WP/24456/2020 of Sri. Vijaya Vardineni Ranga Rao, And 2 Others Vs The Ministry Of Corporate Affairs, And Another on 31 December 2020

ORDER:

The petitioners challenge their disqualification fromDirectorship under Section 164(2) of the Companies Act, 2013,for the alleged default in filing financial statement/annualreturns, and consequently, seek restoration of their Directoridentification Numbers (DINs) viz., 02617498, 02617508 and02617516.

2, Learned counsel for the [petitioners ]would submit that theissue raised in the present Writ Petition is squarely covered bythe order, daled 24.09.2020, [passed ]in W.P.No.16522 of [2020,]which was disposed of in terms of the common order, dated18.07.2019, [passed ]in W.P.No.5422 of 2018 and batch.

3. Sri Siripuram Keshava, learned counsel [representing]Sri Namavarapu Rajeshwar Rao, [learned ][Assistant ][Solicitor]General of India, appearing [for ]the [respondents, ][has ][fa rly]conceded that the order, dated [24.09.2020, passed ][in]W.P.No.16522 of 2020, is similar to [the ][common ][order, ][dated]lB.O7.2)lg, [passed ]in W.P.No'5422 [of ][2018 ][and batch']

4. The operative [portion ]of the [common ][order, ][dated]18.07.2019, [passed ]in [W.P.No.5422 ][of ][20lB ][and batch, ][reads ][as]under:

"For the foregoing reasonsr the [impuqned ][orders ][in]the writ [petitions ]to the [extent ][of ][disquallfylng ][the]the writ [petitions ]to the [extent ][of ][disquallfylng ][the]petltroners under Section 164 [(2) ][(a) ][of ][the ][Act ][and]deactivation of [their ][DINs, ][are ][set ][aside, and ][the ][2 ][']deactivation of [their ][DINs, ][are ][set ][aside, and ][the ][2 ][']

respondent is directed to activate the DlNs of thepetitioners, enabling them to function as Directors otherthan in strike off companles.

It is made clear that this order will not prec ude the2' respondent from taking appropriate action rnaccordance with iaw for violations a5 envisaged underSection 164 (2) of the Act, giving the said provrsionprospective effect from 0t.04.2014 and for necessaryaction against DiN in case of violations of Rule 11 of theRules, It is also made clear that if the petitioners areaggrieved by theaction of the respondents in striking offtheir com panies u der nSection 248 of the Act, they are atliberty to avail alternative remedy under Sectjon 252 ofthe Act.

All the writ petitions are accordingly allowed to the"extent indicated a bove.

5. In view of the above, the present \ /rit Petition is disposedof in terms of the conlmon order, dated 18.07.2019, passed inW.P.No.5422 of 2018 and batch. There shall be no order as toCoStS.

Miscellaneous petitions, if any, pending in this Writ Petition :1'll':1!'*1_ '''.-.._---_-_

To,The Ministrv of Corporate [Affairs, 3rd ][Floor, ][Corporats Bhawan' ][Bandlaguda']Nr"""llr'iJiti.i,;u;;; [Villrs.. ][H;vlirlrg,i ][tv"ioal' ][Ransa ][Reddv District]Hvderabad, Telangana [500 068]2rt; R.;Li;"; of iJ.lpi.ii,tlGP [and ][relansana), ][2nd, ][Floor' corporate]ehl*b,i c.i Post, [TaitiannJir'.n ][r'rigor"' Baidlaguda ][Hyderabad Telangana]500068.3oneaa to Sri S. [Chakrapani Advocate ][[oPUCl]4one CC to Sri Namavarrp,j'R;i;;h;;iAao [essistant ][Solicitor General ][[oPUC]]

(Along wth a copy of order [rn ][W P.No ][5422 ][of ][2018 and ][batch' dated ][18 ][07 ][2019 ][)]

.r 5Two CD CopiesscHe

HIGH COURT

DATED:31 11212020

ORDERW.P.No.24456 of 2020

(oB-tr1Et4<'3" 12 6.lAN1zrlll7-*EO

DISPOSING OF THE WRIT PETITIONWITHOUT COSTS

\J-,'

DDY

21813416630409204754714053587070700775727328111 a26 85934148726 95811208I111991,2018. 12036, 1 2040. L2069, t2L[ a. ][L2L44, ][t2L]r2L94,12200,2209. 122L5. t22L7.12243, l[ 2260. L2262, ][L][ 22Aa. ][12342,]12350, 12417. L243[2. 12472. ][124][9a. ][12506, ][I][ s74. ][L2598, 12621.]t2702, 12735. 12740[. 12a45. ][128][so. ][12865, ][1][ 865. ][13013,][ 13 ][518.]L37491391387813914104L44 5014390143914409. 14582 AND 14597 [0F ][2019]

COMMON ORDER

Since, the issue involved [in all ][the ][writ ][petitions ls ][one and ][the ][same,]they are heard together [and are being ][disposed ][of ][by ][this ][common order']

2. The [petitioners ][are ][the ][directors ][of ][the ][private ][companies,]the [companies ][Act, 2013 (18 ][of ][2013) ][(for ][short'the ][Act').]registered under Some of the such [companies are ][active, ][and some of ][them ][have been struck]off from the register [of ][companies ][under ][Section ][248(1)( c ][) ][of ][the Act' ][for]not carrying on any [business operation ][for the ][specified ][period ][mentioned ][in]the said [provlsion, and ][for ][not ][making ][any ][application ][within ][the ][specified]period, for obtaining the status [of a dormant ][company under Section ][455 of]the Act

3. The [petitioners, ][who were ][directors ][of ][the ][struck ][off ][companies']and who are [presently directors ][of ][active ][companies' ][during ][the ][relevant]in [question, failed ][to ][flle ][financial statements ][or ][annual returns ][for ][a]period continuous [period ][of ][three ][years' ][Therefore' ][the ][2nd ][respondent ][passed ][the]impugned [order ][under ][section ][164(2) ][of ][the Act' ][disqualifying ][them ][as]directors, and [further ][making ][them ][ineliglble ][to ][be ][re-appointed ][as directors]of that company, [or ][any ][other ][company, ][for ][a ][period ][of five ][years ][from ][the]date on which the [respective companies ][failed ][to ][do ][so ][The ][Director]IdentificationNumbers(DINs)ofthepetitionersWerealsodeactiVated.the [same, ][the ][present ][writ ][petitions ][have ][been ][filed']Aggrieved by

4. This court granted interim orders in the writ petitions directing the2nd respondent to activate DINs of the petitioners, to enable them to functionother than in strike off companies.

