Linga Manav And Another V. Union Of India And Another

WP/9276/2020

AI Insights

The case involves petitioners who were directors of private companies that failed to file financial statements or annual returns for three consecutive years, leading to their disqualification under Section 164(2)(a) of the Companies Act, 2013. The petitioners challenged the disqualification and the deactivation of their DINs, arguing that the provisions were applied retrospectively and without proper notice, violating principles of natural justice and constitutional rights under Articles 14 and 19(1). The court examined whether the disqualification could be applied retrospectively and whether the DINs could be deactivated based on the alleged violations.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 677410 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 06-07-2020
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX (CENTRAL) v. VATIKA TOWNSHIP PRIVATE LIMITED, YASHODHARA SHROFF vs. UNION OF INDIA, GAURANG BALVANTLAL SHAH S/O BALVANTLAL SHAH vs. UNION OF INDIA, BHAGAVAN DAS DHANANJAYA DAS vs. UNION OF INDIA
• Laws Referred To: Companies Act, 2013, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NAMAVARAPU RAO
• Assessee Lawyers: VANGA
• Keywords: Deactivation of DIN; Disqualification of Directors; Natural Justice; Retrospective operation; Prospective operation
• Section: 151; 455; 248(1)(c); 164(2)(a)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA (Special Original Jurisdiction) IUONDAY, THE SIXTH DAY OF JULY TWO THOUSAND AND TWENTY PRESENT THE HONOURABLE SRI JUSTICE A.RAJASHEKER REDDY WRIT PETITION NO: 9276 OF 2020 ...PEITONER(S) AND 1 Union Of lndia, Rep by its Secretary, l ,4inistry of Corporate Affairs, Shastry Bhavan, Dr. Rajendra Prasad l ,4arg, New Delhi. The Registrar, Office of Registrar of Companies, ROC, 2nd Floor, Corporate Bhavan, Near Central Water Board, GST Post, Bandlaguda, Nagole, Hyderabad - 500068. ...RESPONDENTS Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any appropriate writ, order or directiod more particularly in the nature of a Writ ltrlandamus, a) Declaring the action of the Respondents in disqualifying the Petitioners invoking section 164(2) (a) as arbitrary, illegal, contrary to the principles of natural justice, in violation of the provisions of lhe Companies Act, 2013 and in contravention of the rights guaranteed under Article 14 and Article 19 (1) of the Constitution of lndia and consequently direct the Respondents to restore the DIN Nos. 01867583 and 01867597of the Petitioners. b)That the list of directors passed by the lVinistry of Corporate Affairs (MCA) on the website, i.e. www.mca.gov.in as arbitrary illegal. without jurisdiction, contrary to the provisions of the Companies Act, 20'1 3 as Rule 1 '1 of the Companies (Appointment of Directors) Rules, 201 4, violative of the principles of natural justice besides violating the rights guaranteed under Article 14 and Article tg (t) (g) of the Constitution of lndia and quash/set aside the same to the extent it declares / treats the petitioners 1 and 2 as disqualified in terms of Section 16a Q) Q) of the Companies Act, 2O'13 in the interest of Justice. c)That the Petition is not disqualified in terms of Section 16a Q) @) of the Companies Act, 2013 for the reason of the alleged default of non - filing of Annual Returns and Frnancial Statements for SAARTHAK FURNITURES PRIVATE LIN/|TED. such other order or orders as the Hon'ble Court may deem fit and proper. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondents to restore the DIN of the Petitioners, DIN Nos. 0'1867583 and 01867597 so as to enable the Petitioners to comply with statutory requirements to be appoinled as Directors in other active Companies and for other administrative requirements, wherein the petitioners can become Directors pending disposal of the Writ Petition. Counsel for the Petitioners:M/S. VANGA ANITA Counsel for the Respondents: SRl. NAMAVARAPU RAJESHWAR RAO, ASST SOLICITOR GEMNERAL 2 The Court made the following: Between: 1. Linga l ,4anav And Another, S/o Linga Ashok, Age. 43 Years, Occupation. Business, R/o. Plot No. 14 Kausalya Estates Suryanagar, Hyderabad - 500009 2. Gunishetty Dhana Lakshmi, D/o. Gunishetty Rajeshwar Rao, Age . 