of Ext.A4 bye law is against the spirit of the Companies Act. Therefore that provision also require reconsideration and modification”.

We do not find any infirmity in the said finding of the court below.  Are  these  issues  that  could  be  tackled  by  the  Yogam  is the next question. As indicated, if these are issues that could be tackled by the Yogam, an interference by the Court under Section  92  of  the  Code  may  not be  justified.  But,  as  far  as  the Yogam is concerned, according to us, the affairs as regards persons who are entitled to participate in its annual general meeting to elect its office bearers, appear to be in an untidy state which cannot be tackled by the Yogam. We are, therefore, of the view that the plaintiffs are justified in seeking direction of the court under Section 92 of the Code for administration of the Yogam  on  that  ground. We take this view  also for  the  reason that having regard to the large number of members of the Yogam, it is imperative for the Yogam to have a legal framework for a proper democratic representation of the members  in  its  annual  general  meeting  in  the  interests  of  the Yogam.”

It can be seen from the above passages that the Division  Bench  had  not  only  approved  Ext.P1  judgment,  but  also rendered a positive finding that the Kerala Act governs the Yogam, that every member has a right to vote, and that the office bearers of the Yogam who have assumed office as early as on 9.8.2015  are  continuing  even  now  on  the  strength  of  the  invalid provisions in the Articles of Association.

While the hearing of these writ petitions was progressing and this Court had issued interim directions regarding the conduct of elections of the Yogam, two persons who were not party to the Ext.P1 decision, filed a writ appeal, challenging Ext.P1  judgment,  in  December  2024.  It  was  contended  that  the admissions made by the Counsel for the Yogam, before this Court during the hearing which culminated in the Ext.P1 judgment, were not authorised. The writ appeal was admitted after condoning the delay  of  989  days.  The  appeal  was  finally  heard  and  disposed  of by judgment dated 19.12.2025, setting aside Ext.P1 judgment and directing the competent authority of the Government of India to  act  in  terms  of  the  judgment  of  the  High  Court  of  Delhi  dated 09.02.2009 in W.P.(C) Nos.22699 of 2005 and 22701 of 2005 after affording  necessary  opportunities  to both sides, without any avoidable  delay.  The  Court  recorded  the  undertaking  of  the  ASGI that  the  said  exercise  will  be  completed  not  later  than  3 months from  the  date  of  receipt  of  a copy  of  the  judgment.  It  was  also clarified that all aspects noticed in the judgment and not solely the one referred in the judgment of the High Court of Delhi, including whether the impugned order of the Government of India dated  20.08.1974  will  stand  operative  even  after  the  Companies Act 2013 has come into force, shall be adverted to and answered specifically.  A reading  of  the  judgment  suggests  that  the  Division Bench was not apprised of the earlier Division Bench judgment Ext.P2 (produced in W.P.(C)No.8198 of 2024), whereby the conclusions  in  Ext.P1  judgment  had  already  been  approved  by  a co-equal bench. The question as to whether the Kerala Act governs the Yogam assumes importance since this is a case in which the authority under the Kerala Act has exercised jurisdiction as directed by this Court, to decide whether the respondents 4 to 7 are disqualified. If the Kerala Act does not apply, the entire exercise was without jurisdiction. Another consequence will be that the 2013 Act will apply; in which case respondents 4 to 7 will have no defence at all since there is no case that any of the financial statements  were filed  before the Registrar of Companies as required under the provisions of the 2013 Act or the Companies Act, 1956.

Based  on  the  arguments  advanced  by  the  counsel  on either side, the questions that need to be answered are formulated and answered in the following paragraphs.

Questions to be considered:

(1) Is the Yogam covered by the Kerala Act or the Companies Act, 2013?

(2) Are  respondents  4 to  7 disqualified  under Section 164(2) of the 2013 Act?

(3) Are the respondents 4 to 7 liable to vacate office under Section 167 of the 2013 Act? (4) Are the writ petitions maintainable?

Question No.(4)–Maintainability of Writ petitions: The contention of the respondents 4 to 7 is that the writ petition is not maintainable since for the same relief, two company petitions  filed  in  2020  and  a suit  in  2022  are  pending.  The  order impugned  in  these  writ  petitions  is  one  that  was  issued  based  on the directions issued by this Court in Ext.P13 judgment (produced in W.P.(C)No.8198 of 2024). The direction issued by this Court was to the Inspector General of Registration to assess whether party respondents are disqualified under the provisions of Section 164  (2)  of  the  Companies  Act,  2013,  after  the  fiscal  year  2014- 2015. The said judgment was passed when the company petitions and  the  suit  were  pending,  and  this  Court  was  fully  aware  of  the pendency of the said litigations when this Court directed the authority under the Kerala Act to decide. It is settled law that there is no  bar to  the exercise of jurisdiction under Article 226 of the  Constitution  of  India  in  all  cases  where  there  is  an  alternate remedy is available. It is only a self-imposed restriction by the Constitutional Court. In Manu S. v. State of Kerala and others [2020 KHC 454], relied on by the respondents, this Court, after reiterating the above legal position, held on facts that the remedy of the petitioners therein was to approach the revisional authority. In the case at hand, since orders  were  issued  in  accordance  with  directions  of  this  Court  on several occasions, it is a fit case for the exercise of jurisdiction under Article 226.

Question (1): The above question is vexed. The 1956 Act, and its predecessor applied to the Yogam until the coming  into  force  of  the  Kerala  Act  in  1961.  In  1974,  when  the Division  Bench  passed  its  judgment  in  P.C.  Aravindan  (supra), there was no contention that the Kerala Act applied, although it had by then come into force. The Yogam had applied to the Central Government to restrict members' voting rights, following the judgment in P.C. Aravindan (supra), on the assumption  that  the Central  Act  applies.  The Central  Government issued  the  order  dated  20.08.1974  on  the  premise  that  the  1956 Act applies. On 31.7.1992, by judgment in C.M.A.No.113 of 1992, the institutions and properties of the SN Trust were brought under the  administration  of  the  Joint  Receiver  appointed  by  this  Court. One of the Joint Receivers, Sri M. K. Raghavan, expired on 20.12.1994, and this Court, by order dated 05.01.1995, appointed Sri N. D. Premachandran in the place of Sri M. K. Raghavan  as  one  of  the  Joint  Receivers.  OS.  No.  45  of  1999  was filed to frame a scheme for the administration of the Yogam in the above circumstances. While the above suit was pending, the Ministry of Company Affairs, Government of India, issued an order on 23.08.2005 stating that the Kerala Act governs the Yogam. Even though the Yogam had earlier applied to the Central Government for restriction of the voting rights and obtained favourable orders in 1974, for reasons  best known to the office bearers, the order of the Central Government issued in 2005 was accepted, and the Yogam started filing the returns to the Inspector General of Registration under the Kerala Act.

