Shri Srinivasa Pani Rama Charan Kristam V. Union of India

WP/16723/2020

AI Insights

The case revolves around the disqualification of Shri Srinivasa Pani Rama Charan Kristam from being a director, as notified by the Ministry of Corporate Affairs (MCA) and the Registrar of Companies, Telangana. The disqualification was based on alleged defaults in filing financial statements and annual returns for three consecutive years, leading to the activation of Section 164(2)(a) of the Companies Act, 2013. The petitioner challenged this decision, arguing that the application of this provision was retrospective and violated principles of natural justice and constitutional rights under Articles 14 and 19(1)(g). The court examined whether the law's application was retrospective and whether the procedural requirements were met before such a disqualification could be imposed.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 734065 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 25-09-2020
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX (CENTRAL)-I/ NEW DELHI v. VATIKA TOWNSHIP PRIVATE LIMITED, YASHODHARA SHROFF vs. UNION OF INDIA, GAURANG BALVANT'LAL 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: A KUMAR
• Keywords: Director Identification Number (DIN); Disqualification of Directors; Natural Justice; Retrospective effect; Writ of Mandamus
• Section: 164(2); 248; 252; 164(2)(a)

Judgement Text

"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 appropriate writ, order or direction, more particularly a Writ of lvlandamus, declaring: a.that the list of directors notified by the Ministry of Corporate Affairs (MCA) on its website, i.e. www.mca.gov.in, as arbitrary, illegal, without jurisdiction, contrary of 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 Petitioners rights guaranteed under Article 14 and Article t I (t ) (g) of the Constitution of lndia and quash / set-aside the same to the extent rt declares / treats the Petitioner as disqualified in terms of Section '1 64 (2) (a) of the Companies Act 2013, in the interest of justice b.that the Petitioner is not disqualified in terms of Section 164 (2) (a) of the Companies Act, 20 13, for the reason of alleged default of non-filing financial statements/Annual Returns by the Companies c.a writ of mandamus or any other appropriate writ, order or direction commanding the Respondents to restore the DIN 06505794 of the Petitioner d.Award cost of this petition to the Petitioner. Petition under Section 15'1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend notification of the Respondent-2disqualifying the Petitioner as director, consequently direct the Respondent-2 to activate the DlN. 06505794 of the Petitioner pending disposal of the above writ petition. Counsel for the Petitioner : SRI A. NAGARAJ KUMAR Counsel for the Respondents: SRI NAMAVARAPU RAJESHWAR RAO ASST.SOLICITOR GENERAL The Court made the following: ORDER HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original J urisdiction) F R I DA Y'irtJYflJlfllr'!'iJl,,ff ffi * H,, e r n PRESENT THE HON'BLE SRI JUSTICE CHALLA KODANDA RAM WRIT PETITION NO: 16723 OF 2020 Between: Shri Srinivasa Pani Rama Charan Kristam, (DlN. 06505794) S/o. Shri Krishna Prasad Kristam, Aged about 43 years R/o. 28-1604-1 , Nowman Nagar, BSNL Office, Nandyal, Kurnool - 5'18501 . Andhra Pradesh, lndia. ...PETITIONER AND '1 . Union of lndia, Represented by the Secretary, Ministry of Corporate Affairs, A Wing, Shastri Bhavan, Rajendraprasad Road, New Delhi -1 10 001. 2. The Registrar of Companies of Telangana, 2nd Floor, Corporate Bhavan, GSI Post, Tattiannaram, Nagole, Bandlaguda, Hyderabad - 500 068. Telangana. ...RESPONDENTS lA NO: 1 OF 2020 THE HOI|'BLE SRI JUSTICE CHALLA KODANDT RAM wRIT PETITION No. L6723 of202ro ORDER: The petitioner challenges his disqualif .cation lrom Directorship under Section 164(2) of the Companies A:t, 2013, for the alleged rlclault in filing financial statement/.{n.