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Judgment
1/ This order will govern the disposal of WP Nos.11258/18, 7527/18, 11261/18 & 11217/18 since the issue involved in all these petitions is identical.
2/ For convenience the facts are being noted from WP No.11258/2018.
3/ By this writ petition the petitioners have challenged Annexure P/1 which is the list of disqualified directors under Section 164(2)(a) of the
Companies Act, 2013 (for short “the Actâ€) issued by the ROC, Gwalior as also Annexure P/8 showing the status of the petitioner’s DIN as
“disqualified by ROC under Section 164(2)†of the Act.
4/ The brief facts are that the petitioners are the directors of M/s. ADI Softech Pvt. Ltd. They are also the directors of other four companies, a list
of which is filed as Ex.P/7. The Registrar of Companies had issued the notice dated 10.3.2017 for striking off the name of M/s. ADI Softech Pvt.
Ltd. and thereafter he had passed the order and published the notice in Form No.STK-7 under Section 248(5) of the Act dated 9.6.2017 striking off
the name of M/s ADI Softech Pvt. Ltd. along with many other companies and declaring them as dissolved. Further case of the petitioners is that
they had filed the annual returns and balance sheets from the date of incorporation of above company till financial year 2012-13 but subsequently the
company became non operational and could not carry out any profitable business, hence annual returns and balance sheets were not filed after 2013
and that they could not avail the benefit of Condonation of Delay Scheme, 2018 (CODS 2018) and the action of the respondent in suspending the
petitioner’s DIN is unjust and illegal.
5/ It is also the case of the petitioners that they are Directors of as many as five companies and the default has been committed by only one company
i.e. ADI Softech Pvt. Ltd. but on account of the action taken under Section 164(2) of the Act now the petitioners are being disqualified to act as
Director in all other four companies. A further grievance has been raised that since the DIN status has been shown to be “as disqualified under
Section 164(2)â€, therefore, now the petitioners cannot act or become director of any of the company for a period of 5 years. The stand of the
petitioners is that they want to file the previous balance sheets of the ADI Softech Pvt. Ltd. with ROC and want to close down the said company so
that they would be able to utilize their DIN and act as Director in other companies.
6/ Learned counsel appearing for the petitioner has advanced following arguments:-
i. Learned counsel submits that there is no provision in the Act providing for suspension of DIN and that under Section 164(2) of the Act
disqualification is only in respect of reappointment as a director of that company or appointment in any other company for 5 years, but there is no
disqualification in respect of all the existing directorship.
ii. He has also submitted that under Rule 11 of the Companies (Appointment and Disqualification) Rules, 2014 the conditions of cancellation or
deactivation of DIN have been mentioned and the petitioners case does not fall under any of those conditions. He has also submitted that Section
248(2) gives a right to the petitioner to move to the Registrar for striking off the name of the company but by virtue of the impugned action that right
has been taken away.
iii. He has also submitted that in terms of the proviso to Section 167(1)(a) the disqualification is only in respect of the defaulting company, therefore, on
the basis of the said disqualification petitioner’s right to act as director in other companies cannot be closed. He has further submitted that
Section 152 of the Act provides for issuance of DIN and Rule 11 provides for cancellation, surrender or deactivation of DIN and apart from these two
provisions there is no other provision providing for the suspension of DIN, hence by invoking the provisions of Section 164(2) of the Act,
petitioner’s DIN cannot be suspended.
7/ Shri Dharmendra Chelawat, learned counsel for the respondents has supported the impugned action submitting that ROC has acted in accordance
with the provisions of the Companies Act.
8/ Having heard the learned counsel for the parties and on perusal of the record, it is noticed that undisputedly the petitioners have committed default
in filing the annual return and balance sheet of ADI Softech Pvt. Ltd. whose name has been struck off and the petitioners have been disqualified as
directors under Section 164(2)(a) of the Companies Act, 2013 and therefore, their DIN status is shown vide Annexure P/8 as disqualified.
9/ The Director Identification Number (DIN) is issued to an individual intending to be appointed as director of a company under Section 154 of the
Act. In terms of sub-section (3) of Section 152 no person can 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. In terms of Section 156 it is obligatory for every existing director to
intimate the DIN to the Company or all the companies wherein he is a director, within the stipulated period of one month and in terms of Section 157 it
is obligatory for every company to furnish the DIN of all its directors to the Registrar or any other specified authority in the prescribed manner within
the stipulated period of 15 days and in terms of Section 158, it is obligatory for every person or company to mention DIN in reference to any director,
while furnishing the return, information or particulars as are required to be furnished under this Act. Hence as per the scheme of the Act, every
director must have one DIN by which he is identified and he cannot have more than one DIN. Under the scheme of the Act the return and the
financial statement in every financial year is required to be filed at regular interval. Section 164(2) provides for the consequence of not filing the
annual return and its effect on the right to continue as director on the following terms:-
“Section 164.  Disqualifications for appointment of director.