42 Years, Occupation. Business, R/o. 8 - 2 - 103 Second Bazar SECUNDERABAD - s00009 lA NO: 1 OF 2020 HON'BI,E SRI JUSTICE A.RAJASHEKI]R F.EDDY Writ Petition No.9276 OF 2O2t) ORDER: Learned counsel for the petitioner as well a s S,ri Namavarzrpu Rajeshwar Rao. learned Assistant Solicitor General of India, appearing for the respondents submits that the lis in this Writ Pet:tion is squarely covered bv the Common Orders of this Court in WP No.5422 of 2018 & batch, dated \"-8.O7.2019. In vieu'of the same and for the reasons alike in the Common Order in WP No.5422 of 2O B & batch, dated 18.07.2019, -his Writ Perition is also aliou ed There s1^.a11 be no order as to costs. As a sequel thercto. miscellaneorrs applications, if any, pending in this Writ Petition, shall stand disposed of. SD/.K. AS SISTANT RE R ,TRUE COPY' SECTIO FI To, Pt 4 1. The Secretary, lvlinistry of Corporate Affairs, Union Of lnd a S;hastry Bhavan, Dr. Ralendra Pr,rsad lvlara, New Delhi. 2. The Registrar, _Office of Registrar of Companies, ROC, 2r d F oor, Corporate Bhavan, Near Central Water Board, GST post, Bandlagurla, t,tagole, HyO;iiOaO - 500068. 3. One CC to t/rS. Vanga Anita Advocate tOpUCl 4. One CC to Sr. )'lamavarapu Rajeshwar Rao. Asst. Solicit:r Ceneral tOpUCl 5. Two CD Copies, (Along with a ccpy of order dated 18lll2O19 in Wp.No. 5422 of 2O1|B & batch.) HIGH COTJFIT DATED:06107 t2020 ORDER WP.No.9276 of 2020 Allowing the WP Without costs. , 1\"1 ,rljr 2C20 Z o I4 ,{ 1 R t'/: i{r C ,'.\". lr ,^, I Yrv\" ' trrw THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY W.P.NOs.5422. 12144. 13520. 13783. 13855. 14155. 24051.30993. AND 40953 0F 2018. 5547. 554 , 5669, s687. 5785. 6047.60A7. 4 7014 7046 7069 7073. 7rO5. 7432. 7454. 7572, 7595. 7732. 7765. 776A. 7A24. 797A. 8111, 8223. 8586, 8590. 9333. 9340. 9381. 9468, 9563. 9584. 9623. 72 Lt2 3 11889 1 1009 1 1208 L1223 1123 tt99!. 12018. L2036. L2040. L2069. L2lOa, L2144, t2tA6, L2L94. 12200, L2209, L22Ls, L2ZL7, L2243, L2260-L2262. 12284. t234L 12350. L2417. 12432. !2472. L2498. L2506. L2574. t2s98. 1262L. 12702. L2735. t2740. L2A45. LZA5O. L2865. L2466. L30L3. L36lA. 1373(). L3749. L3779. L37AA. L3A39. L3A55. L3A78. 139L2, L3917, 13945. L4LOL, L4174. L4207. L4350. L436L. L4390. 14392, 14397. L4409, 14582 AND 14597 0F 20L9 Since, the issue involved in all the writ petitions is 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, registered under the Companies Act, 2013 (18 of 2013) (for short 'the Act'). Some of the such companies are active, and some of them have been struck off from the register of companies under Sectlon 248(1)( c ) of the Act, for not carrying on any business operation for the specified period mentioned in the said provision, 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 period in question, failed to file financial statements or annual returns for a continuous period of three years. Therefore, the 2nd respondent passed the impugned order under Section 76aQ) of the Act, disqualifying them as directors, and further making them ineligible 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 Identification Numbers (DINs) of the petitioners were also deactivated. Aggrieved by the same, the present writ petitions have been filed. COMMON ORDER 1 4. This court granted interim orders in the writ petitions directing the 2nd respondent to activate DINS of the petitioners, to enatrle them to function other than i1 strike off companies. 5. Heard the learned counsel appearing for the petltioners in all the writ petitions, Sri k..Lakshman, learned Assistant Solicitor General appearing for the respondents - Union of India. 6. Learned counsel for the petitioners, contend that before passing the impugned orce:, notices have not been issued, givin! them opportunity, and this amounts to violation of principles of natural lustice, and on this ground alone, the impugned orders are liable to be set asi(le. 7. Learned counsel submits that Section 16+(2)(a) of the Act empowers the authority to disqualify a person to be a di-ector, provided he has not filed financial statements or annual returns of the company to which he is director, for any continuous period of three financial years. Learned counsel further submits that this provision came into forr:e urith effect from 7.4.20L4, and prior thereto i.e., under Section 27aQ)G) of the Companies Act, 1956 (1 of 1956), which is the analogous provision, there was no such requirement for the directors of the private companies. They contend that this provision under Act 18 of 2013, will have prospec lve operation and hence, if the directors of company fail to comply with tho requirements mentioned in the said provision subsequent to the said rlate, the authority under the Act, is wilhin its jurisdiction to disqualify them. But in the present cases, the 2\"d respondent, taking the period prior to 1.4.2(14, i.e., giving the provision retrospective effect, disqualified the petitioners as clirectors, which ls illega I and arbitrary. 