Seshu Babu Yelisetty V. Union of India

WP/22744/2020

AI Insights

The case involves two petitioners, Seshu Babu Yelisetti and Durga Devi Yelisetti, who were directors of private companies registered under the Companies Act, 2013. They were disqualified from directorship and their DINs were deactivated due to alleged defaults in filing financial statements and annual returns for three consecutive years. The petitioners challenged these actions, arguing that the disqualification was applied retrospectively and without proper notice, violating principles of natural justice and their constitutional rights under Articles 14 and 19(1)(g). The court examined the applicability of Section 164(2)(a) of the Companies Act, 2013, and its prospective operation as clarified by a circular from the Ministry of Corporate Affairs.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 721696 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 14-12-2020
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX (CENTRAL)-L NEW DELHI 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, Companies (Appointment of Directors) Rules, 2014, Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NAMAVARAPU RAO
• Assessee Lawyers: MARIPATI VISWARAJ
• Keywords: DIN Deactivation; Director disqualification; Natural justice violation; Retrospective application
• Section: 164(2); 248; 252

Judgement Text

"HIGH COU-RT FOR THE STATE OF TELANGANA (S pe c ia I o ri g i n a I .t u ris d i c tiJn]. r, ! v.1, r''t MONDAY, THE FOURTEENTH DAY OF DECEMBER TWO THOUSAND AND TWENi; PRESENT THE HON'BLE SRI JUSTICE CHALLA KODANDA RAM WRIT PETITION NO: 22744 0F 2020 Betwee n: 2 Seshu Babu yelisettv. DtN No. _ 02_969853, S/o.Velietty Venkateswaratu. Aoed about 5't vears, oic. e,,siness,- Ri6l\"i;_i09,'H;'rd No.35, Cha*anvaolri. Dilshukhnagar. Saroornagai, gvO.jrrrO-. r\"lu'\"ir\".r_'s'56ooo Durga D^evi Yerisetti DrN No. - 029-6g328. D/o. Seshu Babu Garakapati. Aoed about 39 years, occ. Business. nto -1_6:i[9lirt]o-r.ti,:s,\"'Cil;ii;;;;iT Dilshukhnagar, Saroornagar. HyoeraOao, i\"fr\"gr'\"JlSooooo ...PETITIONERS Union of lndra, Ministrv of corporate Affairs. 'A'wing, Shastri Bhawan. Ralendra Prasad Road. New Dethi - ttOOOf , nep. OV'it. S\".iEi\"-rV. The Registrar of companies. (Roc), at Hyderabad. For the state of reranoana 2nd Floor. Corporate Bhawan, GSt post, Nagote. eanOfaguOi. iyJ\"ob;;:*' \" Telangana - 500068. AND 1 2 Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue a writ of lt4andamus, or any other appropriate writ, order or direction, declaring the action of the respondents in deactivating the DtN numbers of the petitioners i.e. Petitioner No.1 SESHU BABU YELISETTY, DtN No. 02969853 and petitioner No.2 DURGA DEVI YELISETTI, DIN No. 02968328 and making him disquatified as a Director, as illegal, arbitrary, without jurisdiction, contrary to the provisions of the Companies Act, 2013 and Rule 1 1 of the Companies (Appointment of Directors) Rules, 2014, violative of the principles of natural justice besides violating the petitioner's rights guaranteed under Article 14 and Article 19(1 )(g) of the Constitution of lndia. ...RESPONDENTS 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 grant interim direction directing the respondents to restore the DIN number of petitioners i.e. Petitioner No.1 SESHU BABU YELISETTY. DIN No.02969853 and Petitioner No.2 DURGA DEVI YELISETTI, DIN No. 02968328, so as to enable the petitioners to discharge the functions as a Director in other companies, to incorporate