The Madras High Court on Friday allowed a batch of around 500 writ petitions filed by top executives and businessmen, including actor and Desiya Murpokku Dravida Kazhagam (DMDK) leader A. Vijayakant, challenging orders passed by Registrar of Companies here last year disqualifying them from being appointed or reappointed as the director of any company for a period of five years because they had not filed annual returns on time.
Justice T. Raja quashed the Registrar’s orders on various grounds, including non-adherence to principles of natural justice. Though the law applicable to the petitioners’ case does not contain any express provision on issuing notice to them and seeking their explanation before initiating the extreme action of disqualification, the judge said still the Registrar ought to have to issued notices and waited for submission of replies before initiating action.
The judge also said the action had been taken by wrongly giving effect to the provisions of law retrospectively.
In his affidavit, Mr. Vijayakant stated that he had been serving as the director of four private companies since 2000 “for doing business and not for any charitable purposes.” While so, the Union Ministry of Corporate Affairs issued a show cause notice to him, under Section 248(1) of the Companies Act of 2013, in March 2017.
The notice sought an explanation as to why the names of two companies, in which he was a director, should not be struck off the Register for not having filed annual returns for three consecutive financial years.
The petitioner pointed out that the 2013 Act came into force only on April 14, 2014. Section 164 of the new Act provided for disqualification if annual returns were not filed for a continuous period of three years.
As per Section 96(1) of the Act, the Annual General Meeting for 2016-17 could be held within six months from the closing of the financial year. Under Section 92(4), the time-limit for filing the annual returns was 60 days from the date of the AGM or the last date on which the AGM ought to have been held. Section 137(1) provides a time-limit of 30 days from the date of the AGM to file the balance sheet.
Therefore, a joint reading of the provisions would make it amply clear that disqualification of a person from holding the post of director could be initiated only on or after October 30, 2017, and not on September 8 itself, as had been done in the present case, he contended. The judge accepted those submissions.