The next stage of the litigation  came on 07.02.2009, when a challenge to the order dated 23.8.2005 was upheld by the High  Court  of  Delhi  and  the  Central  Government  was  directed  to reconsider whether the Kerala Act governs the Yogam. Even though there was such a judgment on 07.02.2009, the Yogam continued  to  file  returns  to  the  Inspector  General  of  Registration. The returns were not accepted since the original records were not made available from the office of the Registrar of Companies. The records were transmitted only in 2019. In the meantime, the 2013 Act came into force. Respondents 4 to 7 were elected as Directors after the 2013 Act came into force. However, the Yogam continued to file the returns to the IG of Registration even thereafter,  without  pursuing  with  the  Central  Government  for  any orders,  as  was  directed  by  the  High  Court  of  Delhi.  It  also  needs to  be  noted  that  an  order  of  the  Company  Law  Tribunal  in  2015, finding that the Kerala Act applies to the Yogam was not challenged in any proceedings. In the above circumstances, the writ petitions that led to the Ext.P1 judgment were filed before this Court seeking to set aside the order issued by the Central Government in 1974 granting permission to restrict voting rights.

As already stated, this Court in Ext.P1, set aside the order dated 20.08.1974. The judgment was approved by a Division Bench in Ext.P2 judgment. Later, another Division Bench set aside the judgment Ext.P1. That leads to a situation where one Division Bench of this Court held that the Yogam is governed by  the  Kerala  Act  and  that  the  order  of  the  Central  Government granting  permission  to  restrict  the  voting  rights  of  members  was bad  in  law,  and  another  Division  Bench  has,  without  noticing  the earlier Division Bench and without going into the merits of the decision, set aside Ext.P1 and directed the Central Government to pass  orders  as  directed  by  the  Delhi  High  Court.  The  subsequent Division Bench has not considered the correctness or otherwise of the  first  Division  Bench.  In  Bindu  K.B.  v.  The  State  of  Kerala and  others  [2014  SCC  OnLine  Ker.  18497], a learned  Single Judge of this Court had considered a similar issue and held as follows:

“47. A learned Division Bench of the High Court of Andhra Pradesh S.K. Mahaboob Ali, Ex-CRPF Constable, Nandyal v. Director General of Police, Central Reserve Police Force,  New  Delhi, 2005 (1) ALT 412  (D.B.), has  held that  the judicial propriety and judicial discipline require that binding precedent shall be necessarily followed. However, while adopting  cautious  approach  in  case  of  conflicting  Judgments  of the  Apex  Court of  co-ordinate  Benches  cited  before  the  Courts, Courts may have to carefully scrutinize whether reasons had been recorded while laying down the ratio and whether the concerned statutory provisions had been considered and whether  the  other  prior  decisions  or  the  binding  decisions  also had been referred to, if any available on the point by the Court while rendering such Judgments.

A Special Bench of Five Judges of the Madhya Pradesh High Court in Jabalpur Bus Operators Association v. State of Madhya Pradesh, AIR 2003 MP 81, examined in depth the issue of precedential value of conflicting judgments of coordinate Benches. It has eventually held that in case of conflict between judgments of two Division Benches of equal strength, the decision of earlier Division Bench shall be followed, except when it is explained by the latter Division Bench in which case the decision of latter Division Bench shall be binding. Their Lordships have also observed that no decision of Apex Court has been brought to their notice which holds that in case of conflict between the two decisions by equal number of Judges, the later decision is binding in all circumstances, or the High Courts and subordinate Courts can follow any decision which is found correct and accurate to the case under consideration.

Indeed, the Special Bench has observed that High Courts and Subordinate Courts should lack competence to interpret decisions of Apex Court since that would not only defeat what is envisaged under Article 141 of the Constitution of India but also militate  hierarchical  supremacy  of  Courts.  The  common  thread which runs through various decisions of Apex Court seems to be that great value has to be attached to precedent which has taken  the  shape  of  rule  being  followed  by  it  for  the  purpose  of consistency and exactness in decisions of Court, unless the Court can clearly distinguish the decision put up as a precedent or is per incuriam, having been rendered without noticing some earlier precedents with which the Court agrees.

In my considered opinion, the position would be this: When the subsequent co-equal bench renders the judgment in ignorance of the earlier pronouncement of co-equal bench, the judgment of the previous bench will have binding effect. On the other hand, if the latter bench refers to the earlier one and distinguishes it, to that extent of distinction, the latter one binds.”

I am in respectful agreement with the above judgment and  find  support  to  the  said  view  in  the  judgment  of  the  Hon’ble Supreme Court in Sundeep Kumar Bafna v. State of Maharashtra [(2014) 16 SCC 623]. The Hon’ble Supreme Court, while considering what constitutes per incuriem judgments, held as follows:

“19. It cannot be over emphasised that the discipline demanded  by  a precedent  or  the disqualification  or  diminution of a decision on the application of the per incuriam rule is of great importance, since without it, certainty of law, consistency of rulings and comity of courts would become a costly casualty. A decision  or  judgment  can  be per  incuriam any  provision  in  a statute, rule or regulation, which was not brought to the notice of the court. A decision or judgment can also be per incuriam if it  is  not  possible  to  reconcile  its ratio with  that  of  a previously pronounced  judgment  of a co-equal  or larger Bench; or if  the decision of a High Court is  not in  consonance  with the  views  of this Court. It must immediately be clarified that the per incuriam rule is strictly and correctly applicable to the ratio decidendi and not to obiter dicta. It is often encountered in High Courts that two or more mutually irreconcilable decisions of the Supreme Court are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam.”

The first question posed is hence answered, holding that the Yogam is governed by the Kerala Act.

Question (2):

The next question that needs to be considered is whether respondents 4 to 7 are disqualified under Section 164 to hold office. In Ext.P13 judgment, this Court after setting aside the order  passed  by  the  Inspector  General  of  Registration,  directed  a reconsideration of the issue after adverting specifically to the directions  of  the  Division  Bench  in  Writ  Appeal  Nos.602  of  2021 and 688 of 2021, but bringing within the ambit of the exercise of evaluation, the further question whether the disqualification under Section 167 (2) of the Companies Act would apply against the Directors of the Company. Ext.P10 produced in W.P.(C)No.8198 of 2024 is the judgment of the Division Bench in the Writ Appeal. The Division Bench took note of the submission made by the counsel appearing for respondents 4 to 7 that an Adjudicating Officer to adjudicate in respect of returns of the Yogam for the period 2006-07 to 2016-2017 has condoned the delay in submission of returns for the period 2006-07 to 2016-17 on payment of a fee of₹6,600/-. The order dated 05.11.2020, which is titled as an immunity certificate under CFSS 2020, whereby immunity was granted from prosecution under the Companies Act, 2013, has been reproduced in Ext.P10 judgment. The operative portion of the Immunity Certificate reads as follows:

“Now,  therefore,  in  exercise  of  the  powers  conferred  under  CFSS, 2020 the undersigned hereby issues this certificate to the said company granting immunity from prosecution or imposition of penalty under the Act subject to the provisions contained in the scheme in respect of aforesaid document(s) converted in the application.”

