Narsimha Reddy Basireddy V. Union of India and anothers

WP/16589/2020

AI Insights

The case involves two petitioners, Narsimha Reddy Basireddy and Keerthi Reddy Gurnmradi, who challenged their disqualification from directorship and the deactivation of their DINs by the Registrar of Companies. The disqualification was based on their alleged failure to file financial statements and annual returns for three consecutive years, as per Section 164(2) of the Companies Act, 2013. The petitioners argued that the application of this provision was retrospective and thus illegal, as it was not applicable to the period before April 1, 2014, when the new Companies Act came into effect. The court agreed with the petitioners, referencing a previous judgment and various legal principles, and set aside the disqualification and DIN deactivation.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 745063 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 24-09-2020
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX (CENTRAL)-L NEW DELHI v. VATIKA TOWNSHIP PRIVATE LIMITED, YASHODHARA SHRIF vs. UNION OF INDIA, GAURANG BALVANTLAL SHAH S/O BALVANTLAL SHAH vs. UNION OF INDIA, BHAGAVAN DAS DHANANJAYA D'S vs. UNION OF INDIA
• Laws Referred To: Companies Act, 2013, Companies Act, 1956, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NAMAVARAPU RAO
• Assessee Lawyers: VANGA ANITA
• Keywords: Director Identification Number (DIN); Disqualification of Directors; Financial Statements; Natural Justice
• Section: 164(2); 248; 252

Judgement Text

"HICH COURT FOII THE STATE OF TEI-ANCANA (Special Original Ju risdiction) I'HURSDAY ,THE TWENTY FOURTH DAY OF SEPTEIVIBER TWO THOUSAND AND TWENTY PRESENT .[HI. IIO, .OUR,, BLE SRI JUSTICE CHALLA I(ODANDA ItAi T WRITPETITION NO: 16589 OF 2020 Iletrvcen: l. Narsimha Reddy Basireddy, S/o. Narayana Reddy Basireddy Age . 66 Years, Occupation. Business, PJo. 12-35, Shanthi Nagar Beside Primary School, Patancheru Medak, Telangana - 502324 2. Keerthi Reddy Gurnnradi, D/o. Sudarshan Reddy Gumrnadi Age.33 Years, Occupation. Business, R/o. H-No.3-52, Burtonguda Bollarum, Secunclelabarl, Telangana - 5000 l0 ...PETITIOT-EllS ANt) L Union of India. Rep by its Secretary, Ministry of Corporate Allairs, Shastrv Bhavan, Dr. Rajendra Prasad Marg, New Delhi. 2. The Registrar. Office of Registrar of Companies, ROC, 2nd Floor'. Corpolatc Bhavan, Near Central Water Board, GSI- Post, Bandlaguda. Nagole. I'lvderabld - 500068. ...RESPONDI'N'I'S Petition uncler Article 226 ol the Constitution of lndia playing that irt thc circuurstances stated in the affidavit tlled therewith, the High Court may be pleased tcr issue any writ, order of clirection rnore particularly one iu tlte nature ol rvrit ol' lllarrrianrus to pe|rrit the Petitioners to continue as Directors of the Corttpany ancl,'or' gcl appoint or reappointed as Directors of any Cornpany without any interl'crence lA NO: I OF 2020 I)etition under Section 151 CPC praying that in the circurnstances stated in the al'lldavit filed in support of tlie petition, the High Court rnay be pleased to stay of tlre clisqualification of directorshrp of the petitioners by activating the DIN t.'\"os. 07378535 and 0'7378472 respectively and digital signature ol the Petitioners, ir.t so far as tlre Petitioners herein are concerned, pending disposal ol the above rvrit petition Counsel for the Petitioners: SRI. VANGA ANITA Counsel lbr the Ilespondents: SRI NAMAVARAPU RAJESHWAII RAO(ASSGI) The Court made the following: ORDER Common order THE I{ON'E|LE SRI JUSTICE CHALLA KODANDA RAM W}?IT PETITION No. 165a9 of 2O2O ORDER: Tl-re petitioners challenge their di squalifica tion from Directorship under Section 164(2) of the Companies Act, 20 13, lor the alleged default in filing linancial statement/Annual Returns. ar-rd conse:quently seek restoration ol their Director Identificarion Numbers (DIN) viz., 07378535 and 07378472 respectivelt'. Learned counsel for the petitioners submits that the issue raised in tre present Writ Petition is squarely covered b,r, the dated 18.07.2019 in W.P.No.5422 ol 2018 and batch Learned Standing Counsel lor the 2\"d respondent - Registrar of Companies does not dispute the aforesaid submission. Operative portion of the aforesaid order reads as under: \"For the foregoing reasons, the impugned orders in the rvrit petitions to the extent of disqualifying the petitioners under Section l6al2)lal of the Act and deactivation of their DINs, are set aside, and the 2\"d respondent is directed to activate the DINS of the petitioners, €nabling them to function as Directors other than in strike off cornpanie s. It is rnade clear that this order will not preclude the 2\"'l respondent from taking appropriate action in accordance with law for rriolations as envisaged under Section L6al2l of the Act, giving the said provision prospective effect from O1.O4.ilO14 and for necessary action against DIN in case of violations of Rule 11 of the Rules. It is also made clear that if the petitioners are 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 under Section 252 of the Act. 'l'o, A l's All the writ petitions are accordingly allowed to the extent indicated above.', In vievy oi the said Order dated 18.07.2019 and lor the reasons recorded therein, this Writ petition is also allou,ed in terms thereol. No costs. Miscellaneous Petitions, if any pending, stand closed. SD/.V.SUDH,. i SSISTANT RD IS It ,TRUE COPY// L The Secretary, Union of India, Ministry ol Corporate Aflairs, Shastry Bhavan. Dr. Rajendra Prasacl Marg, New Delhi. 