5. Heard the Iearned counsel appearing for the petitioners in all thewrit petitions, Sri K.Lakshman/ learned Assistant Solicitor General appearingfor the respondents - Union of India.

6. Learned counsel for the petitioners, contend that before passingthe impugned order, notices have not been issued, giving them opportunity,and this amounts to violation of principles of natural justice, and on thisground alone, the impugned orders are liable to be set aside.

7. Learned counsel submits that Section 76ae)e) of the Actempowers the authority to disqualify a person to be a director, provided hehas not filed financial statements or annual returns of the company to whichhe is director, for any continuous period of three financial years. Learnedcounsel further submits that this provision came into force with effect from1.4.2Ot4, and prior thereto i.e., under Section 274(t)(g) of the CompaniesAct, 1956 (1 of 1956), which is the analogous provision, there was no suchrequirement for the directors of the private companies. They contend thatthis provision under Act 18 of 2013, will have prospective operation andhence, if the directors of company fail to comply with the requirementsmentioned in the said provision subsequent to the said date, the authorityunder the Act, is within its jurisdiction to disqualify them. But in the presentcases, the 2nd respondent, taking the period prior to :- 4.2074, i.e., giving theprovision retrospective effect, disqualified the petitioners as directors, whichis illega I and arbitrary.

B. With regard to deactivation oF DINs, learned counsel for thepetitioners submit that the DIN', as contemplated under Rule 2(d) of theCompanies (Appointment and eualification of Directors), Rules, 2Ot4 (for

short'the Ru les),are granted for life time to the applicants under Rule 1O(6)of the said Rules,and cancellation of the DIN can be made only for thegrounds mentioned in clauses (a)to (f) under Rule 11 of the Rules, and thesaid grounds does not provide fordeactivation for having become ineligiblefor appointmentas Djrectors of the company under Section 164 of the Act.Learned counselfurther submitsthat as against the deactivation, no appealls providedunder the Rules, andappeal to the Tribunal under Section 252 ofthe Act isprovided only agalnst the dissolution of the company underSection 248 of the Act.

9. Learned counsel further submits that 1=t respondentGovernmentof India represented by the lvlinistry of Corporate Affairs, has floated ascheme dated 29.72.2017 viz.,Condonatlon of Delay Scheme- [2018,]wherein the d irecto rs,whoseDINs have been deactivated bythe 2"drespondent, allows theDINs of the Directors to be activated. However, suchscheme is not applicable tothe companies which are struckoff underSection 2aB(5) of the Act.In case of active companies, theycan makea pplication to NationalCompany Law Tribunal under Section)q)of the Act,seeking for restoration,and the Tribunal can order for reactivation of DIN ofsuch directors, whose DIN are deactivated. However, under Section 252 onlythe companies, which are carrying on the business, can approach theTribunal and the companies, which have no business, cannot approach theTribunal for restoration. They submit that since the [penal provision ]is [given]retrospective operation, de hors the above scheme, they are entitled toinvoke the [jurisdiction ]of this court under Article 226 of the Constitution ofI nd ia.

10. With the above contentions, Iearned counsel sought to set asidethe impugned orders and to allow the writ [petitions.]

11. On the other hand learned Assistant Solicltor General [submits ][that]failure to file financiat statements or annual returns [for ][any continuous ][period]

of three financial [years, ][automatically ][entail ][their ][disq ][ua ][lification ][under]section 164(2)(a) of the [Act ][and ][the statute ][does ][not ][provide ][for ][issuance ][of]any notice. Hence, the [petitioners, ][who ][have ][failed ][to ][comply ][with ][the]statutory requirement under Section [164 ][of the ][Act, ][cannot ][complain of]violation of [principles ]of natural [justice, ][as ][it ][is ][a deeming ][provision. ][Learned]counsel further submits that the [petitioners ][have ][alternative remedy ][of]appeal under Section 252 of [the ][Act, and ][hence ][wrlt ][petitions may ][not ][be]e nterta in ed.

12. To consider the contention of the [learned Assistant ][Solicitor]General with regard to alternative [remedy ][oF ][appeal under Section 252 of ][thr:]Act, the said [provision ]is [required ][to ][be ][considered, ][and ][the ][same ][is]extracted as under for better appreciation:

252. Appeal to Tribunal:

(1) Any person aggrieved by an order of the Registrar, [notifying ][a company]as dissolved under Section [248, ][may ][file ][an ][appeal ][to ][the Tribunal ][within ][a ][period of]three [years ]from the date of the [order ][of ][the ][Registrar ][and if the ][Tribunal is ][of ][the]opinion that the removal of the [name of ][the ][company ][from ][the ][register of ][companies]is not [justified ]in view of the absence [of any of ][the ][grounds on which ][the ][order ][was]passed by the Registrar, it may order restoration of the name of [the ][company ][in ][the]register of companies; Provided that before [passing ]an order [under ][this ][section, ][the ][Tribunal ][shall]qive a reasonable opportunity of making representations and of being [heard ]to [the]Registrar, the company and all [the ][persons concerned:]

Provided further that if the Registrar is [satisfied, ][thqt the ][name ][of ][the]company has been struck off [from ]the [register ][of ][companies ][either ][inadvertently or]on basls of incorrect information [furnished ][by the ][company ][or its ][directors, ][which]requires restoration in the register of [companies, ][he may within ][a ][period ][of ][three]years from the date of passinq of the order dissolving the company [under ]248, ftle an application before the Tribunal [seeking ][restoraton ][of ][name ][of ][such]co m [pa ]ny.

(2) A copy of the order passed by the Tribunal shall be filed by the companywith the Registrar within thirty days from the date [of ][the ][order ][and ][on receipt of ][the]order, the Registrar shall [cause ]the [name ][of ][the ][company ][to ][be ][restored ][in ][the]register of companies and shall tssue [a ][fresh certificate of ][incorporation.]

(3) If a company, or any member or creditor or worker [thereof ][feels]aggrieved by the company having its name [struck ][off ][from ][the ][reglster ][of]companies, the Tribunal or an application [made by ][the ][company, member, creditor]or workman before the explry of [twenty ][years ][from ][1.he ][publication ][in ][the ][Offlcial]Gazette of the notice under sub-section [(5) ]of [Section ][248, ][if ][satisfied ][that ][the]company was, at the time of its [name being ][struck ]off, [carrying on ][business ][or ][in]operation or otherwise it is [just ]that the [name ]of the [company ][be ][restored ][to ][the]register of companies, order the name of the company to [be ][restored ][to the ][register]of companies, and the Tribunal may, by the order, [give ][such ][other ][directions ][and]make such [provisions ]as deemed [just ]for [placing ]the company [and ][all ][other ][persons]in the same [position ]as nearly as may be as if the name of the [company has ][not]been struck off from the register of companies.