8. With regard to deactivation of DINs, learnel crunsel for the petitioners submit that the DINs, as contemplated under- RLrle 2(d) of the Companies (Appointment and Qualification of Directors), Ru les, 2014 (for short 'the Rules), are granted for life time to the applicants under Rule 10(6) of the said Rules, and cancellation of the DIN can be made only for the grounds mentioned in clauses (a) to (f) under Rule 11 of the Rules, and the said grounds does not provide for deactivation for having become inellgible for appointment as Directors of the company under Section 164 of the Act. Learned counsel further submits that as against the deactivation, no appeal is provided under the Rules. and appeal to the Tribunal under Section 252 of the Act is provided only against the dissolution of the company under Section 248 of the Act. 9. Learned counsel further submits that 1't respondent - Government of India represented by the Ministry of Corporate Affairs, has floated a scheme dated 29.12.2O17 viz., Condonation of Delay Scheme - 2018, wherein the directors, whose DINs have been deactivated by the 2\"d respondent/ allows the DINs of the Directors to be activated. However, such scheme is not applicable to the companies which are struck off under Section 248(5) of the Act. In case of active companies, they can make application to National Company Law Tribunal under Section 252 of the Act, seeking for restoration, and the Tribunal can order for reactivation of DIN of such directors, whose DIN are deactivated. However, under Section 252 only the companies, which are carrying on the business, can approach the Tribunal and the companies, which have no business, cannot approach the Tribunal for restoration. They submit that since the penal provision is given retrospective operation, de hors the above scheme, they are entitled to invoke the jurisdiction of this court under Article 226 of the Constitution of Ind ia. 10. With the above contentions, learned counsel sought to set aslde the impugned orders and to allow the writ petitions. 11. On the other hand learned Assistant Solicitor General submits that failure to file financial statements or annual returns for any continuous period ,1 of three financial years, automatically entail their disqualification under Section 164(2)(a) oF the Act and the statute does not prcvide for issuance of any notice. Hence, the petitioners, who have failed t,r comply with the statutory requirement under Section 164 of the Act, (:anr ot complain of violation of princip es of natural justice, as it is a deeming provision. Learned counsel further submits that the petitioners have alternative remedy of appeal under Scction 252 of the Act, and hence writ petiticns may not be entertained. 72. To consider the contention of the learned Assistant Solicitor General with regard to alternative remedy of appeal under Ser:tion 252 of the Act, the said provision is required to be considered, and the same is extracted as under for better appreciation: 252. Ap oeal to Tribunal (1) Any person aggrieved by an order of the Registrar, nctifying a company as dissolved under Section 248, may file an appeal to the Tribunal witf in a period of three years from tlre date of the order of the Registrar and if the Tribunal is of the opinion that the -ernoval of the name of the company from the reg ster of companies is not justified n v ew of the absence of any of the grounds on wlrch :he order was passed by the Registrar, it may order restoration of the name of t re c(,mpany in the register of com pa n es; Provrded tl-at before passing an order under this section, the Tribunal shall give a reasonable opportunity of making representations and of tejng heard to the Registrar, the co:'r'rpany and all the peTSons concernedl Provided fLrrther that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies eith( r inadvertently or on basis of inccrrect 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 passing of the order dissolving the compirny under Section 248, file an application before the Tribunal seeking restoration of rame of such com pany. (2) A copy of the order passed by the Tribunal shall be fil€d by the company with the Registrar ,,vithin thirty days from the date of the order an(l on receipt of the order, the Reg,strar shall cause the name of the company to be restored in the register of companies and shall issue a fresh certificate of incorporirilon (3) lf a :ompany, or any member or creditor or wor ker tl'rereof feels aggrieved by the company having its name struck off fror the register of companies, the Tr bunal or an application made by the company, menrber, credrtor or workman before the expiry of twenty years from the publicat on in the Official 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 