new companies under the Companies Act, 2013 and to get appoint as a Director in other companies including putting a digital signature, pending disposal of the above writ petition. Counsel for the Petitioners: SRI MARIPATI MAHARSHI VISWARAJ Counsel for the Respondents: SRI NAMAVARAPU RAJESHWAR RAO, ASSISTANT SOLICITOR GENERAL The Court made the following: ORDER lA NO: 1 OF 2020 THE HON'BLE SRI JUSTICE CHALLA KODANDA RAM WRIT PETITIO N No. 22744 of 2020 ORDER: The petitioners challenge their disqualification from Directorship under Section 16412l of the Companies Act' 2013' for the alleged default in filing financial statement/ Annual Returns' and consequently seek restoration of their Director ldentification Numbers (DIN) viz., 02969853 and 02968328 respectivel'v' Lcarned counsel for the pctitioncrs sr-rbmrts that the rssue raised in the present common order dated batch. writ Petition is squarell' covered b}' the 18.07.2019 in W.P.No.5422 ot 2Ol8 and Sri Namavarapu Rajcshn'ar Rao, Icarned Assistant Solicitor Ceneri,Ll of India, appcaring li)r the 2rr(l respontlctrt Rcgistr:rr of Comprrr.rics docs r-rot dispr-rtt: thc nlorcsericl submissir-ln. Operative portion of the aforesaid order reads as under: \"For the foregoing reasons, the impugned orders in the writ petitions to the extent of disqualifying the petitioners under Section L64l2llal 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, enabling them to function as Directors other than in strike off companies. It is made clear that this order will not preclude the 2\"d respondent from taking appropriatc action in accordance with law for violations as envisaged under Section 16412) of the Act, giving the said provision prospective effect from O7.O4.2OL4 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 tiberty to avail alternative remedy uDder Sectio! 252 of the Act. All the writ petitions are accordingly allowed te the extent indicated above.\" In view of the said Order dated 18.07.2019 and for the rcersons rccordcd therein, this Writ Petitior-i is also allowcd in terms thereof. No cos ts Miscellaneous Petitions, if anv stand closed ,TRUE COPY// SD/-K.ONESIM ASSISTANT REGISTRAR l -- ,v SECTION OFFICER To, 1. The Secretary, Union of lndia, l ,4inistry of Corporate Affairs, 'A'Wing, Shastri Bhawan, Ralendra Prasad Road, New Delhi - 1 10001 . 2, The Registrar of Companies, (ROC), at Hyderabad, For the State of Telangana,2nd Floor, Corporate Bhawan, GSI Post, Nagole, Bandlaguda, Hyderabad, Telangana - 500068. 3. One CC to Sri. Ir,4aripati Ir,4aharshi Viswaraj, Advocate tOPUCI 4. One CC to Sri. Namavarapu Rajeshwar Rao, Assistant Solicitor Genera loPUCl (along with a copy of Order dated: 1810712019 in WP. No. 5422 oI 201 B and batch) 5. Two C.D. Copies Prk HIGH COURT ORDER WP.No.22744 ol 2020 Allowing the WP. without costs. o o R lHE s14 o 6. 19uEC fr?! ?,, l8'il''l )r rr ' \"',--- DATED:1411212020 I THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY W.P.NOs,5422. 12184, r3520. 13783. 1385s. 14166. 24051.30993. ANp 40953 0F 2018, 5547. 5582. 5669. 5687, 5785. 5047, 6087. 614rl. 64A4- 5753. 6aSA- 6q5a_ 6S 1 700t.700a.7()14. 7 046 706s_ 7 07 3. 7 LOs. 7 432. 7 454. 7 57 2. 7 595. 77 32. 7 7 65. 7 7 6A. 7a24. 7 97 A. 8111. 8223. 8586. 8590. 9333. 9340, 9381. 9468. 9563. 9584. 9623, 9726.9737, LOO'A, LOO99. Lt20a, LL223. LL239.1L263. llaag. LL99L. 120L8, 12036, L204(). L2069. IZLOA. L2144. L2ta6, t2L94. L2200, 12209, 122L5, 12217, L2 43. 1226(J. 12262. 12244. 12342. ,,?E 0 11/t1'' 1U ?,) 1)4a) 1)4AA. 1r