A reading of above provision goes to show that if the company is dissolvedunder Section 248 of the Act, any person aggrieved by the same, can file anappeal. Thus the said provision provides the forum for redressal against thedissolution and striking off the company from the register of companies. Itdoes not deal with the disqualification oF the directors, and deactivation oftheir DINs. In the present case, the petitioners are only aggrieved by theirdisqualification as directors and deactivation of DINs, but not about strikingoff companies as such. Hence. Section 252 of the Act, cannot be analternative remedy for seeking that relief, and the contention of the learnedAssistant Solicitor General. in this regard, merits for rejection.

13. Under Section 16a(2)(a) of the Act, if the Director of a companyfails to file financial statements or annual returns for any continuous [period]of three financial [years, ]he shall not 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. The saidprovision under the Act 1B of 2013, came into force with effect from01.O4.20L4, and the [petitioners ]are disqualified [as directors under ][the ][said]provision. At this stage, the issue that arises for consideration is - whetherthe disqualification envisaged under Section [16a(2)(a) ]of the [Act, ][which]provislon came into force with effect from 07.O4.2Ot4, can be madeapplicable with prospective effect, or has to be [given retrospective ][operation?]In other words, the issue would be, from [which financial ][year, ][the ][default]envisaged under Section 16a(2)(a) of the [Act, ][has ][to ][be ][calculated, ][to ][hold]the director of the company liable? In [this ][regard, ][the ][learned ][counsel]brought to the notlce of this Court, [the ][General Circular ][No.OB/14 ][dated]4.4.2074 issued by the Ministry of Corporation [affairs, which ][clarifies ][the]applicability of the relevant financial [years, ][The relevant portion of ][the ][said]circular is as under:

"A number of provisions of the Companies Act, 2013 [inciuding ][those ][relating ][to]maintenance of books of [account, preparation, adoption ][and fillng ][of ][financial]statements [(and ]documents [requ ][red ][to ][be attached ][thereto), ][Auditors reports ][and]the Board of Dtrectors [report ][(Board's ][report) ][have been ][brolght ][into ][force ][with]maintenance of books of [account, preparation, adoption ][and fillng ][of ][financial]statements [(and ]documents [requ ][red ][to ][be attached ][thereto), ][Auditors reports ][and]the Board of Dtrectors [report ][(Board's ][report) ][have been ][brolght ][into ][force ][with]

effect from 1't April, [2014 ][Provisions ][of ][Schedule ][II ][(useful ][lives ][to ][compute]depreciation) and Schedule [UI ][(format ][of ][financial statements) have ][also ][been]brought into force from [that ]date. [The relevant ][Rules ][peftaining ][to ][these ][provisions]have also been notified, [ptaced ][on ][the ][website ][of the ][f4inistry ][and ][have come ][into]force from the same date, The Ministry has received [requests ][for ][clarification ][with ][regard ][to the ][relevant]financial [years ]with effect from [which such ][provisions ][of the ][new ][Act ][reiating ][to]maintenance of books of [account, preparation, adoption ][and ][fiiing ][of ][financial]statements [(and ]attachments thereto), [auditors report ][and ][Board's ][repoft ][will ][be]applicable.

Although the [position ]in this behalf [is ][quite clear, ][to ][make ][things absolutely ][clear]it is hereby notified that the [financial ][statements (and ][documents required ][to ][be]attached thereto), aud tors [report and ][Board's ][report n ][respect ][of ][financial ][years]that commenced earlier than [1!t ][April shall ][be ][governed ][by the ][relevant]provrsions/schedules/rules of the Companies Act, 1956 and [that ][in ][respect ][of]financlal [years ]commencing [on or ][after ][1'r ][Aptil,2014, the ][provisions of ][the ][new Act]shall a [pply. "]

A reading of the above circular [makes ]it [clear ][the ][financial statements ][and]the documents required to be [attached ][thereto, ][auditors ][report ][and ][Board's]report in respect of financial [years ][that ][commenced earlier ][than ][0l^04.2074,]shall be [governed ]by the [provisions ][under ][the ][Companies ][Act, ][1956 and ][in]respect of financial [years ]commencing on or [after ][07.O412OI4, ][the ][provisions]of the new Act shall apply.

74. At this stage it is required to be noticed that the [analogous]provision to Section 164(2)(a) of the Act 18 of 2013, is Section [27 ]a(l)(g) [of]Act 1 of 1956. The said [provision ]under Act 1 of [1956 is ][extracted ][as ][under]for ready reference:

Section 274(1) A [person ]shall not [be ][capable ]of [being appointed ][director ][of ][a]company, if - (g) such person is already a director of a [public ]company which, [-]

(A) has not filed the annual accounts and annua [returns ][for ][any]continuous three financial [years ][commencing ][on ][and ][after ][the]frrst day of April, 1999; or (B)

Provided that such [person ]shall not be eligible to [be ][appointed as a dtrector ][of ][any]other [public ]company for a [period ]of five [years ][from the date ][on which such ][public]company, in which he is a director, failed to [file ][annual accounts ][and annual returns]under sub-clause (A) or has failed to repay its [deposits ]or [interest ][or ][redeem ][its]debentures on due date or [pay ]dividend referred to [in ]clause [(B).]

A reading of the above provision under Act 1 of 1956, nlakes it clear that if [a]person capable of being appointed director of a company and such person isalready a director of a public company, which has not filed annual accountsand annual returns for any continuous three financial [years ]commencing on

and after the first day of April 1999, shall not be eligible to be appointed asa director of any other public company for a period of five years from thea director of any other public company for a period of five years from thedate on which such publlc company, in which he is a director, failed to fileannual accounts and annual returns. So the statutory requirement of filingannual accounts and annual returns, is placed on the directors of a 'publiccompany'. There is no provision under the Act 1of 1956, which placessimilar obligations on the directors of a 'private company'. Therefore, non-filing of annual accounts and annual returns by the directors of the privateannual accounts and annual returns. So the statutory requirement of filingannual accounts and annual returns, is placed on the directors of a 'publiccompany'. There is no provision under the Act 1of 1956, which placessimilar obligations on the directors of a 'private company'. Therefore, non-filing of annual accounts and annual returns by the directors of the privatecompany/ will not disqualify them as directors under the provisions of Act 1of 1956.of 1956.

15. Under Section 164(2) of the new legislation i.e., Act 18 of 2013,no such distinction between a 'private company' or a 'public company' ismade and as per the said provision goes to show that no person who is orhas been a director of a'company', fails to file financial statements or annualreturns for any continuous period of three financial years, will not be eligiblefor appointment as a director of a company. As already noted above, thesaid provision, came into force with effect from O1.04.2014.