The  Court  thereafter  directed  the  Inspector  General  of Registration to consider as to whether disqualification of respondents  4 to  7 as  Directors  of  the  Company  under  Sections 164(2) of the Companies Act, 2013 would arise after the financial year 2014-2015 when the delay in submission of returns has been condoned, when the returns were filed in bulk for the years in question.  In  the  light  of  the  judgments  Ext.P10  and  Ext.P13,  the issues are two-fold. (i) Whether there was any disqualification under  Section  164  of  the  Companies  Act,  2013,  for  the  financial year 2014-15 onwards, and (ii) whether respondents  4 to 7 were disqualified to hold the office of Director in view of disqualification under Section 167(2) of the Companies Act, 2013.

DISQUALIFICATION UNDER SECTION 164(2):

I shall first consider whether there is any disqualification under Section 164(2) of the 2013 Act. Section 164 reads as follows:

“164. Disqualifications for appointment of director.-

(1) A person shall not be eligible for appointment as a director of a company,if—

(a) he is of unsound mind and stands so declared by a competent court;

(b) he is an undischarged insolvent;

(c) he has applied to be adjudicated as an insolvent and his application is pending;

(d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:

Provided that if a person has  been  convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;

(e) an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;

(f) he has not paid any calls in respect of any shares of the  company  held  by  him,  whether  alone  or  jointly with others, and six months have elapsed from the last day fixed for the payment of the call;

(g) he  has  been  convicted  of  the  offence dealing  with related party transactions under Section 188 at any time during the last preceding five years; or

(h) he has not complied with sub-section (3) of Section 152.

(i) he has not complied with the provisions of sub- section (1) of Section 165.

(2) No person who is or has been a director of a company which—(a) has not filed financial statements or annual returns for any continuous period of three financial years;

or

(b) has failed to repay the deposits accepted by it or pay  interest  thereon  or  to  redeem  any  debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more, shall be eligible to be reappointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so:

Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur  the  disqualification  for  a period  of  six  months  from  the  date of his appointment.

(3) A private company may by its articles provide for any disqualifications  for  appointment  as  a director  in  addition  to  those specified in sub-sections (1) and (2):

Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.”

A reading  of  the Section  would show that  if there is failure to file financial  statements  or  annual  returns  for  any  continuous  period of  3 financial  years,  no  person  who  is  or  has  been  a Director  of the  Company  which  had  committed  such  default,  shall  be  eligible to  be  reappointed  as  a Director  of  that  Company  or  appointed  in any other Company for a period of 5 years from the date on which the Company failed to do so. Admittedly, the financial statements of  the  Yogam  were  accepted  after  condoning  the  delay  and  upon payment  of  ₹6,600/-on  05.11.2020. That  is  to  say,  the  financial statements for the financial years 2014-2015 to 2016-2017, which ought to have been filed by 2017-18 to 2019-20, respectively, to escape the rigour of the statutory provision, were filed only on 05.11.2020, after the period of 3 years had elapsed. In the case of the returns for the year 2014-15, the delay exceeds 5 years.

The  CFSS  2020  is  a scheme  introduced  under  Section 460 read with Section 403 of the 2013 Act. A copy of the scheme has been produced as Ext.P18 along with W.P.(C) No. 8198 of 2024. Clause  6 of  Ext.P18,  which  gives  details  of  the  scheme  in clause 6(iv), states as follows:

“(iv)  Manner  of payment  of normal  fees  for  filing  of belated documents and seeking immunity under the Scheme  - Every defaulting company shall be required to pay normal fees as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 on the date of filing of each belated document and no additional fee shall be payable. Immunity from the launch of prosecution  or  proceedings  for  imposing  penalty  shall  be  provided only to the extent such prosecution or the proceedings for imposing penalty under the Act pertain to any delay associated with  the  filings  of  belated  documents.  Any  other  consequential proceedings, including any proceedings involving interests of any shareholder or any other person qua the company or its directors or key managerial personnel would not be covered by such immunity.” (emphasis supplied)

It  can  thus  be  seen  that  the  immunity  certificate  only grants protection against prosecution or proceedings for imposing a penalty under the Act, for the non-filing of the documents within the prescribed time. No other consequential proceedings are covered by such an immunity certificate.

Section  403  of  the  2013  Act  says  that  any  document required to be submitted must be submitted within the time specified  in  the  relevant  provision  on  payment  of  the  prescribed fee. The proviso to Section 403 says that such documents can be submitted after the expiry of the period so provided, on payment of such additional fee as may be prescribed, which will be without prejudice to any other legal action or liability under the Act. Section 403(2) says that  where a company fails to  submit  any  document  under  sub-section  (1)  before  the  expiry of  the  period  specified  in  the  relevant  section,  the  company  and the officers of the company who are in default shall, without prejudice to the liability for the payment of fee and additional fee, be liable for the penalty or punishment provided under the Act for such failure or default. Thus, the liability for penalty or punishment is again emphasised, while permitting the delayed submission of the documents.

