Smt Deepika Reddy Paladugu V. Union of India and another

WP/26486/2021

AI Insights

The case involves a writ petition filed by Smt. Deepika Reddy Paladugu against the Union of India and the Registrar of Companies, challenging the deactivation of her DIN and the disqualification imposed on her as a director. The disqualification was based on the non-filing of financial statements and annual returns for three consecutive years, as per Section 164(2)(a) of the Companies Act, 2013. The petition argued that the action taken was arbitrary, illegal, and violated principles of natural justice, as well as rights under Articles 14 and 19(1)(g) of the Constitution. The court examined whether the disqualification could be applied retrospectively and whether the DIN could be deactivated under the existing rules.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 721631 (HC-HYDERABAD)
• Appeal Type: Others
• Pronouncement Date: 25-10-2021
• Assessment Year: misc
• Other Referred Cases: Yashodhara Shroff vs. Union of India, Gaurang Balvantlal Shah vs. Union of India, Bhagavandas 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: G SUMATHI
• Keywords: Article 14; Article 19(1)(g); Deactivation; Director Identification Number; Disqualification; Natural Justice; Writ of Mandamus
• Section: 151; 226; 455; 248(1)(c); 164(2)(a)

Judgement Text

"H'GH COURT FOR THE S] r\"r; \",il 6l5,Pj 15..,3#\"\",flf A r HvDERABAD fuoNDAY THE TWENTy FrtrTr.r n,rr, .) rwo ii o u.s.ilHfiFJ.ffi pJrof,o c ro B E R PRESENT THE HON'BLE SRIJUSTICE B.VIJAYSEN REDDY WRIT PETITION NO.26486 0F 2021 Between: AND 1 S,mt.,Deepika Re{9y Paladugu, W/o Sri Medipally Suresh Kumar Reddv. Aoed about 41 years R/o 1-1-290t7, ARUL Cotohy,'on A.d niJ\"r.rls\";i,k';Xi\"] Seeundrabbd, ECtL, HyderabaO, terangina-S1ii\" -sobdi+. -\" ..;.;;#=; Union of lnd.ia, Rep.py its the Ministry of Corporate Affairs, ,A, Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi - 110 001, Represent-eb by its Secretary. The Registrar_of Companies (For State of Telangana), 2nd Floor, Corporate Bhawan, GSI Post, Tattiannaram Nagole, Bandlaguda, *ld\"r\".Oftt-.Urojnf$Eiu* 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 pass an order or direction or any other proceedings one in the nature of Writ of Mandamus declaring the action of respondents in deactivating the petitioner Director ldentification Number 01993567 and restricting the petitioners from tiling statutory returns, i.e., the annual returns and financial statements of the Companies in which they are Directors 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 19 (1) (g) of the Constitution of lnd ia. lA NO: 1 OF 2021 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 1st Respondent to restore the petitioner Director ldentification Number (DlN) 01993567 so as to enable him to submit pending annual returns and financial statements for the Company in which he is appointed as director' Counsel for the Petitioner: SMT. G. SUMATHI Counsel for the Respondents: SRI NAMAVARAPU RAJESHWAR RAO' ASSISTANT SOLICITOR GENERAL The Court made the following: ORDER THE HON,BLE SRI JUSTICE B'VIJAYSEN REDDY N No. 26 4A6 OF 202t ORD ER Learned counsel for the petitioner as well as learned counsel representing learned Assistant Solicitor General submit that the subject issue is covered by the common order of this Court dated 05.08.2021 in Writ Petition No 1 1434 of 2021 and batch. In view of the submission made by the learned counsel, in unison, this Writ Petition is disposed of in terms of the order dated O5.O8.2O21 in Writ Petition No' 1 1434 of 2O2l and batch. No cost-s. Consequently, the miscelianeous Applications, if any shali automatically stand dismissed. //TRUE COPY// SD/. V.SUDHA ASSISTANT REGISTRAR SECTION FICER '\"'' Il:;'.:'R',i3.,iJ'3i,Jio RtSe$:[:q.efl.i:iiB\"dsl,: i-i':. ::\":':\"::1]\" 'i[:,^[?ystl!f [:f r;?#\":ts\"'.l.s\"i::^q\";oii]3133:fl ]'3is'ii\"\"['ooTffu ?. 3l3 33ls 3ii'-*:H3ll S,:J3f;f,:\"#xissrstant Soricito'Generar (oPUC) 5. Two CD CoPies 6. One SPare CoPY Along with a Copy of the Order dated 05 08 2021 in W'P No 1 1434 of 2021 and batch. t 4P \" A$P HIGH COURT DATED:2511012'.021 ORDER WP.No.26486 of 2021 DISPOSING OF THE WRIT PETITION WITHOUT COSTS Hi: SI4 15 ^ 2I t!8T2lpl ^s., rc 1.,4 ),/ HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILT w.P.Nos. 11434 11941 12240 3780 14963 14992 l5I 9 758s6 &16 161 of 2021 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. 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) ot the Act, disqualifying them asdirectors, 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 I l 2. The petitioners are the directors of the private companies, registered under the Companies Act, 2013 (1g 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. 