16. Comlng to the facts on hand, the 2'd respondent has disqualifiedthe petitioners under Section 16a(2)(a) of the Act 18 of 2013, for not filingfinancial statements or annual returns, for [period ][prior ]to 01.04.2014. [The]action of the 2nd respondent runs contrary to the circular [issued ]by [the]Ministry of the Corporate Affairs, and he has [given ]the [provisions ]of Act 18 [of]2013, retrospective effect, which is impermissible.

17. The Apex Court in COMMISSIONER OF [INCOME ][TAx](CENTRAL)-L NEw DELHI v. VATIKA TOWNSHIP PRIVATE [LIMITEDL]has dealt with the general [principles ]concerning [retrospectivity, ][The relevant]portion of the judgment is thus:

27. A leqislation, be it a statutory [Act ][or ][a ][statutory ][Rule ][or ][a ][statutory]Notiflcation, may [physically consists ][of ][words ][prlnted ][on ][papers ][However,]r(tol5)rst.clNotiflcation, may [physically consists ][of ][words ][prlnted ][on ][papers ][However,]r(tol5)rst.cl

conceptually it is a [great deal more ][than an ][ordinary ][prose ][There ][is ][a ][special]peculiarity in the mode of verbal [communication ][by a ][legislation ][A legislation is ][not]ju.t u of statements, such as one finds in a work of fiction/non [fiction or ][even]="rie. ln a [judgment ]of [a ][court of ][law. ][There is a technique required ][to ][draft a ][legislation]"r drafting and [*ltl ][ur ][to ][latter one ][understand ][is ]to [a ieqislation ][be ][found in ][the ][Former technique ][various principles ][is ][known ][of'lnterpretatlon ][as ][legislative][of]Statute:'. Vis-a-vis [ordinary ][prose, ][a ][legislation ][differs ][in its ][provenance, lay-out]and features as also [jn ][the ][implication ][as ][to ][its ][meaninq ][that ][arises ][by ][presumptions]as to the intent of the [maker ][thereof.]

28. Of the various [rules guiding how ][a ][legislatiorr has ][to ][be ][interpreted, ][one]establ shed rule is that [unless ][a ][contrary intention ][appears, ][a ][egislation is ][presumed]r'rot to be intencled to have a [retrospect ][ve ][operation ][The idea behind ][the ][rule ][s]that a current [law should ][goveTn ][cLlrrent ][activities ][La\,{ ][passed ][today ][cannot ][apply]to the events of the [past. ][lf ][we ][do something today, ][\r'/e ][do ][rt ][keeping in ][the ][law ][of]today and ln force [and not tomorrow's ][backward ][adjustment ][of ][it' ][our ][bel ][ef ][ln the]nature of the law is [founded on ][the ][bed rock ][that ][every human ][lleing ][ls ][entitled ][to]arrange his affairs by relying [on ][the ][existing law and should ][not flnd ][that ][his ][plans]have been reLrospectively upset. [This principle ][of ][law is known ][as ][lex ][prospicit ][non]respicit : law looks forward not [backward ][As was observed ][in ][Phillips ][vs ][Eyre]t(1b70) [LR ][6 ]QB [11, ][a ][retrospective {egislation ][is ][contrary ][to the ][general ][principle]ihat legislation by [which ][the ][conduct ][of ][mankind ][is ][to ][be regulated when ][introduced]for the first time to deal [with future ][acts ][ought ][not ][to ][change ][the ][character ][of ][past]transactions carried on upon [the ][faith ][of ][the then existing ][law.]

29. The obvious basis of the [principle against retrospectivity is ][the ][principle ][of]'fairness', which must be the [basis ][of ][every ][legal ][rule ][as ][Was ][observed ][in ][the]decision reported in [L'Office Cherifien ][des ][Phosphates ][v. ][Yamashita-Sh ][innihon]Steamship Co. Ltd. [{1994) [1 Ac ][486]. ][Thus, legislations which modified ][accrued]rights or which impose obligations or [impose new duties ][or ][attach ][a ][new disability]h5ve to be treated as [prospective ][unless ][the ][legislative ][intent ][is clearly ][to ][give the]enactment a retrospective [effect; ][unless ][the ][legislation is ][for ][purpose ][of ][supplying]an obvious omission in a [former ][legislation ][or ][to ][explain ][a former ][legislation ][We]need not note that cornucopia [of ][case law available on ][the subject ][because ][aforesaid]legal [position ]clearly emerges [from ][the ][various ][decisions and ][this ][legal position ][was]conceded by the counsel for the [parties ][ln ][any ][case, ][we ][shall refer ][to ][few]ludgments [containing ][this dicta, ][a ][llttle ][later.]

30. We would also like to [polnt ][out, for the ][sake ][of ][completeness, ][that ][where ][a]beneflt is conferred by a [leqislation, ]the [rule against ][a ][retrospective construction ][is]different. If a legislation confers [a ]beneft [on some p€rsons ][but ][!aithout inflicting ][a]correspondlnq detriment [on some ][other ][person ][or ][on ][the ][public ][generally, ][and where]to confer such benefit [appears ]to [have been ][the ][legislators ][oblect, ][then ][the]presumptron would be that such a legislation, [giving ]it a [purposive ][constrLction,]would warrant t to be [grven ]a retrospective [effect. ][Thi:; ][exactly ][is ][the ]lustiflcation [to]treat [procedural provisions ]as [retrospective ][ln ][Government ][of ][India ][& ][Ors. ][v']Indian Tobacco Association, t(2005) [7 ][SCC ][3961, ][the ][doctrine ][of ][fairness ][was held to]be relevant factor to construe [a ][statute conferring ][a ][benefit, ][n ][the context of ][it ][to ][be]given a retrospective operation, The same doctrine of [fairness, ][to ][hold ][that ][a]itatut" was retrospective in [nature, ][was applied ][in ][the ][case ][of ][Vijay ][v, ][State ][oF]Maharashtra & Ors., [(2006) 6 [SCC ]289]. [it ][was held ][that ][where ][a ][law ][rs ][enacted]for the benefit of community [as ]a [whole, even ][in the ][absence ][of ][a ][provlsion ][the]statute may be held to be [retrospective ][in nature. ][However, ][we ][are (slc ][not)]confronted with any such situation [here.]