-rlral Returns, and conseqlrently seek restoration of his Directc,r I,lentification Number (DIN) riz., 06505794. Learned counsel for the petitioner submits that the issue raised in th,l present Writ Petition is squarely :c vr:red b1, the common order dated 18.07.2019 in W.P.No.542:2 ol 2018 and batch. Learned Standing Counsel for the 2\"d responCont - Registrar of Companies coes not dispute the aforesaid submi:;sion. Operativt: portion of the aforesaid order reads as under: \"Fcr the foregoing reasons, the impugned orrlers in the writ petltions to the extent of disqualif]'ing the petitioners under Section l6al2 ^l of the l ct and deactivation of their DINs, are set aside, and the 2'd respondent is directed to activate the DINS of the tr'etitioners, enabling them to function as Directors other than in strike off compa nies. It is made clear that this order will not preclu.de the 2\"d respor,dent from taking appropriate action in rrccordance with larv lbr violations as envisaged under Sectiorr L6 4l2l of the Act, giving the said provision prospective effect from 01.04.2014 and for necessary action against DIN in,:ase of violations of Rule 11 of the Rules. .lt is also made clear thlat if the petitione rs are aggrieved by the action of the respondents in striking off their companies under Section 248 of the Act, tht:y are at liberty to avail alternative remedy under Section 2Ii2 of the Act. All the wrlt petitions are accordingly allowed to the extent indicated above.\" In view of the said Order dated 18.07.2019 and for the reasons recorded therein, this Writ Petition is also allowed in terms thereof. No costs. Miscellaneous Petitions, if any pending, shall stand closed. SDAK,AMMAJI ASSISTANT RE ,TRUE COPY' SEC OFFICER 1. The Secretary, Union of lndia, Ministry of Corporate Affairs, A Wing, Shastri Bhavan, Rajendraprasad Road, New Delhi -1 10 001. 2. The Registrar of Companies of Telangana, 2nd Floor, Corporate Bhavan, GSI Post, Tattiannaram, Nagole, Bandlaguda, Hyderabad - 500 068. Telangana. 3. One CC to Sri A. Nagaraj Kumar, Advocate [OPUC] 4. One CC to Sri Namavarapu Rajeshwar Rao, Asst.Solicitor General, Advocate tOPUCI 5. Two CD Copies To, SM . .v HIGH COURT DATED:2510912020 ORDER WP.No.16723 of 2020 ALLOWING THE WP .t, r Pr€ S t4 () k 30stProo (i ( a }, cFr iD,1ICus,0 WITHOUT COSTS ap ,, /J o o 4 F20 547 a2 647 6047 6 7 6L4O. 6444. 67 53. 6454. 69s4. 6941. 7 QOt. 7 OOA. 7 OL4. 7 046, 7 069, 7 07 3. 7 tos. 7 432. 7 454. 7 57 2. 7 595, 7 7 32. 7 7 65. 7 7 68. 7 AZ4. 7 97 A, 8111. 8223. 8586. 8590. 9333.9340.9381. 9468. 9553. 9584. 9623. 9726,9737. tOO58. 10099. LL20A. 1L223, t1239, LL263, LtaAg. 11991, 12018, 12036, t2040, L2069. 12108, L2L44, 12186, t2L94, L2200. L2209. 1.22L5. 1221-7. t2243. ,-2260. 12262. 12288. 12342. 12350. t2417. t2432. L2472. L2494, 12506. 12s74. 12s98. t262L. L2702, L2735, 12740, L2445, L2 65, 12866, 13 013. 13618, L3730. L3749, L3779.13744. L3439, L3455. L3478. L39r2. t3917, L3945.14101. 147.74. t4207.14350. t436L. L4390. L4392. 14397. 14409,14582 AND L4597 0F 20L9 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 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 oft 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 thern as directors, and further making them ine gible to be re-appointed as direciors of that companyr 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 (DlNs) of the petitioners were also deactivated. Aggrieved by the same, the present writ petitions have been filed. THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY W.P,NOs.5422, 12184, 13520, 13783, 13855, 14165. 240s1, 30993. Since, the issue involved in all the writ petilions is one and the same, they are heard together and are being disposed of by this common order. 4, This court Jranted interim orders in the writ petitions dlrecting the 2.d respondenl to activate DINs of the petitloners, to enable :her'r to function orl-er [l-an il st-ik€ c,ff companies, 5. Hearcj tfe iearned counsel appearing for the petltio-r€rs in alL the writ petitions, Sri K.Lakshman, learned Assistant Solicitor Generi:l appearing for the respondents - Union of India, 6. Learnec counsel for the petitioners, contend that before passing the impugned order-, not.ices have not been issued, givinJ thenr ()ppo11:unity, and this amoun:s l.o vlolation r:f princlples of natural justl(:e !nd on this ground aione, the npugned orders are liable to be set aside. 7. Learrred counsel submits that Section 16.(2)(a) cf the Act empowers the aJthcri:y to disqualify a person to be a directrr, provided he has not filed financia statements or annual returns of the cortp,any to which he is director, for an! continuous period of three financial yearsr. Learned counsel further submlt.s that this provision came into force with effect from 1.4,2014, and prior thereto i.e., under Section 274(l)(9. of :he Companies Acl, 1956 (1 of 1955), which is the analogous provision, there was nc' such requirement for ihe di'ectors of the private companies. The,r :ontend that this provrsion uncler p,ci 1B of 2013, will have prospective operation and lrence, if the direrctor:; of company fail to comply with the requirements mentioned in the sa d provision subsequent to the said date, ther authority under the Act, is wi:hin its jurisdiction to disqualify them. Bu: in tre present cases, the 2nc responCent, taking the period prior to 1,4.2014, .e,, giving the provision retrospective effect, disqualified the petitioners as di'ectcrs, which is illega I and arbltrary. 