2 deactivated been filed. . Aggrieved by the same' the present writ petitions have 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 functionother than in strike off companies' 5. Heard the learned counsel appearing for the petitloners in all the writ petitions, Sri Namavarapu Rajeswara Rao' learned Assistant Solicitor General for the respondents - Union of India' 6. Learned counsel for the petitioners, contend that before passing the irrrpugned order, notices have not been issued, giving them opporturtity, 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 164(2)(a) of the Act empowers the authority to disqualify a person to be a director, provided he has not filed financial statements or annual returns of the company to wnich he is director, for any continuous period of three financial years. Learned counsel further submits that this provision came into force with effect from L.4.2O14, and prior thereto i'e, under Section 27a$)@) 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 unde:r Act 18 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 tte present cases, the 2\"d respondent, taking the period -) time to the applica nts prior to 1.4.2074, i,e., giving the provision retrospectivl effectr disquatified the peririoners as directors, Whichis illegal and arbitfary. B' with regard to deactivation of DINs, rearned counser for the petitioners submit that the DINs, as contemplated under Rule 2(d) of the Companies (Appointment and eualification of Directors), Rules, 2O 14 (for short 'the Rules), are granted for life 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 deactivation, no appealis 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 ascheme dated 29.12.2017 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 dlrectors, whose DIN are deactivated. However, under Section 252 onlythe companies, which are carrying on the business, can approach the Tribunal and the companles, which have no business, cannot 4 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 irnpugned orders and to allow the writ petitions' 11. On the other hand learned Assistant Solicitor General submits thatfailure to file financial statements or annual returns for any continuoLrs period of three financial years' automatically entail theirdisqualificationunderSectionl6a(2)(a)oftheActandthe statute does not provide for issuance of any notice Hence' the petitioners, wno have failed to comply with thestatutory requirement under Section L64 of the Act, cannot complain of violation of principles of natural justice, as it is a deeming provision Learned counsel further submits that the petitioners have alternative remedy ofappeal under Section 252 of the Act, and hence writ petitions may not be ente rta ined. 72. To consider the contention of the learned Assistant Solicitor General with regard to alternative remedy of appeal under Section 252 cf theAct, the said provision is required to be considered, and the same is extracted as under for better appreciation: 252. Appeal to Tribunal: (1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under Section 248, rnay file an appeal to the Tribunal within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the cot pany from the register of companiesis not justified in view al the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies; Pravided that before passing an order under this section, the Tribunal shall give a reasonable oppor-tunity of making representations and of being heard to the Registrar, 5 the company and all the persons concerned: l . provided fu ;,;;3,:{#ii!i,!i.!:;:#?i:{ii;'::tw,!:: ,:,lo,Frt inFormation i;;;;h:;\";:.:::,y^or_ on basis olr otrectors, which r companies, n\" .r,u?,1:,1u1 '\"ttouiioi\"in cutupanY or its d a te or pa s si n s ;; r[J!:\":.r:: ii ;i,;: L;]Z\"::t;,':ff ,:: sec.tion 248, ri\" ,i .\"-oiiil,r,,i,issotuin-g .the company under restoration or r... o7-{i,i'r;;;\":i:\" me rribunat seekiis (2) A copy . fv*fiya;;iw!$vffi (3) If a cor ;: # :']k;; \"i;:' ;x i::W.$ ?:x, ::,' ;fl i:; :; t rtounal or an apolicatio, ,l-::t:\".*:, or companies, the i;2,,;z;i#,;::T:\",i:'y;,ii:ii:,!zi!w,;3,:,?:* rxiisii*;ti!,iw otnu' birurliJr\"r\"Z,ia''.!!!D-unar mav' bv the order' sive such ro, pblirs'ii'\"'ri,;o::1r: t,\"l provisions as diimed iust p o i t i oi i,'' i uZ:l ;, Zi: . \"i, \",1 \"* ::, i \" ;;?,, :,,!r ;,; ; il\" company has not be companies, en struck off from the register of A reading of above provision goes to show that if the company is dissolved under Section 24g of the Act, any person aggrieved by the same, can file an appeal. Thus the said provision provides the forum for red ressa I against the dissolution and striking off the from the register of companies. It does not deal company with the disquarification.of the directors, and deactivation of their DIN'. In the present case, the petitioners are only aggrieved by their d isq ua lification 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 reliet and the contention of the learned Assistant Solicitor General, in this regard, merits for rejection. -.--......