31. In such cases, [retrospectivity ][is ][attached ][to ][benefit ][the ][persons ][in]contradistinction to the [provision imposing some burden ][or ][liability where ][the]presumption attached towards prospectivity, In the instant case, the [proviso ][added]to Section 113 ofthe Act [is ][not ][beneficial ][to the ][assessee. ][On ][the ][contrary, ][it ][is ][a]provision which is onerous to the assessee. Therefore, [in ]a [case ][like ][this, we ][have]to [proceed ]with the normal rule of [presumption ][against ][retrospective ][operation.]Thus, the rule against retrospective [operation ][is ][a fundamental ][rule ][of ][law ][that ][no]statute shall be construed to have a [retrospective ][operatjon unless ][such ][a]construction appears very clearly [in ][the terms of the Act, ][or ][arises ][by ][necessaTy and]distinct implication. Dogmatically [framed, ]the [rule is ][no more ][than a ][presumption,]and thus could be displaced [by ][out ][weighing factors.]

43. There is yet another very interesting [piece ]of [evidence ][that ][clarifies ][that]provision beyond any pale of doubt viz., the understanding of CBDT itself [regarding]this [provision. ]It is contained in CBDT Circular [No,B ]of [2002 dated 27.8 2002, with]the subject ["Finance ]Act, 2002 - Explanatory [Notes ][on ][provision ][relating ][to ][Direct]Taxes". This circular has been issued after the [passing ][of ][the ][Finance ][Act, 2002, ][by]which amendment to section 113 was made. In [this ][circular, various ][amendments]to the Income tax Act are discussed amply [demonstrating ][as ]to [which ][amendments]are cia n ficato ry/retro spective in operation and whlch amendments [are ][prospective]

For example, Explanation to section 158-BB is stated to [be ]clarificatory in [nature.]Likewise, it is mentioned that amendments in [Section 145 ][whereby provisions of]that section are made applicable to block assessments is [made ][clarlFicatory ][and]would take effect retrospectively from 1"r day of July, 1995. [When ][it ][comes to]amendment to Section 113 of the Act, this very circular [provides ]that the saidamendment along with the amendments in [Section ][158-BE. ][would ][be ][prospective]i.e., will take effect from 7.6.2aO2."

18. Thus, the Apex Court in the above [judgment, ][has ][made ][it ][clear]that unless a contrary intention appears, a [legislation ][has ][to ][be presumed to]have prospective effect. A reading of Section 164 of the [Act ][does ][not ][show]that the tegislation has any intention, to [make ][the ][sald provision ][applicable ][to]past transactions. Further, the Apex Court in the above [judgment ][at]paragraph No.43, found that the circular issued by the authority [after ][passing]of the legislation, clarifying the [position ][with ][regard ][to ][applicability ][of ][the]provisions, has to be construed as an important [piece ]of [evidence, ][as ][it]would clarify the [provision ]beyond [any ][pale ][of ][doubt' ][In ][the ][present ][case, ][as]already noted above, the [Ministry ]of [Corporation ][affairs has ][issued ][the]circular No.08/2014 dated [4.4.2014 clarifying ][that ][financial ][statements]commencing after 01.04.2014, [shall ][be ][governed by ][Act ][18 ][of ][2013 ][i.e., ][new]Act and in respect of financial [years commencing earlier ][to ][01.04.2014, ][shall]be governed by Act [1 ]of [1956. ][At ][the ][cost ][of repetition, ][since ][in ][the ][present]cases, as the 2^d respondent / [competent ][authority, ][has ][disqualified ][the]petitioners as directors under Section 16a(2)(a) [of the Act ][18 ][of ][2013, ][by]the [period ][prior ][to ][Ot.O4'20t4, ][the ][same ][is ][contrary ][to ][the]considering circular, and also contrary [to the ][law laid down by ][Apex ][Court in ][the ][above]refe rred [j ]udgment.

lg.Ifthesaidprovisionisgivenprospectiveeffect,aspertheclrculardated 4.4.2014 and the [law ][laid down ][by ][the ][Apex Court, as stated ][in ][the]writ affidavits, the first [financial ][year ][would ][be ][from ][01-04-2014 ][to]31.03.2015 and the second [and ][third ][years ][financial ][years would ][be ][for ][the]31.03.2017. [The annual returns ][and ][financial]years ending 31.03.2016 and statements are to be [filed ][with ][Registrar ][of ][Companies ][only ][after ][the]conclusion of the annual [general meeting of ][the ][company, and ][as per ][the ][first]

proviso to Section 96(1) of the Act, annual general meeting for lhe [year]ending 31.03.2017, can be held within six [months ][from ][the ][closing ][of]financial year i.e., by 30.09.2017. Further, the time [limit ][for ][filing ][annual]returns under Section 92G) of the Act, is 60 days from annual [general]meeting, or the last date on which annual [general ]meeting ought to [have]been held with normal fee, and within 270 days with additional fee as [per ]theending 31.03.2017, can be held within six [months ][from ][the ][closing ][of]financial year i.e., by 30.09.2017. Further, the time [limit ][for ][filing ][annual]returns under Section 92G) of the Act, is 60 days from annual [general]meeting, or the last date on which annual [general ]meeting ought to [have]been held with normal fee, and within 270 days with additional fee as [per ]theproviso to Section 403 of the Act. Learned counsel submit that if the saiddates €re calculated, the last date for filing the annual returns would be30.11.2017, and the balance sheet was to be filed on 30.10.2017 withnormal fee and with additional fee, the last date for filing annual returns is27.O7.2078. In other words, the d isqua lification could [get ]triggered only onor after 27.O7.201A. But the period considered by the 2^d respondent in thedates €re calculated, the last date for filing the annual returns would be30.11.2017, and the balance sheet was to be filed on 30.10.2017 withnormal fee and with additional fee, the last date for filing annual returns is27.O7.2078. In other words, the d isqua lification could [get ]triggered only onor after 27.O7.201A. But the period considered by the 2^d respondent in thepresent writ petitions for clothing the petitioners with disqualification,pertains prior to Ol.O4.2Ol4. Therefore, when the omission, which is nowpertains prior to Ol.O4.2Ol4. Therefore, when the omission, which is nowpointed out, was not envisaged as a ground for disqualification prior to1.4.2014, the petitioners cannot be disqualified on the said ground. Thisanalogy is traceable to Article 20(1) of the Constitution of India, which statesthat "/Vo person shall be convicted of any offence except for violation of a lawin force at the time of the commission of the act charged as an offence, norbe subjected to a penalty greater than that which might have been inflicted1.4.2014, the petitioners cannot be disqualified on the said ground. Thisanalogy is traceable to Article 20(1) of the Constitution of India, which statesthat "/Vo person shall be convicted of any offence except for violation of a lawin force at the time of the commission of the act charged as an offence, norbe subjected to a penalty greater than that which might have been inflictedunder the law in force at the time of the commission of the offence". Inview of the same, the ground on which the petitioners were disqualified,cannot stand to legal scrutiny, and the same is liable to be set aside.cannot stand to legal scrutiny, and the same is liable to be set aside.