8. petitioners Conrpanies With r{:Eard to deactivation of DINs, learneC subnit t^a! the DINs, as contemplated under (Appo ntmelt and Qualification of Dlrectors), cc -: rrst:l for the Rul3 2(d) of the RLrlrrs,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 deactivatlon for having become ineligible for appointment as Directors of the company under Sectlon 164 of the Act. Learned counsel further submits that as against the deactivation, no is provided under the Rules, and appeal the Act is provided only againsl the Section 248 of the Act. to the Tribuna Lnder Sect on appeal 252 of under dissolution of the company 9. Learned counsel further submits that 1'r respondent - Governmenl of India represented by the lvlinistry of Corporate Affairs, has floated a scheme dated 29.12.2077 viz., Condonation of Delay Scheme - 2018, wherein the directors, whose DINs have been deactivated by the 2nd 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. Ho*ever, 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 operatlon, 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 of three finax. ei years/ automatically entail their disqJal li(;ation under Section 164(2)(a) ol the Act and the statute does not provide for issuance of any notice. Hence, the petitioners, who have failed to cornply with the statutory requirerrert under Section 164 of the Act, canrot complain of violation of princit les of natural justice, as it is a deeming prc visi:n. Learned counsel further subrnitr; that the petitioners have alternati re remedy of appeal under Sec:lcn 252 of the Act, and hence writ petitions may not be entertained. 12, To cOnsirler the contention of the learned As;istarnt Solicitor General with regard to alternative remedy of appeal under Se:t on 252 of the Act, the said provision is required to be considered, an J the same is extracted as unCer for better appreciation: 25 2, Appeal :o fribunal: (1) An/ :erscn aggrieved by an order of the Registrar, notify r'rg a company as dissolved unde. Se,:tion 248, may file an appeal to the Tribunel wi:l in a period of three years Fro:n ll-e lale of the order of the Regjstrar and if the Tr Eural is of the opinion that lhe removal of the name of the company from the register oF companies s not justified n ,ziew of the absence of any of the grounds on whicl- :he crder was passed by the liegiitrar, it may order restoration of the name of the ccmpany in the register of com pan ies; Provided that lefore passing an oTder under this section, the TrbLnal shall give a reasonable opp3rtunity of making representations and of being h,ra.d to the Registrar, the crTnpanv and ali the persons concerned: Provided Fuith3r that if the Registrar is satisfied, that lhe nam,: of lhe company has b{?er strrck off from the register of compan es either inad er:ently or on basis of incorrect i\"rformatlon furnished by the company or its d rlc ors, which requires restori:tor n the registeI oF companies, he may within a F€ri()d cf three years from the da:€ o'passing of the order dissolving the company :ncer Sectron 248, file an applicirt cn before the Tribunal seeking resto,'ation of n:rre of such compeny. (2) A copy rF the order passed by the Tribunal shall be filed b'/ th-. (ompany with the Regis:r.rr ^ th n thirty days from the date of the order and on recer:)t of the order, the Registrar shall cause the name of the company to be re:tcrell in the regisrcr of cornpan es encl shall issue a fresh certificate of incorporation. (3) l1' a carnoany, or any member or creditor or !acrker thilr€of feels aggrieved by the :ornf,any having its name struck off from the reglsler of companies, tfe Trif,uI]irl or an application made by the company. me-rb€r, creditor or workman before flre expiry of twenty years from the publication in the Official Gazelte of the noiice under sub-section (5) of Section 248, if satisfied that the company was, el lre t me of its name being struck oft carrving on srlsrness or rn operaton or otlerlvse lt is just that the name of the company re resto.ed to the register of compen es, (lrder the name of the company to be restcred :c tne register oF compan es, a\"rC the Tribunal may, by the order, give such other dlre,:tDns arld make such provis o.s as deemed lust for placinq the compan)' and all o:h{lr