- 6 13. Lrnder Section 164(2)(a) of the Act' if the Director of a company fails to file financial statements or annual returns for any continuous periodof three financial years, he shal not be erigible 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 07 '04'2014 ' and the petitioners are disqualified as directors under the said provision' At this stage' the issue that aris;es for consideration is - whether the d isq u alification envisaged under Section 164(2)(a) of the Act' which provision came into force witl'r effect from 01.04 2014, can be made applicable with prospective efrect, or has to be given retrospective operation?In other words, the issue would be, from which financial year, the default envisaged uncer Section 164(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.08/14 dated 4.4.2014 issued by the lYinistry of Corporation affairs, which clarifies the applicability of the relevant financial years. The relevant portion of the said circular is as under: \"A nlmber of provisions of the Companies Act, 2013 includ'ng those relating to maintenance of books of account, preparation, adoption and filing of financial statements (and docuntents required to be attached thereto), Auditors reports and the Board of Directors report (Board's report) have been brought into force with effect from 1st April, 2014. Provisions of Schedule II (useful lives ro compute depreciation) and Schedule III (format of financial statements) have also been brought into force from that oate. The relevant Rules pertaining to these provisions have ittso been notified, placed on the website of the Ministry and have come into force from the same date, The Ministry has received requests for clarificatian with regard to the relevant financial years with effect from which such Drovisions of the new Act relating to maintenance of books of account, preparation, adoption and filing of financial statefients (and attachments thereto), auditors report and Board's report will be applicable. Alttlough the position in this behalf is quite clear, to make things absalutely clear it is hereby notified that the financial staaerrents (and documents required to be attached theretc), auditors report and Board's repoft in respect of 7 ';;\"::'::,' ;r 1'l' i! ETJ1 ,; :j,\"-::! : : t I a n i,, A p r i t s h a t t b e, c o m p a n i es art, t gii' i ni \"iZi' l'^o i?/ u n 1 a u b s/ r u t es o f t h e 1171\"1,,no.oii,Zi*\"i';iihl,'z:;,7,\":;\"';::li;:::::;i;: new Act shall apply.,, A reading of the statements and the above circu la r makes it clea r the be attached financial th ereto, documents required to auditors report and Board,s report in respect of financial years that commenced earlier than O1- .O4.2OL4, shall be governed by the provisions under the Companies Act, 1956 and in respect of financial years commencing on or after 01.04.2014, the provisions of the new Act shall apply. 14. At thls stage it is required to be noticed that the analogous provision to Section 164(2)(a) of the Act 18 of 2013, is Section 27aG)G) of Act 1 of 1956. The said provision under Act 1 of 1956 is extracted as under for ready reference: Section 274(71 A person shall not be capable of being appointed director of acompany, if - (g) 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 thefirst 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 lA) or has fa ed to repay tts deposits or interest or 'rebeem 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 company' which has not filed annual accounts and annual returns for any continuous three financial Years commenclng on E 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 thedate on which such public company' in which he is a director' r'ailed to file annual accounts and annual returns' So the statutory reqrJirement 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 an,c annuar returns by the directors of the private company' will not disqualify them as directors under the provisions of Act lof 19 56. 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 orhas 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 adirectorofacompany.Asalreadynotedabove,thesaidprovision, came into force with effect from 07'A4'2OL4' 16. Coming to the facts on hand' the 2nd respondent has disqualified the petitioners under section 164(2)(a) of the Act 18 of 2073, fot not filing financial statements or annual returns' for period prior to 07.O4,2Ot4'The action of the 2nd respondent runs contrary to the circular issued by the Ministry of the Corporate Affairs, and he has given the provisions of Act 18 of2013' retrospective effect' which is impermissible. 9 17. The Apex Court in COMMISSIONER Oi INCOME rAx (CENTRAL)-r, NEw DELHI v, VATIKA IOWNSHIP qRMTE LIMITEDI has dealt with the general principles concerning retrospectivity. The relevantportion 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, 28. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series ot statements, such as one finds in a work of fiction/non fiction or even in a judgment of a court 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 af 'lnterpretation of Statutes'. Vis-i-vis ordinary 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. 