tusiness or in operation or otherwise it is just that the name of the company Le restored to the register of companies, order the name of the company to be restored tl the register of companies, and the Tribunal may, by the order, give such otlrer cirections and make such prorisio.rs as deemed just for placing the company anc all other persons in the same positicn as nearly as may be as if the name of the aomlany has not been struck off'rcrn the register of companies. A reading of above provision goes to show that if the company is dissolved under Section 248 of the Act, any person aggrieved by the same, can file an appeal. Thus the said provision provides the forum for redressal against the dissolution and striking off the company from the register of companies. It does not deal with the disqualification of the directors, and deactivation of their DINs. In the present case, the petitioners are only aggrieved by their disqualification as directors and deactivation of DINs, but not about striking off companies as such. Hence, Section 252 of the Act, cannot be an alternative remedy for seeking that relief, and the contention of the learned Assistant Solicitor General, in this regard, merits for rejection. 13. Under Section 16a(2)(a) of the Act/ if the Director of a company fails 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 said provision under the Act 18 of 2013, came into force with effect from 0L04,2014, and the petitioners are disqualified as directors under the said provision. At this stage, the issue that arises for consideration is - whether the disqualification envisaged under Section 164(2)(a) of the Act, which provision came into force with effect from Ol.O4.2Ol4, can be made applicable 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 $aQ)@) of the Act, has to be calculated, to hold the director of the company liable? In this regard, the learned counsel brought to the notice of this Court, the General Circular No.08/14 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 u nder: \"A number of provisions of the Companies Act, 2013 including those relating to maintenance of books of account, preparation, adoption and filing of financial stat€ments (and documents required to be attached thereto), Auditors reports and the Board of Directors report (Board's report) have been brought into force with 5 6 effect from 1't ADril, 2014. Provisions of Schedule II (usefu lives to compute depreciation) and Schedule III (format of financial statements) have also been brought into force from that date. The relevant Rules pertaining to these provisions have also been nctified, placed on the website of the l,linistry and l^ave come into force from the sarre date. The lvin stry has received requests for clarification with regirrd to the relevant financial years wth effect from which such provsions of the rew Act relating to maintenance of oooks of account, preparation, adoption and filing of financial statements (and attachments thereto), auditors report and Board's report will be a pplicable. Although the position in this behalf is quite clear, to make thirrgs ebsolutely clear it is hereby notified that the financial statements (and docum€nts required to be attached theretr), auditors report and Board's report in respec of financial years that commenced earlier than 1st April shall be governed by the relevant provisions/schedules,/rules of the Companies Act, 1956 and hat in respect of financial years commencing on or after 15r April, 2014, the prov s ons of the new Act sha ll a pply. \" A reading of the above circular makes it clear the finan:ial statements and the documents reouired to be attached thereto, auditors report and Board's report in respect of financial years that commenced earlior tfran 07.O4.2074, shall be governed by the provisions under the Companie s Act, 1956 and in respect of financial years commencing on or after 01.O4.2074., the provisions of the new Act shal apply. 14. At this stage it is required to be noticed 'hat the analogous provision to Section 16+(2)(a) of the Act 18 of 2013, is Section 274(l)(g) of Act 1 of 1956. The said provision under Act 1 of 1956 is extracted as under for ready reference: Section 27!Ll:f) A person shall not be capable of being appc nted director of a company, if - (g) such persln is already a director of a public company which - (A) has not filed the annual accounts and annuill returns for any continuous three financial years commencing on and after the first day of April, 1999; or (B) Provided that such person shall not be eligible to be appointed at a Cirector of any other public company for a period of five years from the date on which such public company, in wrich he is a director, failed to file annual accounts irnd annual returns under sub-clalrse (A) or has failed to repay its deposits or inte'est 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, malrpressed similar view. The relevart portion is as under: 29. 