20. A learned Single Judge of the High Court of Karnataka inYASHODHARA SHROFF vs. UNION INDIA2 considering.OF Section 164(2)(a) of the Act and other provisions of the Act, ancl variousjudgments, passed an elaborate order and held that the said provision has noretrospective operation. The observations of the learned Judge, pertaining to private companies, which are relevant for the present purpose, are extracted as under:

208. In view of the aforesaid discussion, I have arrived at the following conclusions:

(a) It is held that Section 16a(2)(a) of the Act is not ultra ylrus Articte 14 of theConstitution. The said provision is not manifestly arbitrary and also does not fallwithin the scope of the doctrine of proportionality. Neither does the said provisionviolate Article 19(1)(9) of the Constitution as it is made in the interest of generalpublic and a reasonable restriction on the exercise of the said right. The objectand purpose of the said provision is to stipulate the consequence of adlsqualifcatlon on account of the circumstances stated therein and the same is inorder to achieve probity, accountability, and transparency in corporategovernance.Constitution. The said provision is not manifestly arbitrary and also does not fallwithin the scope of the doctrine of proportionality. Neither does the said provisionviolate Article 19(1)(9) of the Constitution as it is made in the interest of generalpublic and a reasonable restriction on the exercise of the said right. The objectand purpose of the said provision is to stipulate the consequence of adlsqualifcatlon on account of the circumstances stated therein and the same is inorder to achieve probity, accountability, and transparency in corporategovernance.

(b) That Article fslc) Section 764(2) af the Act applies by operatlon of law on the basisof the circurnstances stated therein, the said provislon does not envisage anyhearing, neither pre-disqualification nor post-disqualification and this ts not inviolation of the principles of natural justice, s not ultra [ylres ]Article 14 of theConstitution.of the circurnstances stated therein, the said provislon does not envisage anyhearing, neither pre-disqualification nor post-disqualification and this ts not inviolation of the principles of natural justice, s not ultra [ylres ]Article 14 of theConstitution.

(c) That Section f64(2) af the Act does not have retrospective operation and istherefore, neither unreasonable nor arbitrary, in view of the interpretation piacedon the same.therefore, neither unreasonable nor arbitrary, in view of the interpretation piacedon the same.(d)

(e) Insofar as the private companies are conceTned, disqualification on account of thecircumstances stated under Section 164(2)(a) of the Act has been brought intoforce for the first time under the Act and the consequences of disqualificationcould not have been imposed on directors of private companies by taking intoconsideration any period prior to 01.04.2014 for the purpose of reckoningcontlnuous period of three financial years under the said provision. The saidconclusion is based on the principal drawn by way of analogy from Article 20(1) ofthe Constitution, as at no point of time prior to the enforcement of the Act/ adisqualification based on the circumstances under Section 164(2) of the Act wasever envisaged under the 1956 Act vis-a-vis directors of [private ]companies. Sucha disqualification could visit a director of only a [public ]company under Section27a(\)(g) of 1956 Act and never a director of a private company. Suchdisqualification of the [petitioners ]who are directors of [private ]companies is hencequashed,circumstances stated under Section 164(2)(a) of the Act has been brought intoforce for the first time under the Act and the consequences of disqualificationcould not have been imposed on directors of private companies by taking intoconsideration any period prior to 01.04.2014 for the purpose of reckoningcontlnuous period of three financial years under the said provision. The saidconclusion is based on the principal drawn by way of analogy from Article 20(1) ofthe Constitution, as at no point of time prior to the enforcement of the Act/ adisqualification based on the circumstances under Section 164(2) of the Act wasever envisaged under the 1956 Act vis-a-vis directors of [private ]companies. Sucha disqualification could visit a director of only a [public ]company under Section27a(\)(g) of 1956 Act and never a director of a private company. Suchdisqualification of the [petitioners ]who are directors of [private ]companies is hencequashed, (f)

(g) Consequently, where the disquaiification under Section L6a(2) of the Act is basedon a continuous [period ]of three fnancial [years ]commencing from 01,04,2014,wherein financial statements or annual returns have not been filed by a [publ ]c orprivate company, the dlrectors of such a company stand disquallfied and theconsequences of the said disqualification would apply to them under the Act.on a continuous [period ]of three fnancial [years ]commencing from 01,04,2014,wherein financial statements or annual returns have not been filed by a [publ ]c orprivate company, the dlrectors of such a company stand disquallfied and theconsequences of the said disqualification would apply to them under the Act.

21, A learned Single of the High Court of Gujarat at Ahmedabad [in]GAURANG BALVANTLAL SHAH S/O BALVANTLAL SHAH VS. UNION OFINDIA3 expressed similar view as that of the leaned single Judge of HighCourt of Karnataka (1 supra), and held that Section [764(2) ][ot ][the Act ][of]2013, which had come into force with effect [from ][7.4.2074 ][would ][have]prospective, and not retrospective effect and that the defaults contemplatedunder Section 16a(2)(a) with regard to non-filing [of ][financial statements ][or]r rlspecial Civil Application No.22'135 of2017andbatchdated 18 12.2018

annual returns for [any ][contlnuous period ][of ][three ][financial years ][would ][be]thedefaulttobeCountedfromthefinancialyear20l4-lSonlyandnot201"3-14.

22. A learned single Judge [of ][the ][High ][Court ][of ][Madras ][in BHAGAVAN]DAS DHANANJAYA DAS vs. [ttNION ][OF ][INDIAA ][also ][expressed similar]view. The relevant [portion ][is ][as ][under:]