Section  460  of  the 2013  Act deals  with  the power to condone  delays.  It  says  that  where  any  document  required  to  be filed  with  the  Registrar  is  not  filed  within  the  time  specified,  the Central  Government  may,  for  reasons  to  be  recorded  in  writing, condone the delay. The power can hence be exercised only by the Central  Government.  In  the  case  at  hand,  in  view  of  my  finding that the Kerala Act applies, the word “Central Government” will have to be read as “State Government”. No provision permits the exercise  of  power  under  Section  460  by  a delegate.  A reading  of Ext.P18 Scheme along with Sections 403 and 460 leads one to the conclusion that the scheme only provides for delayed submission on payment of the fee prescribed therein and does not in any manner save the legal consequences spelt out in the statute, except the imposition of penalty or punishment. It is pertinent  to  note  that  neither  Section  403  nor  Section  460  refers to Section 164 of the Act. The language of the above Sections is not ambiguous in any manner. Nothing in those provisions has the effect of undoing a disqualification which is incurred by the operation  of  Section  164(2). In  view  of  the  statutory  provisions, the respondents cannot be heard to contend that the condonation of the delay in filing the annual returns will have the effect of undoing  the  statutory  consequence.  There  is  yet  another  reason for coming to the above conclusion. The Company, its shareholders  and  its  directors  are  distinct  individuals,  each  being a legal entity. The Company is a body corporate having perpetual succession,  and  it  cannot  cease  to  exist  for  not  filing  the  annual returns in time. Hence, there is justification for having a provision for condoning the delay in filing the returns. Directors who are distinct from the Company and who are in control of the affairs of the  Company  are dealt  with  differently  by  the  Act,  by  prescribing certain consequences if they fail to file the annual returns continuously for three financial years. They are not entitled to the benefit of the condonation of delay available to the Company. That is also the reason why Section 403(2) says that for the default  of  the  company,  the  company  as  well  as  the  officers  who are in default will be liable for the penalty or punishment provided under the Act. The very purpose of having such provisions and the  CFSS  2020  can  only  be  seen  as  a protection  granted  to  the Company from default committed by human agencies like the Directors. They cannot be seen as provisions which have the effect  of  removing  the  accountability  and  instead  should  be  seen as provisions for fixing responsibility.

Do  the  maxims ‘lex  non  cogit  ad  impossibilia’ and ‘impotentia excusat legem ', apply to the case at hand?

The  counsel  for  the  respondents  4 to  7contended  that there was no wilful default in filing the annual returns. It is contended that though the returns were filed, they were not accepted by the Registrar since the original records relating to the Company were not available. The argument is that since there was an impossibility to comply with the statutory requirement, the Company  cannot  be  said  to  have  defaulted.  Reliance  is  placed  on the maxims‘lex non cogit ad impossibilia’ and ‘impotentia excusat legem', to support the contention.  The counsel placed reliance on the judgment in Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax & Anr. [(2022) 3 SCC 321] to submit that a person is excused from doing  an  act  which  is  not  possible  of  performance.  The  judgment was  rendered  with  reference  to  the  two  legal  maxims  referred  to above. The Hon’ble Supreme Court considered the question whether a person  can  be held  liable for  not  deducting  TDS,  when the  concerned  provisions  were  not  even  in  the  statute  book,  and applying the above two legal maxims, held that it was a case where there was an impossibility to obey the law. The law laid down  in  the  said  judgment  cannot  be  applied  to  the  facts  of  this case. The judgment in Huda and another v. Dr.Babeswar Kanhar and another [(2005) 1 SCC 191], also only lays down the general principle that a party prevented from doing an act by circumstances beyond his control can do so at the first subsequent opportunity, and the law does not compel performance of an impossibility. The Apex Court in the above judgment was considering the correctness of forfeiting the earnest money paid for allotment of a plot, on the ground that the communication of non-acceptance of allotment was received after the  last  date  fixed  for  the  purpose.  It  was  a case  where  the  last day fell on a holiday, making the performance impossible. The scope of the above maxims was recently stated by the Hon’ble Supreme Court in the decision  in Additional  Director General Adjudication, Directorate of Revenue Intelligence v. Suresh Kumar & Co. Impex (P) Ltd. [(2026) 1 SCC 756] thus:

“39. We  quote  para  15  of  the  judgment  [Presidential  Poll,  In  re, (1974)  2 SCC  33]  referred  to  above  which  reads  thus  : SCC  pp. 49-50)

“15. The impossibility of the completion of the election to fill the vacancy in the office of the President before the expiration of the term of office in the case of death of a candidate as may appear from Section  7 of  the  1952  Act  does  not  rob  Article  62(1) of its mandatory character. The maxim of law impotentia  excusat  legem is  intimately  connected with another maxim of law lex non cogit ad impossibilia. Impotentia excusat legem is that when there is a necessary or invincible disability to perform the mandatory part of the law that impotentia excuses. The law does not compel one to do that which one cannot possibly perform. ‘Where the law creates a duty or charge, and the party is disabled to perform it, without any default in him, and has no remedy  over  it, there  the  law  will  in  general  excuse him’. Therefore, when it appears that the performance of the formalities prescribed by a statute has been rendered impossible by circumstances over which the persons interested had no control, like the act of God, the circumstances will be taken as a valid excuse. Where the act of God prevents the compliance with the  words  of  a statute,  the  statutory  provision  is  not denuded of its mandatory character because of supervening impossibility caused by the act of God. (See Broom's  Legal  Maxims, 10th Edn.  at  pp.  162-63 and Craies on Statute Law, 6th Edn. at p. 268.)”

To attract the doctrine, there should be an impossibility of performance, and no remedy being available over it. In the case at hand, the circumstance stated is that the Registrar refused to accept the returns. The above contention must be appreciated in the light of certain related facts. In 1974, the Yogam had approached the Central Government and got an exemption regarding the voting rights. This was at a time after the Kerala Act had come into force,  and the exemption had to be sought from the State Government and not the Central Government. In 2005, the Central Government issued orders stating that the Kerala Act applies to the Yogam. The Yogam accepted the said order. Later in 2009, the order issued by the Central Government in 2005 was set aside by the Delhi High Court, and the Central Government was asked to reconsider whether the Kerala Act applies. It can be seen from the judgment of the Delhi High Court that the Yogam had taken a stand that the Kerala Act applies. However, neither the petitioners before the Delhi High Court nor the Yogam pursued the matter with the Central Government and the Yogam wanted to proceed  on  the  basis  that  the  Kerala  Act  applies.  However,  when the writ petitions that led to Ext.P1 judgment were filed, the Yogam shifted their stand and contended that the Kerala Act would not apply. This Court held that the Kerala Act will apply. The Yogam challenged the judgment in writ appeal, and Ext.P1 judgment was reversed. It is not, hence, a case of impossibility of complying  with  the  statutory  requirement.  The  persons  in  control of the affairs of the Yogam were changing stands to suit their purposes  at  different  stages.  If  the  stand  of  the  Yogam  was  that the Kerala Act applies, they should have submitted the annual returns before the Registrar of Companies. The Yogam has no case that this has been done. It is hence a case where the Yogam wanted  to  contend  before  this  Court  that  the  Kerala  Act  does  not apply,  and  at  the  same  time,  they  submitted  the  returns  to  the authority under the Kerala Act. Such actions cannot hence be considered as bona fide. After creating an obstacle themselves, the Yogam cannot be heard to take shelter under the above- mentioned  maxims.  This  is  not  a case  where  the  maxims  can  be applied.

Does  the  condonation  of  delay  remove  the  disqualification incurred?

