Smt. Churukanti Vijaya V. Union of India

WP/19528/2021

AI Insights

The case revolves around the disqualification of Smt. Churukanti Vijaya as a director due to non-filing of financial statements and annual returns for three consecutive years, as per Section 164(2)(a) of the Companies Act, 2013. The petitioner challenged the disqualification, arguing that the provision was applied retrospectively, which was not permissible. The court examined whether the disqualification could be applied retrospectively and whether the procedural requirements of natural justice were followed. The court concluded that the disqualification should be applied prospectively from April 1, 2014, and not retrospectively, and that the petitioner was not given a fair opportunity to contest the disqualification, leading to the setting aside of the disqualification and restoration of the DIN.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 721641 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 23-08-2021
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax (Central) vs. Vatika Township Private Limited, Yashodhara Shroff vs. Union of India, Gaurang Balvantlal Shah vs. Union of India, 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: KANDURI RAJANI
• Keywords: Deactivation of DIN; Disqualification of Directors; Natural Justice; Retrospective effect; Writ of Mandamus
• Section: 151 CPC; 164(2)(a)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (SPecial Original Jurisdiction) MONDAY, THE TWENTY THIRD DAY OF AUGUST TWO THOUSAND AND TWENTY ONE Between: AND 1. 2 Smt. Churukanti Viiaya, D/o. Maddi Venkat Redd.y, Aged about 55 years' Fi/o 2- I5lir7d,\"a\"I'N\".6:'Hivli-Hiiis,-bathavanana Nasdr, Kukatpallv, Hvderabad' Telangana - 500072 ...'ET'T.ONER Unionoflndia,Rep.byitsMinistryofCorporateAffairs'shastriBhawan'Dr' Tfif Hi\"J'513:11 3Si\"d)?*:31!i\" or r\"t\"ns,na 2no Froor, corporate Bhawan, os'ipb-si,-rligole,Baridlaguda,Hyderabad-500068 ...RESpoNDENTS PRESENT THE HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI WRIT PETITION NO. 19528 0F 2021 so as to enable the Petitioner to comply with the statutory the SSVR Assets Private Limited bearing CIN No' PetitionunderArticle226ottheconstitutionoflndiaprayingthatinthe circumstancesstatedintheaffidavitfiledtherewith,theHighcourtmaybepleased toissueawrit,orderordirectionmoreparticularlyoneinthenatureofWritof Mandamus declaring the action of the Respondents in disqualifying the Petitioner invoking Section 164(2)(a) as arbitrary' illegal, contrary to the principles of natural justice, in violation of the provisions of the Companies Act' 20'1 3 and in contravention of the rights guaranteed under Article 14 and Article 19 (1)(g) of the ConstitutionoflndiaandconsequentlydirecttheRespondentstorestoretheDlN numbers of Petitioner i.e. Churukanti Vijaya (DlN' 02689469)' IANO:1 OF 202'l Petition under Section '1 51 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 reactive the DIN number of Petitioner i.e. churukanti Vijaya (DlN: 02689469) and requirements in uT4900TG20l0PTCOTOllgunderlaw,pendingdisposalofthewritpetition' Counsel for the Petitioner: Smt. KANDURI RAJANI Counsel for the Respondents: SRI NAMAVARAPU RAJESHWAR RAO' ASSISTANT SOLICITOR GENERAL The Court made the following: ORDER HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI Wril Petilion No.l 9528 of 2021 ORDER : When the motter is token up for heoring, leorned counsel on either side foirly concede thot the issue involved in this wril petition is squorely covered by the common order doted lB.()7.2019 in W.P.No.5422 of 2018 ond bolch. Following the order doted 18.07.2019 in W.P.No.5422 ol 2O1B ond botch, this wrii petiilon is ollowed, No order os to cos ts. As o sequel, miscelloneous petitions pending if ony in this Writ Petilion, sholl stond closed. //TRUE COPY// SD/. K.SAILESHI ASSISiTANT REGISTRAR SECTION OFFICER To, l.TheMinistryofCorporateAffairs,Unionoflndia,shastriBrawan'Dr'Rajender Prasad Road, New Delhi. 2. The Reqistrar of Companies, State of Telang-ana'^2nd Floor' Corporate Bhawan' - ci'i pJii.-rliqot\", sa,iot\"suda' Hvderabad 1qg9-0-68 e. One CC to Srit. Kanduri Rajani, Advocate IOPUU] 4. one cc to Sri r.lamav\"iapiiRli\"in*ii nab, Assiitant solicitor General (oPUC) 5. Two CD CoPies. 6. One SPare CoPY Along with a coiy of the common order dated 18.07.2019 n w.P.No.5422 of 2018 and batch. MP HIGH COURT DATED:2310812021 ORDER WP.No.19528 ot 2021 ALLOWING THE WRIT PETITION WITHOUT COSTS * { s IA S e H 1 c o P E S 2021 3 0 ,t --) a. AND 40953 oF 2018. 5547, 558 s669. 5687. 5785. 6047. 6087. 6140. 6484, 6753. 6a5a. 69sA, 69AL, 700t. 700A, 70L4, 7046. 7069. 7073,7LOs,743 7 4s4. 7 572, 7595, 7732, 7755, 7768.7824,7974, 8111, 8223. 8586. 8590. 9333. 9340. 9381, 9468. 9563. 9584. 9623. 9726.9737. 10058. 10099. 11208. 11223. 11239, 11263. 11889, tL99r, ]-20ta. L2036. t2040. 12069. tztoA. 12L44. L2tA6' L2L94. L2200.]-2209, L2215, L22L7,12243. L2260, 12262, 12288' t2342. t2350, L2417, L2432. 12472. L2498. !2506, L2574, L2598. 12621, L2702. L2735. L2740. L2A45. ]-2850. L2865. L2A66. t30!3. t36L8. 13730. 13749. 13779. 13788. 13839. 13855;13878, 13912, 13917. Lgg45. t41-o1-. L4L74. L4207. L4350. L436r, t4390. L4392, L4397 ' t4409. 14582 AN 1-4597 0F 2 019 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 order' 2. The petitioners are the directors of the private companies, registeredUndertheCompaniesAct,20l3(18of2013)(forshort'theAct,). Some of the such companies are active, and some of them have been struck off from the register of companies under Section 248(i)( 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 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 olher 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 ' THE HON'BLE SRI JUSTICE A.RAJASHEKER REDDY W.P,Nos,5422, 12184, 13520. 13783. 13855. 14166. 24051.30993- the Act. 2 4 2nd respondent to activate DINs of the petitioners, to e other than in strike off companies. 5. Heard the learned counser appearing for the d(rtitioners in al the writ petitions, sri K.Lakshman, learned Assistant solicitoi 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 jtrstice, and on this ground alone, the impugned orders are liable to be set asibe. 7. Learned counset submits that Section fO/12;1ay of the Act empowers the authority to disqualify a person to be a dlrector, provided he has not filed financiar statements or annuar returns of thd company to which he is director, for any continuous period of three finanJiilr years. Learned counsel further submi s that lthis provision came into forice with effect from 7.4.2074, and prior thereto i,.e., under Section Z7+(t)(gl 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. ]-hey contend that this provision under Act 18 of 2013, wiI have prospective operation and hence, if the difectors of company fail to comply with the requirements mentioned in the said provision subsequent to the said cate, the authority under the Act, is within its jurisdiction to disquarify them, But in the present cases, the 2nd respondent, taking the period prior to 1.4.20 14, i.e., giving the provision retrospective effect, disquarified the petitionersr .is directors, which is illegal and a rbitra ry. 8. With regard to deactivation of DINs, learne