persons rn the same positicn as nearly as may be as if the name of the compa.y has not been struck ofF ff()m th(i 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 lhe 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 aggrleved by lheir 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 164(2)(a) of the Act, if the Director of a company fails to file financial statements or annual returns for any continuous perlod 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 falls to do so. The said provision under the Act 18 of 2013, came into force with effect from 07.04.2014, and the petitioners are disqualified as directors under the said provision. At lhis stage, the issue that arises for consideration is - whether the disqualification envisaged under Section 164(2)(a) of the Act, wh ch provision came into force with effect from 01.04.2014, 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 i64(2)(a) of the Act, has to be calculated, to hold the director of the company liable? In this regard, the learned counse brought to the notice of this Court, the General Circular No.0B/14 dated 4.4.2074 issued by the f4inistry of Corporation affairs, which clarifies the applicability of the relevant financial years. The relevant portion oF the said c:rcula r is as under: \"A number of provisions of the Companies Act, 2013 including those relating to maintenance of books of account, preparation, adoption and filing of frnanciat statemenls (and documents required to be attached thereto), Auditors reports and the Board of Drectors report (Board's report) have been brought into force wth o effect from 1'' Afi'i , 2014. Provisions of Schedule II (useful lrv-.s to compute depreciation) arcl Schedule III (format of financial statements) have aiso been brought into force from that date. The relevant Rules pertaining to tlese provisions have also been rctified, placed on the website of the N4inistry and lrave come into force frorn the senre datrl, The Iuinistry .las received requests for clarification with regard to th3 relevant frnancial years v/r:h efFect From which such provisions of the ne Act reiating to maintenance of l-rocks of account, preparation, adoption and fi ing o' financial statements (and ilttdchments thereto), auditors report and Board s report will be a ppl cable. A though :he t),:,sition rn this behalf is quite clear, to make things ebso utely c ear it is hereby noti'i:rC that the financial statements (and documents -equ red to be attached thereto), auditors report and Board's report in respect oi iina.cial years lhat commencerl e,lrlier than 1st April shall be governed bv t're relevant prov srons/sched r eslrules of the Companies Act, 1956 and tha: ir respect of frnanciai years ccr.-lm?ncrng on or after lstApril, 2014, the prov sions oF the new l ct shaI a pply. \" A reading oF the rro /e circular makes ihe documents 'eqJ red to be attached report in shall be gOVerned of financia respect it clear the financia sta:ements anC and Boa rd's 01.04. 2014, 1 956 and in respec;. r:f financial years that thereto, auditors report commenced ea rlier tl- a 'r rv lhe provisions under the Companies A:t. of the new Act shzr I y'ear:i commencing on or after 01.04.2014, r.h(3 provisions a pply. prov isio n Act 1of 14, At this stage it is to Se cl.io r l-';4(2)(a) required to of the Act 18 1956. Tlre saicl provision under Act be noticed that the analogous of 20L3, is Section 27a(1)(9) of 1 of 1956 is ex:racteci as under clear that if a SL Ch person rs accounts aTrn Ja I fcr ready refe Te n c,: Section 27zt(l) A person shall not be capable of berng appointed d re:tor oF a j alr€ady a director of a public company which, - has not filed the annual accounts and annual relJflrs For ar'ry co.ltnuous three financial years commencing on anc after tlTe f -st day of April, 1999; or lll Provided that such person shali not be eligible to be appointed as a dfector of any other lubl c cor^ipary 'or a period of five years from the date on which such pub ic company, rn whch fe s a director, failed to file annual accounts and annra returns under sub-clause rA) or has failed to repay its deposits or interest oLe(leem lls debentures on d!e date or pay dividend referred to in clause (3). company, i - (g) such persor (A) A reading of the allove provision under Act 1 of 1956, makes it person capable of beinS appointed director of a company anc already a director cf a public company, which has not filed and annual returns f'cr any continuous three financial years cofirrYrenctno on 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 