Sri Hariprasad Reddy Peddi Reddy V. Union of India and another

WP/23417/2020

AI Insights

The case involves Sri Hariprasad Reddy Peddi Reddy and Smt Shashanka Reddy, who challenged their disqualification as directors and the deactivation of their DINs by the respondents, which was based on their alleged failure to file financial statements or annual returns for three consecutive years. The petitioners argued that the action taken by the respondents was arbitrary, illegal, and violated principles of natural justice, as it was based on a retrospective application of the law. The court examined the applicability of Section 164(2)(a) of the Companies Act, 2013, and its prospective operation as clarified by the Ministry of Corporate Affairs' circular and relevant judicial precedents.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 721691 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 23-12-2020
• 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: K SANDEEP
• Keywords: Director Identification Number (DIN); Disqualification of Directors; Natural Justice; Retrospective Legislation; Writ of Mandamus
• Section: 151; 226; 248; 252; 164(2)(a)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (S pecia I Original J urisdiction) WEDNESDAY ,THE TWENTY THIRD DAY OF DECEIVBER TWO THOUSAND AND TWENTY PRESENT THE HONOURABLE SRI JUSTICE K.LAKSHMAN WRIT PETITION NO: 23417 OF 2020 Between: 1. Sri Hariprasad Reddy Peddi Reddy, S/o Peddi Reddi Madhusudhan Reddy, Aged about.39 years. R/o Flat No. 401. Vasudha Delight Apadments. Road No.1 1 Hills Colony. Behind D f ilart Vanastlipuram, VTC, Vanastalipuram. Hayath Nagar. K. V Ranga Reddy District. Telangana- 500070. 2. Smt Shashanka Reddy, D/o Sri Hariprasad Reddy Peddi, Aged abort. 29 years. Rio Flat No. 401, Vasudha Delight Apartments. Road No. I 1. Hills Colony, Behind D lVart Vanastlipuram, VTC, Vanastalipuram, Hayath Nagar. K. V Ranga Reddy District. Telangana- 500070. ...PETITIONERS AND 1. Union of lndia, Rep.by its the lvlinistry of Corporate Affairs. A Wing, Shastri Bhawan, Ralendra Prasad Road, New Delhi - 1 10 001 , Represented by its Secretary. 2. The Registrar of Companies, (For State of Telangana), 2nd Floor, Corporate Bhawan, GSI Post. Tattiannaram Nagole, Bandlaguda, Hyderabad - 500 068 ...RESPONDENTS Petition under Article 226 of lhe 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 disqualifying the petitioners as a directors and deactivating the 1st petitioner Director ldentification Number (DlN) 0350744S and 2nd petitioner Director ldentification Number (DlN) 06450245 by vide notification and restricting the petitioners to incorporate new companies under Companies Act. 2013 as arbitrary, illegal, without jurisdiction, contrary of the provisions of the Companies Act, 2013 and Rule 11 of the Companies (Appointment of Directors) Rules, 2014, violative of the principles of natural justice besides violating the petitioner rights guaranteed under Article 14 and Article I 9 (1 ) (g) of the Constitution of lnd ia. 