Another argument advanced by the respondents 4 to 7 is that once the delay is condoned, the difference in status between the returns filed within the time and those filed after the expiry of the limitation would be obliterated. The above contention cannot be legally sustained. True, such a principle applies where an application under Section 5 of the Limitation Act is  allowed,  and  a proceeding  is  taken  on  file.  The  same  yardstick cannot be applied to a case in which the delay in filing the returns creates  different  consequences  for  the  Company  and  its  Officers. Reliance is placed on the decisions of the High Court of Allahabad in Fateh Singh v. Deputy Director of Consolidation, Mathura & Ors.  [2004  SCC  OnLine  All.  1967], Paras  Nath  v.  Deputy Director of Consolidation [2008 SCC OnLine All. 164] and the decision of the High Court of Uttaranchal in Balram v. Deputy  Director  of  Consolidation  & Ors.  [2009  SCC  OnLine Utt. 956] to submit that once the delay is condoned, the difference in  status  between  the returns  filed  within  time and  the returns filed after the expiry of limitation would be obliterated. The  judgments  in  Fateh  Singh  (supra) and  Parasnath  Supra (supra) relate to the filing of appeals along with a petition for condonation  of  delay,  and  the  Court held  that  once  the delay  is condoned, the appeal must be treated as one filed within time. The  same  is  the  effect  of  the  judgment  in  Balram  (supra).  The law laid down in those judgments cannot be applied to cases where  a statutory  consequence  is  spelt  out  if  there  is  a delay  in filing the annual returns. Reliance was also placed on the judgment  of  the  Hon'ble  Supreme  Court  in  Ramlal,  Motilal  and Chhotelal v. Rewa Coalfields Ltd. [AIR 1962 SC 361]. There again, the Hon'ble Supreme Court was dealing with an application under Section 5 of the Limitation Act, and the Court held that where it was shown to the satisfaction of the court that an appeal was presented after the expiration of the period of limitation owing to the appellant being misled by an order, practice or judgment of the High Court, the said appeal shall for all purposes be deemed to have been presented within the period of limitation. The above judgment also does not lay down a proposition that the statutory consequences of the delay in filing the annual returns will be undone on the condonation of delay. As far as the Company is concerned, once the delay is condoned under Section 460 of the 2013 Act, the consequences prescribed in Sections 403 and 460 alone will follow. However, in the case of Directors, a different consequence is prescribed under Section 164, which cannot be undone by the condonation of delay under Section 460. The above contention is hence rejected.

Does the Non obstante clause in Section 460 have the effect of nullifying the consequences spelt out in Section 164(2)?

The counsel for the respondents 4 to 7 contended that Section  460  begins  with  a non  obstante  clause  and  hence  there can be no disqualification under Section 164, once the delay is condoned under Section 460. Non obstante does  not override all provisions. Section 460 only says about the condonation of delay. It does not speak about the disqualifications that have already occurred. The way a non obstante clause should be understood has been explained by the Hon’ble Supreme Court in State of Bihar & Ors.v. Bihar Rajya M.S.E.S.K.K. Mahasangh & Ors. [(2005) 9 SCC 129] in paragraph 45, which is extracted below:

“45. A non obstante clause is generally appended to a section with a view to give the enacting part of the section, in case of conflict, an overriding effect over the provision in the same or other Act mentioned in the non obstante clause. It is equivalent to saying that in spite of the provisions of the Act mentioned in the non obstante clause, the provision following it will have its full operation  or the  provisions  embraced  in  the non  obstante clause will  not  be  an  impediment  for  the  operation  of  the  enactment  or the provision in which the non obstante clause occurs. (See Principles of Statutory Interpretation, 9th Edn., by Justice G.P. Singh—Chapter V, Synopsis IV at pp. 318 and 319). …...”

The  decisions  in  Union  of  India  v.  G.M.Kokil  [1984 Supp. SCC 196] and Om Prakash v. Union of India [2011 (14) SCC 1], which were cited during the hearing do no take any different view from the judgment in State of Bihar (supra). Applying the above principle, the enacting part of Section 460 empowers the Central Government to condone, for reasons recorded in writing, the delay in filing a document with the Registrar under any provision of the Act. The consequences of the delay stated in Section 164(2) do not impede the operation of the enacting part of Section 460. The addition of the words“Notwithstanding  anything contained  in the Act” can only refer to such provisions in the Act which will be an obstacle to the condoning of delay and nothing more. Hence, the non obstante clause  does  not  in  any  manner  affect  the  consequences  spelt  out in Section 164(2). In the light of the above discussions, I hold that the consequences spelt out in Section 164(2), which are statutory, will not be affected by the condonation of delay in filing the returns, whether under CFSS 2020 or under Section 460 of the 2013 Act.

The maxim Nullus commodum capere potest de injuria sua propria and its application :

The next argument advanced by the Counsel for the respondents is that Section 164(2) only makes the respondents 4 to 7 ineligible to be reappointed  as a Director of that company or appointed in other company for a period of five years from the date on which the said company failed to file the returns, and, since the period of 5 years is already over, the ineligibility no longer  continues.  Such  an  argument  cannot  be  countenanced.  It is a well-established legal principle that no man can take advantage of his own wrong. In Union of India v. Maj. Gen. Madan  Lal  Yadav  [(1996)  4  SCC  127], the  Hon’ble  Supreme Court,  while  considering  whether  a trial  under  the  Army  Act  was barred by limitation since the accused was available for trial owing to his escape from detention, held as follows:

“28. Even if narrow interpretation is plausible, on the facts in this case, we have no hesitation to conclude that the trial began on 25-2-1987 on which date the court martial assembled, considered the charge and the prosecution undertook to produce the respondent who was found escaped from the open detention, before the Court. It is an admitted position that GCM assembled on  25-2-1987.  On  consideration  of  the  charge,  the  proceedings were adjourned from day to day till the respondent appeared on 2-3-1987.  It  is  obvious  that the  respondent  had  avoided  trial  to see  that  the  trial  would  not  get  commenced.  Under  the  scheme of the Act and the Rules, presence of the accused is a precondition for commencement of trial. In his absence and until his presence was secured, it became difficult, nay impossible, to proceed  with  the  trial  of  the  respondent-accused.  In  this  behalf, the maxim nullus commodum capere potest de injuria sua propria—meaning no man can take advantage of his own wrong— squarely stands in the way of avoidance by the respondent and he is estopped to plead bar of limitation contained in Section 123(2). In Broom's Legal Maxim (10th Edn.) at p. 191 it is stated:

“… it is a maxim of law, recognised and established, that no man shall take advantage of his own wrong; and this maxim, which is based on elementary principles,  is  fully  recognised  in  courts  of law  and  of  equity,  and,  indeed,  admits  of illustration from every branch of legal procedure.”