(1) **************************
(2) No person who is or has been a director of a company which-
(a) has not filed financial statements orannual returns for any continuous period of three financial years; or
(b) has failed to repay the deposits acceptedby 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 re-appointed 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.]â€
10/ Section 164(2)(a) explicitly provides that in the default of not filing financial statement or annual return for any continuous period of 3 financial
years, the disqualification for reappointment as director in the defaulting company or appointment in other company for a period of five years follows.
11/ Section 167 relates to vacation of office of Director and proviso to Section 167(1)(a) provides that:-
“S.167. Vacation of office of director
(1) The office of a director shall become vacant in case-
(a) he incurs any of the disqualification 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.]â€
12/ In terms of above proviso, on incurring the disqualification under Section 164(2) the office of the Director becomes vacant in all other companies
except the defaulting company, hence by operation of law the director of the defaulting company ceases to be the Director in other company.
13/ Section 92 deals with the annual return and subsection (4) thereof provides for the period within which the annual return of the company is to be
filed before the Registrar of Companies and Section 137 deals with filing of copy of the financial statement with the Registrar and it also prescribes
the time limit within which it is to be filed. Undisputedly in the present case the annual returns have not been filed within the prescribed time.
14/ Section 248 of Companies Act empowers the Registrar to remove the name of company from register of companies. The name of the company
i.e. M/s ADI Softech Pvt. Ltd. has already been struck off by the Registrar by publishing notice in Form STK-7 on 9/6/2017 and this notice/order is
not under challenge in this writ petition. The prayer in the writ petition is to permit voluntary dissolution of the company whereas by publishing notice
dated 9/6/2017 the company has already been dissolved.
15/ Counsel for the petitioner has raised a submission that Rule 11 of Companies (Appointment and Disqualification of Directors) Rules, 2014 provides
for the circumstances under which the DIN can be cancelled, surrendered or deactivated and none of the circumstances exists in the present case,
therefore, the DIN of the petitioner cannot be cancelled or deactivated. In the present case Rule 11 has not been invoked, nor any order cancelling
or deactivating DIN has been passed but since the petitioner has become disqualified under Section 164(2) of the Act, therefore, the DIN status is
shown as “disqualified by ROC under Section 164(2)â€, which has eclipsed their DIN which they can not use till disqualification continues and by
virtue of Section 164(2) the petitioner cannot be reappointed as Director of the defaulting company or appointed as director in any other company for
five years.
16/ The issue of non compliance of the principles of natural justice has also been raised but the reply of the respondent reveals that prior to striking off
the name of the Company, notice under Section 248(1) & (2) was served upon the concerned company, therefore, while striking off the name of the
company due opportunity of hearing was given to the concerned company in respect of the default. Hence, the petitioner being a director of the
company had the opportunity at that stage to put forth the explanation in respect of the default. The disqualification of the petitioner under Section
164(2) of the Act is in respect of the default in relation to the company, hence it cannot be held that the principle of natural justice has been
violated. That apart the Companies Act, 2013 has been notified on 30/8/2013. Thereafter the respondents had floated the Company Law
Settlement Scheme, 2014 (CLSS 2014) vide General Circular No.34/14 as also Condonation of Delay Scheme, 2018 (CODS 2018), which remained
operative up to 1.5.2018, therefore, the petitioners had sufficient opportunity for a period of almost 5 years to cure the default and to avoid the
consequence of Section 164(2) which they have failed to avail.
17/ In WP No.7527/2018 an additional ground has been raised by learned counsel for the petitioner that the last balance sheet was filed as on
31.3.2011, therefore, the 3 years period in terms of Section 164(2)(a) should be counted from that date which will come to an end on 1.11.2014 and
five years period will commence from that date, which will come to an end on 30.10.2019 but the disqualification as mentioned in the impugned
communication on Page-43 of the writ petition is up to 30.10.2021, which is unsustainable. Such a submission can not be accepted because the letter
dated 29.11.2017 issued to the petitioner-Company shows that the disqualification up to 2021 has been calculated considering the default of not filing
the annual return for 3 years i.e. 2013-14, 2014-15 & 2015-16, hence the default of not filing the return subsequent to coming into force of Companies
Act, 2013 has been taken into account which is just and proper.
 18/ In WP No.11217/2018 learned counsel for the petitioners has raised the solitary argument that the petitioner No.1 had committed default in
submitting the return for one Company i.e. Iprotek Solution Pvt. Ltd. whereas he is the director of five other active companies and the Petitioner No.2
had committed a default in respect of 2 companies namely Vimalsneh Real Estate Pvt. Ltd. and Iprotek Solution Pvt. Ltd., whereas he is the director
in 4 other active companies, therefore, on the basis of the default committed in one/two companies the petitioners cannot be restrained from acting as
director in other active companies. Such an argument has already been rejected referring to the provisions of the Act in earlier part of this order.
19/ Having regard to above analysis, I do not find any merit in these writ petitions which are accordingly dismissed.
 20/ Signed order be kept in the file of WP No.11258/2018 and a copy thereof be placed in the file of connected WP Nos. 7527/18, 11261/18 &
11217/18.