1n fine. (a) V/hen the New Act 2013 came into effect fror 1.4.2014, the second respondent herein has wrongly giverr re:rospective effect an(l erroneously disqualified the petition€ r - directors from 1.1,2016 itself before the deadlane commenc:d v/rongly fixing the first financial year from 1.4,2073 to 31.3,2012 , (b) By virtue of the new Section 164(2)(a) of th: 2(r13 Act using the expression'for any continuous period of thr€e financial year\" and in the light of section 2(41) defining \"financial year\" as well as their owl General circular No.08/14 dated 4.4.2014, the first financial year would be from L.4.2074 to 31.3.2015, the second financial year would be from 1.4.2015 to 31.3.2016 and the third financial year would be From 1.4.2016 to 31.3.2017, whr:reas the second respondent clearly admitted in paras 15 anc 22 of the counter affidavit that the default of filing statutory retLrns For the final years commences from 2OL3-14, 2074-75 end 2015-16 i.e, one year before the Act 2013 came into force l-his is the basic incurable legal infirmity that vitiates tle entire impugned p ro ceed inqs. 23. In view of the above facts and circumstances anc the judgments referred to sup-a, as the impugned orders in present writ petitions disqualifying th€' petitioners as directors under Section 1()4(2)(a) of the Act, have been passed considering the perlod prior to 01,04.2014, the same cannot be sustalned, and are liable to be set aside to that extont. 24. As far as the contentlon regarding issuance of pri,lr notice before disqualifying the petitioners as directors is concerned, Sectiln 164(2)(a) is required to be noticed, and the same is extracted as under for ready reference: 164, Disqualification for appointment of director: o w.P.No.25455 0f 20 Li ard batch dated 27.07.2018 ri (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) 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 whjch 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 fiied 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 (1 supra), as well as the learned single Judge ofthe High Court of Gujarat at Ahmedabad in Gaurang Balvantlal Shah s/o Balvantlal 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 16a(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-disqualification nor post-d isq ua lification and this is not in violation of the principles of natural justice and hence, is not ultra vlres Article 14 of the Constitution. I concur with the said reasoning. 25. Thus, from the above, it is clear that Section rca(2)(a) of the Act is a deeming provision and the disqualification envisaged under the said provision comes into force automatically by operation of law on default and Legislature did not provide for issuance of any prior notice, but the respondents notified disqualification even before it incurred, and deactivated DINs, which is illegal arbltrary and against provisions contained in Section 164(2)(a) of the Act. 14 26. The next grievance of the petitioners is with reEard to deactivation of their DINs. The contention of the learned counsel fr:r the petitioners is that except for the grounds mentioned under Rule 11 (a) to (f) of the Rules, the DINs cannot be cancelled or deactivated, and the /iolation mentioned under Section f6 (2)(a) of the Act, ls not one of the gror.]nds mentioned under clauses (al to (f) of Rule 11, and hence for the alle gec violation under Section 16a(2)(a) of the Act, DIN cannot be cancelled. 27. Rule 1C of the Rules provide for allotment of DIlr and under sub rule (6) of Ru e 10, it is allotted for life time. Ru e I1 provides for cancellation or deactivation. Rule 11, which is relevant 'or the present purpose, is extracted as under for ready reference: the DIN is found to be duplicated in respect of the sanre porson provided the data related to both the DIN shall be merged with the validly retained numberj the DIN was obtained in a wrongful manner oT by fraudulenl. means; of the death of the concerned individual; the concerned individual has been declared as a perso r of unsound mind by a com petent Court; if the ccncerned individual has been adjudicated an ins(,lvent; Provided tll.rt before cancellation or deactivation of DIN purs rant to clause (b), an opportunity of treing heard shail be given to the concerned indiridu.rl; on an a)plication made in Form DIR-5 by the DlN hoidsr tc surrender his or her DIN alonl /vith