'pub lc company'. There is no provision under the Act 1 of 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 164(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 164(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 [4inistry 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)-I/ NEW DELHI v, VATIKA TOWNSHIP PRIVATE LIMITEDL has dealt with the general principles concerning retrospectiv ity. The relevant portion of the judgment is thus: 27. A legislation, be it a statutory Act or a statutory Rute or a statutory Notification, may physically consists of words printed on papers. However, '1:ol-s;t scc t conceptLrall/ i :i.9redt deal more than an ordinary prose. Tl^ere is a speCiai peclrliarily n If]e -noJe cF verbal communication by a leglslation. A lergLslatron rs not JUst a series cf st;ter'rents, such as one finds in a !r'/ork of Fiction/non Fictron or even in a ludgmenl of :r c)urt of law. l-here is a technique required to draft a legislation as !\"/ell as to urder:rtand a legislation. Former technique is knov/l .s legislative drafting and latt,r'o1e is to be found in the various principles of ':rterp-etation of Statutes', Vis-d-,,is ordinary prose, a Iegislation differs in its proven.nce, iay-or,it and features as also n the implication as to its meaning that arises b' presumptLons as to the intecl cf the maker thereof. 28. Of :he va-ioJs rules guiding how a legislation has to be nle-preled, one established rule i; tlrat unless a contrary intention appears, a legislati()n is presumed not 1:o be inte\"rd{lai to have a retrospective operation. The idea behind the rule is that a current larv shculd govern current activities. Law passed toda,/ carrnot apply lo the events of l.he past, If we do something today, we do il keeping n :he law of today and in force ard not tomorrow's backward adjustment of it. Orr belief in the nature of the aw s fourrded on the bed rock that every human beinll is enlitled to arrange his afFairs by relying on the existing law and should not FinC tfat his plans have been retrcsre(:tvely upset, This principlqof law is known as le)r trospict non resp ci! : lar! ooks f,)rward not backward. As was observed in Ph lips vs. Eyre [(1870) LR 6 QB :], a relrospective legislation is contrary to the genera princrple that eglslat on b , /vh ch the conduct of mankind is to be regulated vr'freN rtroduced For the first trre tr deal with futu[e acts ought not to change the charact:r of pasl transactions cerrieJ o1 upon the faith of the then existing law. 29. The obvicLrs basls of the principle against retrospectivity is tne pr rciple of 'fairness', whicl'r rrust b,e the basis of every legal rule as was cbse'vod in lhe decson repor:e(: r L'Office Cherifien des Phosphates v. Yamashit3-:;hinnlhon Steamship Co. LtC Ii1994) 1 Ac 486]. Thus, legislations whch molifLed accrued rights or whch irrDose obligations or impose new duties or attach a n€.w disabi ty have to be treat€ro as prospective unless the legislative intent is clearly tc Aive the enactment a retrospeclive eFfect; unless the legislation is for purpose ()f iupplying an obvioLrs omiss on n a former legislation or to explain a former leJr: la':ion. Vy'e need not note that cornucopia of case law available on the subject because aForesaid leqal position clear'y €rmerges from the various decisions and this legal fosltion was conceded by the :ounsel for the parties, In any case, we shall r€fe- to f€:w judgments containing thls dicta, a little later. 30. We would alsc lil.ie to point out, for the sake of completeness, tlat v/here a beneft is conferracl lli a legislation, the rule against a retrospective corst uction is diFFerent. If a eqislaton confers a benefit on some persons but wilhcut i.Flrcting a corresponding (let\" ment on some other person or on the public generally, alrd where to ccnfer sLrcl' ;ene'it appears to have been the legislators obj(ct, :hen the presumptlon w)uld b{r thal such a legislation, giving it a purposive cons'truction, would warrant it to be given a retrospective effect. This exactly is the jusiification to treat procedurel provisions as retrospective. In Government of Inc ir & Ors, v. Indian Tobacco A:;slcii)tion, [(2005) 7 SCC 396], the doctrine oFfairness vas held to be re evant factor ri construe a statute conferrlng a benefit, in the cont3x: cf t to be given a retrospeat r'e operation. The same doctrine of fairness, tc l-ol1l that a statute lvas retrosteclive in nature, was applied in the case of Vila'/ r. State oF Maharashtra & 3rs 112006) 6 SCC 2891. It was held that where a lir!'r is enacted for the benefit 01'conrrunity as a whole, even in the abse'lce of a prlvsion tl're statute may bcl h€ c to be retrospective in nature. Holtever, we 3r'l sic not) conFronted with any such situation here. 31 ln ;rch ,:ases, retrospectivity is attached to benefrt th€ )e-sons n contradistrnctiorl tc the provision imposing some burden or liabilitr' !