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 dlrect the 1st Respondent to stay the disqualification and restore the '1st petitioner Director ldentification Number (DlN) 03507449 and 2nd pelilioner Director ldentification Number (DlN) 06450245 of the petitioners so as to enable the petitioners to incorporate new companies tinder Companies Act. 20'13. Counsel for the Petitioner : SRI K. SANDEEP Counsel for the Respondents: SRI NAMAVARAPU RAJESHWAR RAO, ASST.SOLICITOR GENERAL The Court made the following: ORDER lA NO: 1 OF 2020 THE HONOURABLE SRI JUSTICE K. LAKSHMAN WRIT PETITION No.23417 OF 2O2O ORDER The petitioners challenge their disqualification from Directorship under Section rca Q) @l ol the Companies Act, 2013, lbr the alleged default ir-r fiiing llnancial statements/ Ann ual Rcturns, and consequently seek restoration of thcir Director Idcntification Numbers (DlN) tiz., 03507449 an(l 06'1502.11 rcspectively. 2, Learned counsel for the petitioners r,,,ould submit that the issue raised in the present Writ Pctition is squarely covered b1, the common order passed by this Court in W.P.No.5422 of 2018 and barch, dated IB.O7.2O19. 3. Learned Standing Counsel for the 2\"d respondent - Registlar of Companies does not dispute the aforesaid submission. 4 . Operative portion o1' the common ordcr, clated 18.07.2019, in W.P.No.5422 of 2018 reads as under: \"For thc foregoing rcasons. the impugned orclcrs in tl're writ petitions to the cxtent of disqualifving the pctitioncrs under Section l6aQ)lal of the Act and dc:Lctivation o[ their DINs, are set aside, and the 2,,,t respondcnt is clirectcd to activatc the DIN-s of the petitioncrs. enabling them to functior.r rts Directors othcr thiln in stril(! o[f compurrics It is rn:rcle clear tl]at this rtrcLcr 'ill rlot prcclu(lc thc.2,i,i rcspon(1cnt liom taliing approltriatc :rctiorr in a.ccr,rrrliutcc rli[h larv for violations as envlsaged under Section 164(2) ol the Act, giving the said provision prospective effect from O1.O4.2O14 and for necessary action against DIN in case of violations of Rule I 1 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, thcy are at libert!. to ar,,ail altcrnative remcd . lrnder Scctior.r 252 of the Act. Ali the rr-rj1 peririons arc accorclinglv allou.ccl ro tht: cxtent indi(.atterl aboYc ' 5. ln vier,v of the saicl orcler dated lg.O7.2}lg ancl for rhe reasons recorded therein, this writ petition is also allowed in terms thereof. No costs. Miscellaneous petitions, pending if any, shall stand closed. I SD/.I.NAGALAKSHMI ASSISTANT REGISTRAR f i, ,TRUE COPY' SECTION OFFICER To, 1. The Secretary, lvinistry of Corporate Affairs, Union of lndia, A Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi - 1 10 001 . 2. The Registrar of Companies, (For State of Telangana), 2nd Floor, Corporate Bhawan, GSI Post. Tattiannaram Nagole, Bandlaguda, Hyderabad - 500 068. 3. One CC to Sri K. Sandeep, Advocate [OPUC] 4. One CC to Sri Namavarapu Rajeshwar Rao, Asst.Solicitor General, Advocate loPUCl 5. Two CD Copies (Along with a copy of order dt:18/07/2019 in W.P.No .5422 oI 20'18 and Batch) SMq* HIGH COURT DATED:23t12t202O ORDER WP.No.23417 ot 2O2O eoR 1HE S itAlC 29DEC 2pg (( o .t. i) E 2 ^* ALLOWING THE WP WITHOUT COSTS s-s$l\"l lk.r * * ')-:o <) W.P.NOs.5422. 12184, 13520, 13783. 13855. 1416 6, 2405t,30993. AND 40953 0F 2018. 5547. 5582. 5669, 5687. 57a5. 6047. 60a7, 6140.6444. 6753 68s8,6958, 6981, 7001, 7008, 4-7046,7069, 8111, 8223, 8s86, 8s90, 9333, 9340, 9381, 9468, 9s53, 9584. 9623. 7 6 7 o 0099 L2 8 1 1 3 11239 1 2 9 2 6 L2 40 t2 69 08 L2L44 t2L t2 4 12200, 12209, t22ts, L22t7,12243, 12260, L2262, 12288, L2342, 123sO, L24L7, t2432, t2472, 12494, 12506, 12574, 12598, L262L, 12702, 12735. 12740. 12845. 12850. 12865. 12866. 13013. 13618, 13730. t3749, t3779, 13748. 13f339, L3455, l3B7a, L3912. 13917, 13945. 14tor. L4L74. t4207. t4350. L436L. L4390. 14392, 14397. 14409,14s82 AND 14s97 082019 Since, the issue inv