The reasonableness of the rule being manifest, we proceed at once to show its application by reference to decided cases. It was noted therein that a man shall not take advantage of his own wrong to gain the favourable interpretation of the law. In support thereof, the author has placed reliance on another maxim frustra legis auxilium invocat quaerit qui in legem committit.  He  relies  on Perry v. Fitzhowe [(1846)  8 QB  757  : 15 LJ  QB  239]  . At  p.  192,  it  is  stated  that  if  a man  be  bound  to appear on a certain day, and before that day the obligee puts him in prison, the bond is  void. At p.  193, it is  stated that“itis moreover  a sound  principle  that  he  who  prevents  a thing  from being done shall not avail himself of the non-performance he has occasioned”. At p. 195, it is further stated that “a wrong doer ought not to be permitted to make a profit out of his own wrong”. At p. 199 it is observed that “the rule applies to the extent of undoing the advantage gained where that can be done and not to the extent of taking away a right previously possessed.”

A similar  view  was  expressed  in  the  judgments  in  Lily Thomas v. Union of India [(2000) 6 SCC 224]  and Union of India  & Ors.  v.  Prohlad  Guha  [2024  SCC  OnLine  SC  1865]. Recently, in Binod Pathak & Ors. v. Shankar Choudhary & Ors.  [2025  SCC  OnLine  SC  1411], the  Apex  Court  considered the distinction between the two legal maxims nullus

commodum capere potest de injuria sua propia  and  ex injuria ius non oritur, and the Court held as follows:

“48. A perusal  of the aforesaid  makes  it  abundantly clear,  that while the maxim‘ex injuria ius non oritur’is a principle governing the general spirit of the jurisprudence of “rights”, that a right cannot emanate or emerge from a wrongful act, the maxim‘nullus commodum capere potest de injuria sua propria’, on the other hand, confirms the general rule of equity and prudence that no one can benefit from their own wrongdoing. The scope of the latter is wider than the former. The first maxim explains that the legitimacy of a right stands vitiated if such right, which otherwise would have been legitimately exercisable, accrues from a wrongdoing of the person claiming under or exercising such right. Although, under the law, a right may arise even if from a wrongdoing, yet if exercise of such right is allowed, it would malign the very jurisprudential  underpinning of‘right’and ‘duty’. A right  has  a legal  sanctity and  backing  to it,  in  order  for it  to have  a legitimising  effect,  since  the  jural  correlative  of  a right  is duty. More particularly, the term “right” is very specific to not include every benefit, profit or advantage. The maxim solidifies the faith in law that no wrong action will be given a legal validity. The legal validity of a right flows from other legal norms or from a source of law [See : Niel MacCormick, “Rights in Legislation”, Law,  Morality and  Society  : Essays  in  Honour of  H.L.A.  Hart,  P.M.S.  Hacker,  and  Joseph  Raz  (eds).  189- 206, Oxford : Clarendon Press (1977)].

The  maxim  nullus  commodum  capere  potest  de  injuria  sua propria, on the other hand lays itself as a as a rule of equity. An advantage falling from wrongdoing may be a legal or illegal advantage. The maxim dictates that, be that as it may, no profit or advantage of a person's wrongful act may be validated by the seal of law. It may very well happen, that the advantage may be legal or illegal, but the validation of law will not be extended to it by the law. Thus, the courts that have the discretion to allow or disallow the availment of such advantage in ordinary circumstances,  are  constrained  to  not  permit  a person  who  has committed a wrongful act to benefit from the advantageous position afforded to him because of such wrongful action as a matter of justice, equity and fairness. Fellmeth and Horwitz rightly extend an illustration, that when a person himself destroys evidence, he cannot take shelter of the defence of lack of evidence. The advantage falling from the wrong will not be validated by the courts of law.”

Admittedly,  respondents  4 to  7 are continuing  in  office after  the  expiry  of  their  term.  Going  by  the  dictum  in  the  Ext.P1 judgment approved by the Ext.P2 judgment, even their election to office in 2015 cannot be legally justified since not all members were permitted to vote. In Ext.P2, a Division Bench has held that the  Directors  had  assumed  office  on  9.8.2015  and  are  continuing even  now  on  the  strength  of  the  invalid  provisions  in  the  Articles of Association. Without conducting an election, the respondents  4 to  7 have  managed  to  be  at  the  helm  of  affairs  of  the  Yogam.  In the above factual background, if the contention of the counsel for the respondents 4 to 7 that the ineligibility has ended is accepted, it would, in effect, be subscribing to and perpetuating an illegality. In  Madan  Lal  Yadav  (supra),  the  Hon’ble  Supreme  Court  held that the trial began on the day the Court Martial assembled, though the accused, who had escaped detention, was brought before  the  Court  Martial  more  than  one  year  later  and  negatived the contention of limitation. Inferentially, in the case at hand, the only interpretation possible is that the period of 5 years contemplated in Section 164(2) will begin from the day the respondents cease to be Directors. This is more so, since admittedly,  there has  been  no  election  held  after  2015.  I hence hold  that  the  respondents  4 to  7 have  become  disqualified  under Section 164(2) of the 2013 Act.

DISQUALIFICATION UNDER SECTION 164(1):

Section 164(1)(h) says that a person shall not be eligible for appointment as a Director of a company, if he has not complied with sub-section (3) of section 152. The question is whether any  disqualification  is  attracted  for  not  having  a Director Identification Number (DIN). Section 152(3) of the 2013 Act says that no person shall be appointed as a Director of a company unless he has been allotted the DIN under Section 154 or any other  number  as  may  be  prescribed  under  Section  153. Section 152(4) says that every person proposed to be appointed as a Director shall furnish his DIN or such other number as may be prescribed under Section 153 and a declaration that he is not disqualified to  become a Director under the Act. Every individual intending  to be appointed  as a Director shall make an application for allotment of DIN as provided under Section 153. Under Section 154, the Central Government shall within one month from the receipt of an application under Section 153, allot a DIN to the applicant in the manner prescribed. Section 155 prohibits applying, obtaining or possession of another DIN by a person who has already been allotted a DIN under Section 154. Thus, no person can have two DINs. Every Director on obtaining a DIN must  intimate  the  company/companies  in  which  he  is  a Director and the companies in turn should intimate this fact to the Registrar  of  Companies  under  Section  157. It  can  thus  be  seen that having a DIN is a compulsory requirement for a person to be appointed as a director. Section 164(1)(h) says that a person shall not be eligible for appointment as a Director of a Company if he has not complied with sub-section (3) of Section 152. The above provision is a re-affirmation of what is contained in Section 152. The contention of the petitioners is that except 16 Directors, nobody  else  possess  a DIN. It  is  further  contended  that  the  4th respondent  and  the  6th respondent  are  in  possession  of  2 DINs, which itself is a disqualification.