29. of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appearst a legislation is presumednot 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 of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Philips 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 transactions carried on upon the faith of the then existing law. 30.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 repofted in L'Office Cherifien des Phosphates v. Yamashita-shinnihon Steamship Co' Ltd' t{19;g4) 1Ac 4861. Thus, tegislations which modified accrued rights or which impose obligations or impose new dutiei 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 legistation is for purpose of supplying an obvious oi,ission in a former legislation or to explain a former legislation. We need not note that cornucopia of case blw avaitable on the subject because aforesaid legal oositrcn clearlv emerqes fram the various decisions and 'thE legal pos,itton was canceded by the counsel for the 1 (zots)t scct l0 parties. ln any caset we shall refer to few judgments containinq this dicta, a little later. 31. We would also like to point out, for the sake of :ompleteness, that where a benefit is conferred by a l?gislation, the rule against a retrospective construction is different. If a legislation confers a benefit on som? persons but without inflicting a corresponding detriment: on some other person or on the public generall,/, and whereto confer such benefit appears to have be?n the leqislators object, then the presumption wauld b. that such a legislation, giving it a purposive canstruction, would warrant it to be given a retrospective effect. This exactly is the justification to treat t'rocedural provisions as retrospective, In Government of India & Ors. v. Indian Tobacco AssociaUon, [(2005) 7 SCC 396], the doctrine of fairness was held to be relevant factor to construe a statute :onferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in naturet vtas applied in the case of Vijay v. State of Maharashtra & Ors., [(2006) 6 SCC 289]. It was held that wlEre a law is enacted for the benefit of cammurity as a whole, even in the absence of a provisian the statute may be held to be retrospective in nature. qowever, we are (sic not) confronted with any such situatian here. 32. in such casest retrospectivity is attached to benefit the persons in contradistinction to the provision imDasinlt some burden or liability where the presumt.tion attached towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial fo the assessee. On the contrary, it is a ptovision which is onerous to the assessee. Therefore, in a case like this, we have to proceed with the nonllal rule of presumption against retrospective operatio.. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a consuuction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Dogmattcally framed, the rule is no more than a presump'tiont and thus could be displaced by out weighin(t factors. 43. 1'here is yet another very interesting piece of evidence' that clarifies that provision beyond any pale of doubt wz., the understanding of CBDT itself regarding this pra'/isian. It is contained in CBDT Circular No.8 of 2002 dated 27.8.2002, with the subject \"Finance Act, 2002 - l:xplanatory Notes on provision relating to Direct Taxes\". 1'his circular has been issued after the passing of the trinance Act, 2002, by which amendment to section 113 was made. In this circular, various amendrr,ents to the Income tax Act are discussed amply demonslrating as to which amendments are clarificatcry/retrospective in operation and which amendn,ents are prospective. For exarlple, Explanation to seclion 158-BB is stated ta 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 clilrificatory and would take effect retrospectively from 1't day of )uly, 1995. When it comes ta 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 intentlon, to make the said provision applicable topast 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, asalready noted above, the Ministry of Corporation affairs has issued thecircular 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 OL.O4.2O 4, shall be governed by Act 1 of 1956. At the cost of repetition, since in the present cases, as the 2nd 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 01.04.2014, the same is contrary to the circular, and also contrary to the law laid down by Apex Court in the above referred judg meht, 19. If the said provision is given prospective effect, as per the circulardated 4.4.2074 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 T2 of the company, and as per the first proviso to Section 96(1) of the Act, annual general meeting for the year ending 31'03'2017' 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 gz4) 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 rormal fee, and within 27O days with additional fee as per theproviso to Section 403 of the Act' Learned counsel submit that if thesaiddatesarecalculated,thelastdateforfilingtheannual returns would be 30.11.2017, and the balance sheet was to be filed on 30.10.2017 