29. In fine,

(a )When the New Act 2013 [came ][into ][effect ][from ][1'4.2014, ][the]second respondent herein [has wrongly ][given ][retrospective ][effect]and erroneously disqualified the [petitioner ][directors ][frorn]1.1.2016 itself before the deadline [commenced ][wrongly fixing ][the]first financial [year ]from 7.4.2013 [to ][31.3 ][2074.]second respondent herein [has wrongly ][given ][retrospective ][effect]and erroneously disqualified the [petitioner ][directors ][frorn]1.1.2016 itself before the deadline [commenced ][wrongly fixing ][the]first financial [year ]from 7.4.2013 [to ][31.3 ][2074.](b)By virtue of the new Section [164(2)(a) ][of the ][2013 Act ][using ][the]expression 'for any continuous [period ][of ][three ][financial ][year" ][anC]in the light oF section 2(41) [defining "financial ][year" ][as ][well ][as ][their]own General circular No.08/14 [dale:d ][4.4.2074, ][the first ][financial]year would be from 7.4.7014 to 3t.3,2015, [the ][second ][financial]year would be from 1.4.2015 to 31 3.2016 and [the third ][financial]year would be from 1,4.2076 to 31.3 [2017, ][whereas ][the ][second]respondent clearly admitted [in ][paras ][15 ][and 2Z ][of ][the ][counter]affidavit that the default of [filing ][statutory ][returns ][for the ][linal]years commences from 2073-14, 2074-15 and [2015-16 i ][e, ][one]year before the Act 2013 came into force. [This ][is ][the ][basic]incurable leqal infirmity that [vitiates ]the [entire ][impugned]proceed ings.expression 'for any continuous [period ][of ][three ][financial ][year" ][anC]in the light oF section 2(41) [defining "financial ][year" ][as ][well ][as ][their]own General circular No.08/14 [dale:d ][4.4.2074, ][the first ][financial]year would be from 7.4.7014 to 3t.3,2015, [the ][second ][financial]year would be from 1.4.2015 to 31 3.2016 and [the third ][financial]year would be from 1,4.2076 to 31.3 [2017, ][whereas ][the ][second]respondent clearly admitted [in ][paras ][15 ][and 2Z ][of ][the ][counter]affidavit that the default of [filing ][statutory ][returns ][for the ][linal]years commences from 2073-14, 2074-15 and [2015-16 i ][e, ][one]year before the Act 2013 came into force. [This ][is ][the ][basic]incurable leqal infirmity that [vitiates ]the [entire ][impugned]proceed ings.

23. In view of the above facts and [circumstances and ][the ][judgments]referred to supra, as the [impugned ][orders ][in ][present ][writ ][petitions]disqualifying the [petitioners ]as [directors under ][Section ][16a(2)(a) ][of ][the ][Act,]have been [passed ]considering the [period ][prior ][to ][01.04.2014, ][the ][same]cannot be sustained, and are [liable ][to ][be ][set ][aside ][to ][that ][extent.]

24. As far as the contention [regarding lssuance ][of ][prior notice ][before]disqualifying the [petitloners ]as directors [is ][concerned, ][Section ][164(2)(a) ][is]required to be noticed, and the same is [extracted ][as ][under ][for ][ready]reference:

164. Disqua lification for appointment of director:

(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 continuousperiod of three financial years; or (b)

Shall be eligible to be re-appointed as [a ][director ][of ][that ][company ][or]appointed in other companies [for ][a period of ][five ][years ][from ][the date on ][which ][the]said company fails to do so.

A reading of the above [provision ][makes ][it ][clear ][that ][it ][provides]disqualification on happening [of ][an ][event ][i.e., if ][a ][person ][who ][is ][or ][has ][been]a director of a company [has ][not filed financial statements ][or ][annual ][returns]for any continuous [period ]of [three ][financial years, shall be ineligible ][to ][be re-]appointed as a director [of ][that ][company ][or ][appointed ][in ][any other ][company]for a period of five [years ][from the ][date ][on ][which ][the ][said company fails ][to ][do]so. The [provision ]does [not ][provide ][for ][issuance ][of ][any prior ][notice ][or]hearing. A learned single [Judge ][of ][the ][High ][court ][of ][Karnataka ][in ][Yashodara]Shroff v, Union [of India ][(l ][supra), ][as ][well ][as ][the ][learned single ][Judge ][of the]HighCourtofGujaratatAhmedabadinGaurangBalvantlalShahs/oBalvantlal shah vs. [Union ][of ][India ][(2 ][supra), ][after ][analyzing ][various]provisions of the Act and Rules [framed ][thereunder, ][and ][by relying ][on various]judgments of the Apex Court, held that [Section 164(2)(a) of ][the ][Act ][applies]by operation of law [on ][the ][basis ][of ][the ][circumstances stated ][therein, the ][said]provision does not envisage any [hearing, ][neither ][pre-d ][isq ua ][lification ][nor]this [is not in ][violation ][of the ][principles ][of ][natural]post-disqualification and justiceandhence,isnorultrayiresArticle14oftheConstitution'Iconcurwith the said reasoning.

25. Thus, from [the ][above, ][it ][is clear ][that ][Section ][164(2)(a) ][of ][the ][Act]rs adeeming [provision ][and ][the ][disqualification envisaged ][under ][the ][said]into [force automatically ][by ][operation ][of ][law on default ][and]provision comes did not [provlde ][for ][issuance ][of ][any prior ][notice' ][but ][the]Legislature respondentsnotifieddisqualificationevenbeforeitincurred,anddeactivatedDINs, which is illegal [arbitrary ][and ][against ][provisions contained ][in]Section 164(2)(a) [of ][the ][Act.]

26. The next grievance of the petitioners is with regard to deactivationof their DINs. The contention of the learned counsel for the [petitioners ]isthat except for the grounds mentioned under Rule 11 (a) to (f) of the Rules,the DINs cannot be cancelled or deactivated, and the violation mentionedunder Section 164(2)(a) of the Act, is not one of the grounds mentionedunder clauses (a) to (f) of Rule 11, and hence for the alleged violation underSection 164(2)(a) of the Act, DIN cannot be cancelled.

27. Rule 10 of the Rules provide for allotment of DIN and under subrule (6) of Rule 10, it is allotted for life time. Rule 11 provides forcancellat,on or deactivation. Rule 11, which is relevant for the presentpurpose, is extracted as under for ready reference:

11. Cancellation or surrender or deactivation of DIN: The CentralGovernment or Regional Director (Northern Region), Noida or any offrcer authorizedby the Regior'ral Director may, upon being satisfied on verification of partculars ordocumentary proof attached with the application received from any person, cancel ordeactivate the DIN in case -

(a) the DIN is found to be duplicated in respect of the same person providedthe data related to both the DIN shall be merged with the validly retainednumber;the data related to both the DIN shall be merged with the validly retainednumber;b)the DIN was obtained in a wrongful manneT oT by fraudulent means;c)of the death of the concerned individual;d)the concerned individual has been declared as a person of unsound mindby a com petent Court;c)of the death of the concerned individual;d)the concerned individual has been declared as a person of unsound mindby a com petent Court;(e)if the concerned individual has been adjudicated an insolvent; (e)

Provided that before cancellation or deactivation of DIN pursuant to clause (b),an opportunity of being heard shall be given to the concerned individual;

(0

on an application made in Form DIR-5 by the DIN holder to surrender hisor her DIN along with declaration that he has never been appointed as director inany company and the said DIN has never been used for filing of any document withany authority, the Central Government may deactivate such DIN;Provided that before deactivation of any DIN in such case, the CentralGovernment shall verify e-records.