Yet another contention that is taken is that 5 of the persons among the 16 persons who possess DIN are persons who have  been  nominated  to  the  Board,  which  is  impermissible  under the Companies Act. In the case on hand, since the Yogam is governed by the Kerala Act, the authority to issue DIN is the Government  of  Kerala,  since  the  words  “Central  Government”  in Section 154 will have to be read as the “State Government”. Admittedly, no rules have been framed for the allotment of DIN by the Government of Kerala. As such, it cannot be said that any of the Directors possess a DIN. The DIN that some of the Directors are  in  possession  of  are  ones  issued  by  the  Central  Government. A question then arises whether the said DINs can be made use of by  the  said  Directors  to  submit  that  they  have  complied  with  the requirement under Section 152. There is also a question whether such a condition can be insisted upon if there is an impossibility of performance. Even  though  this  Court  had  directed  the  Inspector General of Registration to consider the question of disqualification under  Section  164(2)  as  well  as  the  disqualification  owing  to  not having  a DIN,  Ext.P16  order  (in  W.P.(C)No.8198/2024)  does  not consider  the  question  regarding  DIN  and  all  that  is  stated  is  that the issue is pending with the Government. In the light of the admitted  facts,  I find  that  there  is  a disqualification  attracted  for non-compliance  with  Section  152(3)  of  the  Companies  Act,  since admittedly  none  of  the  Directors  have  a DIN  issued  by  the  State Government. Having a DIN is a pre-condition for appointment as a Director. Hence,  none  of  the  appointments  of  the  Directors  of the Yogam after 2014 (when the requirement of having a DIN was introduced in the statute book) are in accordance with the provisions  of  the  statute. It  necessarily  follows  that  all  of  them are  holding  office  against  the  provisions  of  the  Statute.  In  Ext.P2 judgment, a Division Bench of this Court has already held that the Directors  are  holding  and  continuing  in  office on  the  strength  of the invalid provisions in the Articles of Association.

In Sajith Kannanunni Nair v. Union of India [2021 SCC OnLine Mad. 49], the Court was considering a case of disqualification as a Director under Section 164(2) of the Companies Act, 2013. The learned Single Judge followed the Division Bench judgment of the same court in Writ Appeal No.569 and others of 2020 in Meethelaveetil, Kaitheli Muralidharan  V.  Union  of  India. That  was  a case  where  there was  a deactivation  of  the  DIN  pursuant  to  disqualification  under Section  164(2).  The  Court  held  that  the  Registrar  of  Companies cannot  deactivate  the  DIN. On  facts,  the  court  was  dealing  with the case of a person was a director of several companies and the disqualification was on the ground of not filing financial statements for 3 consecutive years. In Zacharia Maramkandathil Mohan & Ors. V. Union of India & Ors. [2021 (3) KHC 550], a learned Single Judge of this Court considered the question whether Sections 164 and 92 of the 2013 Act  are  unconstitutional.  This  Court  held  that  the  provisions  were not unconstitutional. It was held that Section 164 (2) can have only  prospective operation.  The above judgments  do not  apply  to the fact situation in these cases.

As per the Statute, a DIN has to be issued by the Government  within  one  month  of  the  application. It  was  hence for  the  Directors  concerned  to  have  taken  steps  for  obtaining  the DIN from the Government. This Court is not, in these writ petitions,  called  upon  to  issue  any  directions  to  the  Government regarding  the  issuance  of  DIN  to  the  Directors  of  the  Board. On the admitted facts,  it has to be held that none of the Directors who are holding office now have complied with the requirement of Section 152(3) and are hence disqualified under Section 164(1) of the 2013 Act.

Question No.(3):

The next question is whether by virtue of Section 167, the  Directors  will  vacate  office  on  having  been  disqualified  under Section 164. Section 167 reads thus:

“167. Vacation of office of director.—(1) The office of a director shall become vacant in case—

(a) he incurs any of the disqualifications specified in Section 164:

Provided  that  where  he  incurs  disqualification  under  sub-section (2) of Section 164, the office of the director shall become vacant in all the companies, other than the company which is in default under that sub-section.

(b) he absents himself from all the meetings of the Board of Directors held during a period of twelve months  with  or  without  seeking  leave  of  absence  of the Board;

(c) he  acts  in  contravention  of  the  provisions  of Section 184 relating to entering into contracts or arrangements in which he is directly or indirectly interested;

(d) he fails to disclose his interest in any contract or arrangement in which he is directly or indirectly interested, in contravention of the provisions of Section 184;

(e) he becomes disqualified by an order of a court or the Tribunal;

(f) he is convicted by a court of any offence, whether involving moral turpitude or otherwise and sentenced in  respect  thereof  to  imprisonment  for  not  less  than six months:

Provided  that  the  office  shall  not  be  vacated  by  the  director in case of orders referred to in clauses (e) and (f)—

(i) for thirty days from the date of conviction or order of disqualification;

(ii) where an appeal or petition is preferred within thirty days as aforesaid against the conviction resulting in sentence or order, until  expiry  of  seven  days  from  the  date  on which such appeal or petition is disposed of; or

(iii) where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of.

(g) he  is  removed  in pursuance of the provisions  of  this Act;

(h) he, having been appointed a director by virtue of his holding any office or other employment in the holding,  subsidiary  or  associate  company,  ceases  to hold such office or other employment in that company.

(2) If a person, functions as a director even when he knows that the office of director held by him has become vacant on account of any of the disqualifications specified in sub- section (1), he shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

(3) Where all the directors of a company vacate their offices under any of the disqualifications specified in sub-section (1), the promoter or, in his absence, the Central Government  shall  appoint  the  required  number  of  directors who  shall  hold  office  till  the  directors  are  appointed  by  the company in the general meeting.

(4) A private company may, by its articles, provide any other ground for the vacation of the office of a director in addition to those specified in sub-section (1).

The counsel for respondents 4 to 7 contended that Section 164(2) does not prohibit continuation in office, even if there is a default. It is argued that the section only makes a Director  ineligible  to  be  re-appointed.  It  is  submitted  as  per  the proviso to Section 167(1) that if a disqualification is incurred under  Section  164(2),  the  office  of  the  Director  in  the  company which is in default will not become vacant. It is hence argued that, on a combined reading of Sections 164 and 167, even if there  is  a default  by  the  Company,  there  is  no  vacating  of  office contemplated. The counsel draws support from the judgment in Yashodara  Shroff  v.  Union  of  India  &  Anr.  [ILR  2019  Kar. 3768] and the decision in Kaynet Finance Ltd. v. Verona Capital Ltd. [2019 SCC OnLine Bombay 1203]. A mere reading  of  the  Section  would  show  that  the  Office  of  the  Director does not become vacant immediately on non-compliance with the requirement  of  Section  164(2). Section  164(2)  also  only  says  of ineligibility to  be reappointed. It does  not state that  the Director of a Company, which is in default, immediately vacates office. The argument  on  behalf  of  respondents  4 to  7 that  a disqualification under  Section  164(2)  does  not  call  for  a direction  restraining  the respondents  4 to  7 from  functioning  as  Directors  of  the  Yogam  is hence well-founded. It is only the consequences which flow from the operation of Section 164(2) that would apply to such persons. However, that may not be true in the case of disqualification incurred under Section 164(1)(h).