withnormal fee and with additional fee' the last date for f iling annual returns is 27 '07 '2018' In other words' the disq u a Iification could get triggered only on or after 27 'O7 '2018' But the period considered by the 2id respondent in the present writ petitions for clothing the petitioners with disqu a lification ' pertains prior to 01.04.2014. Therefore, when the omission, which is now pointed out, was not envisaged as a ground for d isq u a lification prior to 7.4.2014, the petitioners cannot be disqualified on the said ground' ThisanalogyistraceabletoArticle20(1)oftheConstitutionoflndia, which statesth at \"No person shatl be convicted of any offence except for viotatton of a lawin force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that whi<:h might have been infticted 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 Iiable to be set aside' 20. A learned Single Judge of the High Court of Karnataka in YASHODHARA SHROFF vs. UNION OF -) 13 ) INDIAZ considering Section 164(2)(a) of the Act and other provisions of the Act, and various judgments, passed an elaborate order and held that the said provision has no retrospective operation he observations of the learned Judge, pertaining to private companies, which are relevant for the present purpose, are extractedas under: 2 w.p.No.52911 of2017 and batch dated 12 06 2019 2o8. In view of the aforesaid discussion, I have arrived at the fol low i ng co n cl u sio n s : (a) It is held that Section fia(2)(a) of the Act. is no.t .ultra virus 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 provisionviolate Afticle 19(1)(g) 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 cinsequence of a disquatification on account of the circumstances stated therein and the same is in order to achieve probity, accountabilitY, and transparency in corPorate governance. (b) That Articte (sic) Section 164(2) ot the Act applies bY ' ' operation of iaw'on the basisof the circumstances stated t'herein, the said provision does not envisage anY hearing' iiitnei pre-disqualification nor post-disqualific.ation. and this is not in violation of the principles of natural justice' is not ultra vires Article 14 of the Constitution' (c) That Section 164(2) of the Act does not have retrospective operation and is therefore, neither unreasonable nor arbitrary, in view of the interpretation placed on the same' (d) . . . (e) Insofar as the private companies are concemed' disqualification on account of the circumstances stated under Section 16a(2)(a) of the Act has been brought into force for the first time under the Act and the consequences of disqualification could not have been imposed on directors of private companies bY taking into consideration any period prior to 01'04'2014 for the purpose of reg.ko,ning continuous period of three financial years under til si'aii provision. The said conclusion is based on the iririiiit ilru*, bv wav of analogY from Article 20(1).of the 'Consiitution, as at no point of time prior.to the iifirr\".\"ri of the Act, a disqualification based on the circumstances under Section 164(2) of the Act was ever envisaged under the 1956 Act vis-e-vis directors of private ;.;;;;; such a disqualification could uisit .a. d.ire:t?r ot onlY a public companY under Section 274(1)(9) of 1956 irii iri- r\"r\", a director of a private companY' such 'iiiqiutirir\"iion of the petitioners .who are directors of private companies is hence quashed' 0 lo) conseouentlv' where the disqualification under Section '\" lliiilit i;i Act is based on a continuous period of three financial years commencing from O1'042014'. wherein financial statements or annial returns have not been filed b)y- a- p)ublrc or private companyt the directors of such a 14 company stand disqualified and the consequences of the said disqualification would apply to them under the Act. 27. A learned Single of the High Court of Gujarat at Ahmedabad in GAURANG BALVANTLAL SHAH S/O BALVANTLAL SHAH vs. UNION OFINDIA3 expressed similar view as that of the leaned single Judge of High Court of Karnataka (1 supra), and held that Section 164(2) of the Act of 2073, which had come into force with effect from 7.4.2014 would have prospective, and not retrospective effect and that the defaults contemplated under Section 16a(2)(a) with regard to non-filing of financial statements or annual returrs for any continuous period of three financial years would bethe default to be counted from the financial year 2014-15 only and not 2013- 14. 22. A learned single Judge of the High Court of Madras in BHAGAVANDAS DHANANJAYA DAS vs. IINION OF INDIA4 atso expressed sir.ilar view. The relevant portion is as under: 29, In fine, (a) When the New Act 2013 came into effect from 1,4,2014, the second respondent herein has wrongly given retrospective effect and erroneously disqualified the petitioner - directors from 1,1.2016 itself beiore the deadline commenced wrongly fixing the first fin,zncial year from 1.4.2013 to 31.3,2014. (b) By virtue of the new Section 164(2)(a)