2. The Registrar, Olfice olRegistrar of Cornpanies, ROC, 2nd Floor, Corporate Bhavan, Near Central Water Board, GST Post, Bandlaguda, Nagole, Hyderabad - 500068. 3. One CC to SRI. VANCA ANITA Aclvocate [OPUC] 4. One CC to SRI. NAMAVARAPU RAJESHWAR RAO(ASSGI) Advocate loPUCl -5. Two CD Copies (along with copy of order dt I 8-07-2019 in WP 542212018) / -, sECTTOLOffiET{ A-- I.IICH COURT D ATI'-D2410912020 OIi,DE[t /l'.No.1 6589 o1' 2020 , LLOWING TIIE W]P WI'THOUT COSTS ,,{r1 i5) q (' zma F t .rf-! * 1HE s 2sstP o6.5'\".a,TC l4 (r. llo <-,./ THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY w.P.NOs.5422. 12184, 13520. 13783. 1385s. 14166. 240s1.30993. AND 40953 0F 201a. 5547. 5582. 5669. 5687, 5785. 6047, 6087. 6140, 6484,6753, 6858, 6958, 6981. 7001. 7004. 7014. 7046. 7069. 7 07 3, 7 LOs. 7 432. 7 454. 7 57 2, 7 595. 7732. 77 65, 77 68, 7 824, 7 97 8, airl Qrr? REe6 REoo o??? o? n o2at odAa oE62 oEaa oer? 9726.9737. LOO'a. LOO99. t1208. L1223, tr239. L1263. LL8a9. tL99L. 12014. 12036. L2040. 12069. Lztoa. t2L44. 12146. 12194. 12200. 12209, L2215. t2217.12243. L2260. t2262. t22Aa. 12342. 12350. 12417. L2432. 12472. 12494. L2506. t2574, t2s9a, 12621. t2702. 12735. 12740. L2445. 12450. L2465. L2466. t30L3. t36LA, 13730. 13749, 13779. 13788. 13439. L3455. t3A7A. t39L2. L39L7. l?Qr'.q t4tfrt 141'r4 1L)na 14 En td?Al lz?on I aao) 11ta()-, 14409, 14582 AN L4597 0F 20L9 COMMON ORDER 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 ordeT. 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 Section 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 164(2) 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. ') 4. This court granted interim orders in the writ petitions directing the 2\"d respondent to activate DINs of the petitioners, to enable them to function other than in strik:e off companies. 5. Heard the Iearned counsel appearing for the petitioners 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 order, notices have not been issued, giving them opportunity. and this amounts to violation of principles of natural justice, and on this ground alone, the impugned orders are liable to be set aside. 7. Learned counsel submits that Section 16a(2)(a) of the Act empowers the authority to disqualify a person to be a director, provlded 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 srJbmits that this provision came into force with effect from 7.4.2074, and prior thereto i.e., under Section 274(l)(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 1B of 2013, will have prospective operation and hence, if the directors of company fail to comply with the requirements mentioned in the said provision subsequent to the said date, the authority under the Act, is within its jurisdiction to disqualify them. But in the present cases, the 2nd respondent, taking the period prior to 1.4.2074, i.e., giving the provision retrospective efFect, disqualified the petitioners as directors, which is illegal and arbitrary. 8. With regard to deactivation of DINs, learned counsel for the petitioners submit that the DINs, as conternplated under Rule 2(d) of the Companies (Appointment and Qualiflcation of Directors), Rules, 2014 (for J 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 ineligible for appointment as Directors of the company under Section 164 of the Act. Learned counsel further submits that as against the deactlvation, 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 l't respondent - Government of India represented by the Ministry of Corporate Affairs, has floated a scheme dated 29.t2.2077 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 India. 10. With the above contentions, learned counsel sought to set aside 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 4 of three financierl years. automatically entail their disqualification under Section 16a(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 provislon. [-earned counsel further submit.s that the petitioners have alternative remedy of appeal under Section 2152 of the Act, and hence writ petitions may not be enl:ertained. 12. To consider the contention of the learned Assistant Solicitor General with regard to alternative remedy of appeal under Section 252 of the Act, the said provisiorl is required to be considered, and the same is extracted as underr for tretter appreciation: (1) Any person aggrievecl 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 frorn 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 ofthe name ofthe company in the register of cornpanies; ProvidL'd that before passing an order under this section, the Tribunal shall give a reasonable opportunity of making representations and of being heard to the Registrar, the company and all the persons concerned: Provlded furthe'that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertently or on basis of incorrect inlormation furnished by the company or its directors, which requires restoration in the reglster of companies, he may within a period of three years from the date of passing of the order dissolving the company under Section 248, file an application before the Tribunal seeking restoration of name of such co m pa ny. (2) A copy of the order pi:ssed by the Tribunal shall be filed by the company wlth 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 comp,anies arrd shall is:;ue a fresh certificate of incorporation. (3) Il a company, or any member or creditor or worker thereof feels aggrieved by t.le corrrpany having its name struck off from the register of companies, the'fribunai or an application made by the company, member, creditor or workman beff,re the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section (5) of Section 248, if satisfied that the company was, at the tline of its name being struck off, carrying on business or in operation or otherwise t 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, ard 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. 