declaration that he has never been appoi rted as director in any company and the said DIN has never been used for fil ng of irny (locument with any authority, :fe Central Government may deactivate such DIN; Provid€rd that before deactivation of any DIN in such cas€, the Central Government sf all ,./erify e-records. Explanation: for the purposes of clause (b) - The tern.rs \"wrongful manner\" means if the DIN rs obta ned on the strength of dccuments which are not legally valid or incomplete documents are furnished or cn suppression of material information or on tfe bilsis of wrong certification or by' making misleading or false information or by mir;representation; (ii) the term \"fraudulent means\" means if the DIN is obtained w th an intent to Ceceive any other person or any authority inclu(l ng the Cential Govern ment. 28. Claur;es (a) to (f) of Rule 11, extracted above, p,rovides for the circumstances under which the DIN can be cancelled or deactivated. The said grounds, are different from the ground envisaged under (r) (a) (b) (c) (d) (e) (f) 1r.. Cancellation or surrender or deactivation of D:tN: The Central Government or llegional Director (Northern Region), Noida or an , officer authorized by the Region,rl Director may, upon being satisfied on verificati(n of particulars or documentary t rool\" attached with the application received from any person, cancel or deactivate the DIN in case - l5 Section l6aQ)@) of the Act. Therefore, for the alleged violation under Section 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 !dentification 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. Sectjon 155 prohibits any individual, who has a ready been allotted a DIN under Section 154 from applying for or obtaining or possessing another DIN. Rules 9 and 10 of the said Rules of 2014 prescribe the procedure for making application for allotment and for the allotment of DIN, and further provide that the DIN allotted by the Central Government under the said Rules would be valid for the life time of the applicant and shall not be allotted to any other person. 30, Rule 11 provides for cancellation or surrender or deactivation of DIN. Accordingly, the Central Government or Regional Director or any authorized officer of Regional Director may, on being satisfied on verification of partrculars of documentary proof attached with an application from any person, cancel or deactivate the 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 wlth 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 applrcant 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 or deactivated as that would run counter to the provisions contained in the Rule 11. which specifically provides for the circumstances under which the DIN could be cancelled or deactivated. 31. In that view of the matter, the Court is of the opinion that the action of the respondents in deactivating the DINs of the petitioners - Directors along with the publication of the impugned list of Directors of \"struck off\" companies under Sectjon 248, also was not legally 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 his particulars stated in Form DIR -3 has to intimate such change to the Central Government within the prescribed time in Form DIR-6, however, if that is not done, the DIN could not be cancelled or deactivated. The cancellation or deactivation of the DIN could be resorted to by the concerned respondents only as per the provrsions contained in the said Rules.\" 30. In view of the above facts and circumstances and the judgment referred to supra, the deactivation of the DINs of the petltioners for alleged violations under Section 164 of the Act, cannot be sustained. l6 31. For the foregoing reasons, the impugned orders in the writ petitions to the extent of disqualifying the petitioners under Section 16+(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 companies. 32. It is made clear that this order will no preclude the 2\"d respondent from taking appropriate action in accordance with law for violations as envisaged under Section rcaQ) ot the I ct, giving the said provision prospective effect from 07.O4.2074 and fo- necessary action against DIN in case of violations of Rule 11 of the Rules. 33. It is also made clear that if the petitioners ar-e aggrieved by the action of the respondents in striking ofF their companies under Section 248 of the Act, they are at liberty to avail alternative remedy u rder Section 252 of the Act. 34. All the writ petitions aTe accordingly allo.,ved to the extent indicated a bove. 35. Interlocutory applications pending, if any, shal stand closed. No order as to cost s. A.RAJASHEKER REI)DY,J DATE: 18-07-2019 AVS "