/here the presurnption attaclrL:C :o!vards prospectivity. In the instant case, the trcvisc added to Section 113 oF ihe, ct is not beneficial to the assessee On the co'rtrary', it is a provrson !.rhich is, clerous to the assessee. Therefore, in a case like thi;, i/e have to Oroceed witlr t-re rormal rule of presumption against retrospective operation. TlTus, lhe rule trga rs'i retrospective operation i5 a fundamental rule o' l,lvr' that no statute shall be cc1:;trued to have a retrospective operation unless such a conslrL.lctlon itpDear:i v,-:r / clearly in the terms of the Act, or arises by n:c:s:iary arld d stinct impliaat on. f lgmatically framed, the rule ls no more than a )r{lsLrmption, and thus could be d splaced by out weighing factors. 43. There is ye: another very interesting piece of evidence tha: cl..i res thlt provis on beyond ary f,ale of doubt vlz., the understanding of CBDT :seli regard ng this provision -t rj ccrtalned in CBDT Circular No.B of 2002 dated 27.8.2012, wil:h the sublecr: \"Finarce A:t, 2OO2 - Explanatory Notes on provislon reatnll to Direct Taxes\". Th s c r:Lr a ;.trs been issued after the passing oF the Finance I'ct, 2002, by which amendmenl to sectlon 113 was made, In this circular, various :rrrendments to the Inconle ta>: A:t rre discussed amply demonstrating as to which lrnendments are clarificato.y/r:trosf,ective in operation and which amendrnents are p'ospective. For example, Explanation to section 158-BB is stated to be clarificatory in nature. Likewise, it is mentloned that amendments in Section 145 whereby provisions of that section are made applicable to block assessments is made clarificatory and would take effect retrospect vely from 1\" day of July, 1995. When it comes to amendment lo Section 113 of the Acl, lhis very circu ar provrdes Ihat the sa d amendment a ong with the amendments ln Section 158-BE, would be prospectve .e., vrill take eFfect fro.n 1.6.2002.' 18, Thus, the Apex Court in the above judgment, has made it clear thal unless a contrary ntention 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 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 lvlinistry 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 1B 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 2nd responden! / competent authority, has disqualified the petitioners as directors under Section 164(2)(a) of the Act 1B of 2013, by considering the period prior to 01.04.2474, 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 4.4.2074 and the law laid down by the Apex Court, as stated in the writ affidavits, the flrst 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 flrst proviso to Section 96(.[) of the Act, annual general mee.irg for the year endlng 31.03.2::-7, can be held within six nronths frcrl the closing of financlal year l.e. try :10.09,2017. Further, the time limrt flr filing annual returns under Seciion 92(4) of the Act, is 60 days frott a-.nual general meeting, or tl'e asr. darte on which annual general meet rg ought to have been held with norn'al fee, and within 270 days with additional fee as per the proviso to Seclior z-03 of the Act. Learned counsel submil: i-hat if the said dates are calcula:ecl, the last date for filing the annual returns would be 3A.77.2017, and the balance sheet was to be filed on 30.-.0.201'7 with normal fee and ./ th additional fee, the last date for filing ,rrnual returns is 27 .07 .2078. In other words, the disq u a lification could gel l:riEc ered only on or after 27,07.2A18. But the period considered by the 2'd respondent in the present writ 3e:itlc,ns for clothing the petltioners with dlsiqualification, pertains prior to 01,04.2014. Therefore, when the omiss cn, vhich is now pointed out, v/a:; nlt envisaged as a ground for disqual fl,:ati6n Or.oI- ,o 1.,1.20L4, the pet tioners cannot be disqualified on the said ground. This analogy is traceal e to ,Article 20(1) of the Constilution of lndia, ,^i hich states that \",Alo person shal; be convicted of any offence except for tiolation of a law in force at the tir.e )f the commission of the act charged a:; an offence, nor be subjected to it penalty greater than that which might havet been inflicted under the latt in iorce at the time of the commission of the cffence\". In view of the same, l.he ground on which the petitloners vrere disqualified, cannot stand to legal scrutiny, and the same is liable to be s€t aside. 