252. Appeal to Tribunal: 5 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 deactivatlon 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 O1.O4.2014, and the petitioners are disqualified as dlrectors under the said provision. At th is the disqualification stage, the issue that arises for consideration is whether envisaged under Section !6a(2)(a) of the Act, which Ol.O4.2Ol4, can be made provision came into force with effect from 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 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 notice of this Court, the General Circular No.0B/14 dated 4.4.2OL4 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 f ling of financial statements (and documents required to be attached thereto), Auditors reports and the Board of Directors report (Board's report) have been brought into force with 6 effect from 1st 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 pertaining to these provisions have also been notified, placed on the website of the Ministry and have come into force from the same date. The lvlinistry has received requests for clarification with regard to the relevant financial years '^/ith effect from which such provisions of the new Act relating to maintenance of books of account, preparation, adoption and filing of financial statements (and attachments thereto), auditors report and Board's report will be applica ble, 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), auditors report and Board's report in respect of financial years that commenced earlier than 1't April shall be governed by the relevant provisions/schedules/rules of the Companies Act, 1956 and that in respect of financial years commencing on or after 15t April, 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 O1.O4.2074, shall be governed by the provisions under the Companies Act, 1956 and in respect of financial years commencing on or after 0t.04.20t4, the provisions of the new Act shall apply. 14. At this stage it is required to be noticed that the analogous provision to Section 16a(2)(a) of the Act 18 of 2013, is Section 274(t)(9) 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 - (9) such person is already a director of a public company which, - (A) has not filed the annual accounts and annual 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 as a director 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, makes it clear that if a person capable of being appointed director of a company and such person is already a director of a public companyf which has not filed annual accounts and annual returns for any continuous three financial years commencing on 7 and after the first day of April 1999, shall not be eligible to be appointed as a director 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. So the statutory requirement of filing annual accounts and annual returns, is placed on the directors of a 'public company'. There is no provision under the Act 1of 1956, which places similar obligations on the directors of a 'private company'. Therefore, non- filing of annual accounts and annual returns by the directors of the private company, will not disqualify them as directors under the provisions of Act 1 of 1956. 15. Under Section 76a(2) of the new legislation i.e., Act 18 of 2013, no such distinction between a 'private company' or a 'public company' is made and as per the said provision goes to show that no person who is or has been a director of a 'company', fails to file financial statements or annual returns for any continuous period of three financial years, will not be eligible for appointment as a director of a company. As already noted above, the said provision, came into force with effect from 01.04.2014. 16. Coming to the facts on hand, the 2nd respondent has disqualified the petitioners under Section 16a(2)(a) of the Act 18 of 2013, for not filing financial statements or annual returns, for period prior to 01.04.2014. The action of the 2\"d respondent runs contrary to the circular issued by the lvlinistry 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 LIMITEDT has dealt with the general principles concerning retrospectivity. The relevant portion of the judgment is thus: 27. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, '(20t5)t scc r 8 conceptually it is a great deal n]ore than an orcjinary prose. There is a special peculiarity ln the mode ()f verbal communication by a legislation, A legislation is not just a series of statements, such as one finds in a work of fiction/non fiction or even in a judqment of a courr: of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of'Interpretation of Statutes'. Vis-;-vis orclinary prose, a legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arises by presumptions as to the intent of the maker thereof. 28. of the /arious rules guiding how a legislation has to be interpreted, one established rule !s that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities, Law passed today cannot apply to the events of the past. if we do something today, we do it keeping in the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature oi the lalv is founded on the bed rock that every human being is entitled to arrange his aflairs by relying on the existing law and should not find that his plans have been retro:ipectively upset. This principle of law is known as lex ilrospicit non respicit : law looks forvr'ard not backward. As was observed in Phillips vs. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that 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 transactlons carried on Lrpon the faith of the then exist ng 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 nnihon Steamship Co. Ltd. [{1994) 1 Ac 486]. Thus, legislations which modified accrued rights or which impose obligations or impose new dutjes or attach a new disability have 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. In any case, we shall refer to few ludgments containing this dicta, a little later. 30. We woul,l a so like to point out, for the sal(e of completeness, that where a benefit is confeffed by a legislation, the rule against a retrospective construction is different, If a l€gislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefrt appears to have been the legislators object, then the presumption wouid be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisirrns as retrospective. In Government of India & Ors. v. Indian Tobacco p'ssociation, [(2005) 7 SCC 396], the doctrine of fairness was held to be reievant factor to construe a statute conferring \"r benefit, in the context of it to be given a retrospective cperation. The same doctrine of fairness, to hold that a statute was retrilspective in natuTe, was applied in the case of Vijay v. State of Maharashtra & Ctrs., [(2006) 6 SCC 289]. It was held that where a law is enacted for the benefit of comn'runity as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. HoweveT, we are (slc not) confronted with any such situation here. 31. In suc'r case:;, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attErched towards prospectivity. In the instant case, the proviso added to Section 113 of the 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 ncrmal rule of presumption against retrospective operatior'1. Thus, the rLrle ar]ainst retrospective operation is a fundamenta rule of law that no statute shall be construed to have a retrospective operation unless such a construction app:ars very clearly in the terms of the Act, or anses by necessary and drstinct impllcation. Do,lmatically framed, the rule is no more than a presumption, and thus could b,3 displa:ed by out weighing factors. 43. There is yet another very interesting prece of evidence that clarifies that provision beyono any paLe of doubt viz., the understanding of CBDT itself regarding this provlsion. Ii is contained in CBDT Circular No.B of 2002 dated 27.8.2002, with the subject \"Finance Acl:, 2002 - Explanatory Notes on provision relating to Direct Taxes\". This circular has been issued after the passing ofthe Finance Act, 2002, by which amendnrent to section 113 was made. In this circular, various amendments to the Income tax Act are discussed amply demonstrating as to which amendments are cla rifica to r'l/ retros pectlve in operation and which amendments are prospective. 9 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 clarificatory and would take effect retrospectively from l't day of luly, 1995. When it comes to amendment to Section 113 of the Act, this very circular provides that the said amendment along with the amendments in Section 158-BE, would be prospective i.e., will take effect from 1.6.2002.\" 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 legislation has any intention, to make the said 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 wjth 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 considering the period prior to 0L.04.20L4, the same is contrary to the circular, and also contrary to the law laid down by Apex Court in the above refe rred judg ment. 19. If the said provision is given prospective effect, as per the circular daled 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 years ending 31.03.2016 and 31.03.2017. The annual returns and financial 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 l0 proviso to Section 96(1) of the Act, annual general meeting for the year ending 31.03.20L7, 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 92$) 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 the proviso to Section 403 of the Act. Learned counsel submit that if the said dates are calcul;rted, the last date for filing the annual returns would be 30.L1.2017, and the balance sheet was to be filed on 30.10.2017 with normal fee and with additional fee, the last date for filing annual returns is 27.O7.2078. In other ^/ords, the d isq ua lification could get triggered only on or after 27.O7.2018. But the period considered by the 2\"d respondent in the present writ petitions for clothing the petitioners with disqualification, pertains prior to 01.O4.2014. Therefore, when the omission, which is now pointed out, war; not envisaged as a ground for disqualificatlon prior to 1.4.2O14, the petition€rrs cannot be disqualified on the said ground. This analogy is traceable to Article 20(1) of the Constitution of India, which states that \"/Vo person shall be convicted of any offence except for violation of a law in force at the titne of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence\". In view 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. 20. A learned Single Judge of the High Court of Karnataka in YASHODHARA SHR