Explanationi for the purposes of clause (b)

(j) The terms "wrongful manner" means if the DIN is obtained on thestrength of documents which are not legally valid or incomplete documents arestrength of documents which are not legally valid or incomplete documents arefurnished or on suppression of material informaton or on the basis of \/vrongcertification or by making misleading or false information or by misrepresentation;certification or by making misleading or false information or by misrepresentation;

(ii) the te.m "fraudulent means" means if the DIN is obtarned withan intent to deceive any other person or any authority includingthe Central Govern ment.an intent to deceive any other person or any authority includingthe Central Govern ment.

28. Clauses (a) to (f) of Rule 11, extracted above, provides for the circumstances under which the DIN can be cancelled or deactivated. Thesaid grounds, are different from the ground envisaged undersaid grounds, are different from the ground envisaged under Section 164(2)(a) of the Act. Therefore, for the alleged violation underSection 164 of the Act, DINS cannot be cancelled or deactivated, except [in]accordance with Rule 11 of the Rules.

29. Learned Single Judge of the Gujarat High Court in the [decision]

cited 2 supra, held as under:

"29. This takes the Court to the next [question ][as ]to [whether ]the [respondents]could have deactivated the DINS of the [petitioner ][as ][a ][consequence ][of ][the ][impugned]list? In this regard, it would be appropriate to refer to the [relevant ][provisions]contained in the Act and the said Rules. [Section ][153(3) ][provides ][that ][no ][person]shall be appointed as a Director of a [company, unless ][he ][has ][been ][allotted ][the]Director ldentification Number under Section [154. ][Section ][153 ][requires ][every]individual intending to be appointed as Director [of a ][Company ][to ][make ][an]application for allotment of [DIN ]to [the ][Central ][Government in ][such ][form ][and manner]as may be [prescribed. ]Section [154 ][states ][that the ][Central ][Government shall within]one month from the receipt of the [application under Section 153 ][allot ][a ][DIN ][to ][an]applicant in such manner as may be [prescribed ][Section ][155 ][prohibits ][any]inclividual, who has already been allotted [a ][DIN ][under Section ][154 ][from ][applyrng ][for]or obtainrng or [possessing ]another DIN. [Rules ][9 ][and ][10 ][of the ][said ][Rules ][of ][2014]prescnbe the procedure for maktng appllcation [for ]allotment [and ][for the allotment ][of]DIN, and further [prov ]de that [the ][DIN ][allotted ][by ][the Central Government under ][the]sai.j Rules wouid be valid for the [life ]time [of the applicant ][and ][shall not ][be ][allotted ][to]any other [person,]

30, Rule 11 [provrdes ]for [cancellation ][or ][surTender ][or ][deactivation ][of ][DIN']Accordingly, the Central Government [or ][Regional ][Director ][or ][any authorized ][officer]of Reqional Director may, on [being ][satisfied ][on ][verification ][of ][particulars ][of]docum!ntary [proof ]attached [with ][an ][application ][from any ][person, cancel ][or]deactivate t'he DIN on any of the [grounds mentioned ][in ][Clause ][(a) ][to ][(f) ][thereof']The said Rule 11 does [not contemplate ][any suo ][motu ][powers ][either ][with ][the ][Central]Government or with the [authorized ][officer ][or ][Regional ][Director ][to ][cancel ][or]deactivate the DIN allotted to [the ][Director, nor any of ][the ][clauses ][mentioned ][in ][the]said Rules contemplates [cancellation ][or ][deactivation ][of ][DIN ][of the ][Director ][of ][the]"struck off company" or of the Director having [become ][ineligible under Section ][164]of the said Act. [The ][reason appears ][to ][be ][that ][once ][an individual, who is ][intending]to be the Director of a [particular ][company ][is ][allotted ][DIN ][by ][the ][Central]Government, such [DIN ][would ][be valid ][for the ][life time of ][the ][applicant and on the]basis of such DIN he [could ][become ][Director ][in ][other ][companies ][also ][Hence, ][if ][one]of the companies in [which he was Director, is ]["struck ][off", ][his ][DIN could ][not ][be]cancelled oi deactivated [as ][that ][woutd run counter ][to the ][provisions contained in the]Rulell,whichspecificallyprovidesforthecircumstancesunderwhichtheDlNcouldbe cancelled or deactivated.

31. In that view of the [matter, the ][Court is of ][the ][opinion ][that the ][action of the]respondentsindeactivatingtheDlNsofthepetitioners-DirectorSalongWiththepubtication of the impugned list of [Directors ][of ]["struck ][off" ][companies ][under]ieition zag, also [was ][not ][leqally ][tenable. ][Of ][course, ][as ][per ][Rule ][12 ][of the ][said]Rules, the individual [who has ][been ][allotted ][the ][DIN, in the event of ][any change ][in]nl'pu'ti.utu''statedinFormDlR.3hastointimatesuchchangetotheCentralGovernmentwithintheprescribedtimeinFormDlR-6,however,ifthatisnotdone'theDlNcouldnotbecancelledordeactiVated'ThecancellationordeaCtiVationofthe DIN could be [resorted ][to ][by ][the ][concerned respondents ][only ][as ][per ][the]provisions contain€d in the said Rules ["]

30. Inviewoftheabovefactsandcircumstancesandthejudgmentreferred to supra, the [deactivation of ][the ][DINs ][of ][the ][petitioners ][for ][alleged]violations under [Section ][164 of ][the ][Act, cannot ][be ][sustained']

31. For the foregoing reasons, the impugned orders in the [writ]petitions to the extent of disqualifying the petitioners underSection 164(2)(a) of the Act and deactivation of their DINs, are set aside,and the 2nd respondent is directed to activate the DINS of the [petitioners,]enabling them to function as Directors other than in strike off iompanies.

32. It is made clear that this order will not [preclude ]the 2ndrespondent from taking appropriate action in accordance with law forviolations as envisaged under Section 164(2) of the Act, giving the saidprovision prospective effect from 01.04.2Ot4 and for necessary actionagainst DIN in case of violations of Rule 11 of the Rules.

33. It is also made clear that if the petitloners are aggrieved by theaction oF the respondents in striking off their companies under Section 248 ofthe Act, they are at liberty to avail alternative remedy under Section 252 ofthe Act.

34. All the writ petitions are accordingly allowed to the extentind icated a bove.

35, Interlocutory applications pending, if any, shall stand closed. Noorder as to costs.

DATE: 18-07-2019AVS

A.RAJASHEKER REDDY,]