20. A lea:nr:d Single Judge of the High Court ,)f llarnataka in YASHODHARA SHROFF vs. UNION OF INDIA? considerlng Section 164(2)(a) ol the Act and other provisions of the i ct, and various judgments, passec ai\"l e:laborate: order and held that the said provision has no rel,rospective operet on. The observations of the learned JuCa€, lertaining to ' l, No 5291 I ol :(,1'/ ; ril barchdared I2062019 II private companies, which are relevant for the present purposei are extracted as under: 208. 1n vlew of the aforesaid dlscussion, I have arr ved at the follou/lng concLusions (a) It is held that Section 16a(2)(a) of the Act is not ultra v/rus Article 14 of the Constitution. The said provision is not manifestly arbitrary and also does not fall within the scope of the doctrine of proportionality. Neither does the said provision violate Article 19(1)(9) of the Constitution as it is made in the interest of general public and a reasonable restriction on the exercise of the said right. The obJect and purpose of the said provision is to stipulate the consequence of a disqualification on account of the circumstances stated therein and the same is in order to achaeve probity, accountability, and transparency in corporate 9OVernance. (b) That Article (slc) Section 164(2) of the Act applies by operation of law on the bas s of the circumstances stated therein, the said provision does not envisage any hearinq, neither pre-disqualification nor post-disqualification and this is not in violaton of the princlples of natural justice, ls nol ultra vires Artice 14 of the Constitution. (c) That Section 164(2) of the Act does not have retrospective operatron and s therefore, neither unreasonable nor arbitrary, in view of the interpretatlon placed on the same. (d) (e) Insofar as the private compan es are concerned, disqua rfication on accoLrnr of tlre circumstances stated under Secton 164(2)(a) of the Act has been broughi nlo force for the Frst time under the Act and the consequences of d squa fcatron cou d not have been imposed on direclors of private companies by lakrnq nto consideraton any period prior to 01.04.2014 for the purpose of reckonrng contrnuous period of three financial years under the said provision. The sa d conclusion is based on the principal drawn by way of analogy from Article 20(1) of the Constitution, as at no point of time prior to the enforcement oF the Act, a disqualification based on the circumstances under Section 164(2) of the Act ! ,as ever envisaged under the 1956 Act vis-a-vis dlrectors of private compan es. Such a disqualification could visit a director of only a public company under Sectron 274(l)(g) of 1956 Act and never a director of a private company. Such disqualificatron of the petitioners who are directors of private companles is hence quashed. (r) (9) Consequently, where the disqualification under Section 16a(2) of the Act is basec on a continuous period of three financial years commencing from 01.04.2014, wherein financial statements or annual returns have not been filed by a public or private company, the directors of such a company stand disqualified and the consequences 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 BALVANT'LAL SHAH S/O BALVANTLAL SHAH vs. UNION OF INDIA3 expressed similar view as that of the leaned single Judge of H gh Court of Karnataka (1 supra), and held that Section 164(2) of the Act of 2013, which had come into force with effect ftom !.4.2074 would have prospectivei and not retrospeclive effect and that lhe defaults contemplated under Section 164(2)(a) with regard to non-filing of financial statements or I r/Special Civil Application No.22435 of 20l'7 andbatch dated 18.12.2018 anr'lual returns for any continuous period of three financial )'ears would be the default to o? ccunted from the financial year 2014-..5 only and not 2013- 14. 22. A lea'r:)d single Judge of the High Court of IVadras n BHAGAVAN DAS DHANANJAYA DAS vs, UNION OF INDIA4 also exorr:ssed similar view. \"fhe relevi:nlr portion is as under: 29. In f ne, (a) 'ler the New Act 2013 came into e'fect f:()n 1,4.2C14, the se,:ord respondent herein has wrongly given '€rtrospective effect a rd erroneously disqualified the petitioner - d rectors from 1 ....2)1\"6 itself before the deadline commenced /r'rorgly fix ng the fi-:;t f nancial year from 1.4.2013 to 31.3.2014. (b) B/ vi.tu{l of the new Section 164(2)(a) of the 2113 Act using the e;