Under Section 167(1) of the Act, the office of a Director shall become vacant in case he incurs any of the disqualifications specified in Section 164. (emphasis supplied). The proviso to Section 167(1)(a) only protects Directors who incur disqualification under sub-section (2) of Section  164.  A person  shall  not  be  eligible  for  appointment  as  a Director if he has not complied with sub-section (3) of Section 152, going by Section 164(1)(h). Admittedly, in the case on hand, respondents 4 to 7 have not complied with sub-section (3) of Section 152 and are hence not eligible for appointment as Directors. The question then is whether the disqualification, which was existing even at the time of appointment of respondents 4 to 7 as Directors, will not invite any consequence by the operation of Section 167. A reading of Section 167(1)(a) may suggest that the appointment as Director precedes the disqualification. However, when read along with Section 152(3) which mandates that the person  to  be  appointed  has  a DIN,  the  Section  167(1)(a)  cannot be understood as suggesting that the disqualification occurred after becoming a Director.  It can only mean  that a person who is appointed as a Director without complying with Section 152(3) will  vacate  the  office.  Hence  the  only  conclusion  possible  is  that the Office of Director in the  case of respondents  4 to 7 will stand vacated by operation of Section 167(1)(a).

The next issue is regarding correctness of Ext.P16 order which has been challenged. Ext.P16, though it is a very elaborate order, except in the last paragraph which is captioned as Order, there is no consideration of the issues directed to be considered. Even in the last paragraph, all that is stated is as follows;

“On the basis of the statements and other documents submitted  by  the  parties,  perusing  all  the  relevant  provisions of the Companies Act, 2013 and other facts and after examining the matter in detail, came to conclusion that the Directors of SNDP Yogam No. 995/1903 are not disqualified for the period of 2014-2015,2015-2016.“

The order is bad for several reasons. This Court had directed the Inspector  General  of  Direct  Registration  to  consider  the  question of disqualification after the financial year 2014-2015. However, the finding is restricted to 2014-15 and 2015-16. None of the subsequent  years  have  even  been  considered  for  the  purpose  of disqualification. The order only extracts the submissions made by the counsel appearing for the applicants and the respondents before the Inspector General of Registration. Almost the entire order has been devoted for extracting the contentions and pleadings, and the relevant provisions of the Companies Act. (Sections 152, 153, 156, 157, 164 and 167). Thereafter, the order proceeds to identify the points that need decision in the following manner;

“Disqualification of directors of SNDP Yogam under sections 164(2) &167(1)(a) of the Companies Act, 2013 as SNDP Yogam did not file financial statements/returns for consecutive period of 3 years from 2013- 2014 to 2015-2016.“

Thereafter  it  is  stated  that  the  State  Government  had condoned  the  delay  in  submitting  the  returns  and  authorised  the Deputy Inspector General of Registration(Licensing) and Kerala Non-Trading Company Registrar as the Adjudicating Officer to adjudicate the penalty regarding filing of annual returns of the Yogam from 2006-07 to 2016-17. It is stated that immunity certificate had been issued to the Yogam as per CFSS 2020. However, the crucial question whether the disqualification under Section 164(2) exists despite condonation of the delay in filing of returns has not even been considered. In fact, that alone was the issue that was directed to be considered. Hence, I find that Ext.P16 cannot be legally sustained since there is absolutely  no consideration of the question of disqualification.

As  I have  found  that  respondents  4 to  7 have  vacated the office of the Director in view of Section 167(1), a question arises as to what should follow. Even though the question of disqualification of other Directors have not been considered in this judgment,  if  the  law  which  has  been  laid  down  is  applied  in  their cases, necessarily, the fall out will be that they will also be disqualified. The functioning of the Yogam cannot come to a total standstill, since elections are yet to  be conducted. The Statute provides  an  answer  for  such  situation  also  in  the  form  of  Section 167(3) which says that the Government shall appoint the required number of Directors who shall hold office till Directors are appointed by the company in the general meeting. The word“Central  Government”  in  Section  167(3)  will  have  to  be  read  as“State Government” in the case of the Yogam. It is hence for the Government to do the needful by appointing the required number of Directors to continue the functioning of the Yogam and to ensure  that  an  election  is  conducted  at  the  earliest  and  a proper Board of Directors is put in place. Section 167(2) says about punishment to persons who function as Directors even after knowing that the Office of Director held by him had become vacant. Those are aspects which the Inspector General of Registration will have to look into and pass necessary orders.

CONCLUSION:

In the light of the discussions and findings in the preceding paragraphs, these writ petitions are disposed of with the following directions and findings.

(i) The order Ext.P16, produced in W.P. (C)No.8198/2024 is quashed.

(ii) It  is  declared  that  respondents  4 to  7 are  not eligible  to  be  re-appointed  as  Directors  in  view of non-compliance with the requirements of Section 164(2) of the Companies Act, 2013.

(iii) It is declared that no person shall be eligible to be appointed/re-appointed as Director of the SNDP  Yogam  unless  they  possess  a DIN  which is issued by the State Government under the Provisions of Kerala Act read with the Companies Act, 2013.

(iv) It  is  declared  that  respondents  4 to  7 are  not holding office in accordance with the requirements of the Kerala Act read with the Companies  Act,  2013  since  admittedly  none  of them have a DIN issued by the State Government.

(v) Respondents 4 to 7 are declared to have vacated office under Section 167(1)(a) of the Companies Act, 2013 as they are disqualified under Section 164(1)(h) of the Act.

(vi) The  1st respondent  in  W.P.(C)No.8095  of  2024 is directed to take necessary measures contemplated under Section 167(3) for appointing required number of Directors to hold office till Directors are appointed by the Company in the general meeting.

(vii) The Inspector General of Registration (2nd respondent in W.P.(C)No.8095 of 2024) is directed to take consequential action under Section 167(2)  in view of the declaration  that respondents  4 to  7 have  vacated  office  of  the Director owing  to disqualification under Section 164(1)(h).