Sri Algubelli Surya Prakash Reddy and another V. Union Of India and another

WP/13780/2021

AI Insights

The case involves multiple writ petitions filed by directors of private companies who were disqualified and had their DINs deactivated due to non-filing of financial statements or annual returns for three consecutive years, as per Section 164(2)(a) of the Companies Act, 2013. The petitioners challenged the disqualification and DIN deactivation, arguing that the provisions were 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 whether the disqualification could be applied retrospectively and whether the DINs could be deactivated based on the alleged violations.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 721649 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 05-08-2021
• Assessment Year: misc
• Other Referred Cases: COMMISSIONER OF INCOME TAX (CENTRAL)-II 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: N RAO
• Assessee Lawyers: G SUMATHI; NAVEEN KUMAR V; VANGA ANITA
• Keywords: Deactivation; Director Identification Number; Disqualification; Natural Justice; Prospective effect; Retrospective effect
• Section: 151; 226; 403; 455; 248(1)(c); 164(2)(a)

Judgement Text

"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE FIFTH DAY OF AUGUST TWO THOUSAND AND TWENTY ONE THE HON'BLE SRI JUSTICE ABHINAND KI.JMAR SHAVILI wP NO.114 34 0F 2021 Between: AND Sri Rahul Balmoori, S/o. Sri Balmoori l rladan lrrlohan Aqed about. 34 vears R/o H No. 3-4-746, Flat. No. 2, Opp. HRD College. Naraya-na CuOi. Hiniayatfrnlgai, Hyderabad -500027. ...PETITIONER Union of lndia, Rep.by its the Ministry of Corporate Affairs, A-Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi - .1 10 001 , nepresen[eA Oy iti Secretary. The Registrar of Companies, (For State of Telanqana). 2nd Floor. Coroorate Bhawan, GSI Post, Tattiannaram Nagole, Bandlagudd, Hyderaba'd.- Sbgoo\"Uol\"r, 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 pass an order or direction or any other proceedings one in the nature of writ of I /andamus declaring the action of respondents in deactivating the petitioner Director ldentification Number 05103752 (sri Krishna Rahul Balmoorl) and restricting the petitioners from filing 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 11 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)(t Xg) of the Constitution of lndia 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) 05103752 (Sri Krishna Rahul Balmoori) so as to enable him to submit pending annual returns and financial statements for the company in which he is appointed as Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL I PRESENT wRlr PETlrloN Nos, 11434. 11911r 1?210. 13780. 149G3. 14992. r5139. 158s6 & 16161 0F 2021 director Counsel for the Petitioner: SMT. G. SUMATHI Between: AND 1. 2. Nalla Anil, C/o. Nalla Venkat Ram Reddy, Age 48 Years, R/o. G-2, Rahul Residency Apartment, Maruthi Nagar, Bowenpally, Tirumalgiri, Hyderabad- 5ooo1 1 ' Telangana ...PErroNER The li/inistry of Corporate Affairs, A Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi - 1 10 001 , Represented by its Secretary. The Registrar of Companies Telangana, 2nd Floor, Corporate Bhawan, GSI Post, Tattiannaram, Nagole, Bandlasuda Hyderabad - 500 168. ri]R!gBB?,0.*r. Mr. Praveen Kumar Reddy Nukalapati, S/o. Balarami Reddy Aged About 49 Years, Occ. Business, R/o. 8-3-677/51 Sri Krishna Devilraya Nagar Srinagar Colony Hyderabad, Telangana lndia-500073 ...pE,,oNER Union of lndia, The Ministry of Corporate Affairs Represent,:d by its Secretary A Wing, Shastri Bhawan, Rajendra Prasad Road, New Delhi . 110 011, The Registrar of Companies, Telangana State, 2nd Floor, (;orporate Bhawan, GSI Post, Tattianaram, Nagole, Bandlaguda, Hyderabad - {;00 068 Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High C:ourt may be pleased to issue a Writ, Order, .Direction more particularly one in the nature of Writ of [/landamus by declaring the action of the Respondents in deactivating and disqualifying the DIN Number 02462763 of the Petitioner as a Director is illegal, arbitrary, without jurisdiction, contrary of the provisions of the (lompanies Act, 2013 and Rule 11 of the Companies (Appointment of Directors) Rule,s, 2014 and violative of the principles of natural justice besides violating the Petitior er' rights guaranteed under Article 14 and Article 19 (1) (g) of the Constitution of ln,iia and consequently direct the Respondents to activate the DIN No. 02462763 of th: Petitioner to enable him for promoting/forming new Companies and for filing statutory compliance lA NO: 1 OF 2021 Petition under Section 151 CPC praying that in the cirr;umstances stated in the affidavit filed in support of the petition, the High Court ma1'be pleased to direct the 1st Respondent to stay the disabling of the DIN Number and restore the DIN Number 02462763 (Nalld Anil) of the Petitioner for the purpoiie of incorporation of new Companies Under the Companies Act, 2013 pending disposal of the above Writ Petition Counsel for the Petitioner: SRI NAVEEN KUMAR V. Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAt. AND 1. 2. ...RESPONDENTS WP NO: 11941 OF 2021 tNP NO:12240 OF 2021 Between: t 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 proceeding one in the nature of writ of Mandamus declaring the action of respondents in deactivating the DIN Number 06950854 for the disqualification period from 1.11.2018 to 31.10.2023 of the Petitioners and restricting the petitioners from filing statutory returns, i.e., the annual returns of the Petitioners company 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 principle of natural justice besides violating the petitioners rights guaranteed under Article '14 and Article l g (1) (g) of the Constitution of lndia 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 DIN number 06950854 for the disqualification Period from 1.11.2018 to 31 .10.2023 of the Petitioners so as to enable them to submit the annual returns and Financial Statements of the petitioners company Counsel for the Petitioner: SRI AJAY BABU MANDADAPU Gounsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL WP NO: 13780 OF 2021 Between: 1 2 Sri Algubelli S-urya Prakash Reddy, S/o Sri Algubelli Sheshi Reddy L:ate 11-20- 3^11?1, lu{e Co-qp!e1_Saroor Nagar, LB Nagar Rangareddy, Tetangana - 500 035, lndia Din . 00479767 !! CfqlQp Reddy Pinnapu Reddy, S/o Sri Pinnapu Reddy Venkat Reddy 3-1 1- ??9-,!?.N?SqI, Sri Strankar Colony Saroor Najar, Ranlareddy, Tetan!;ana - 500074' lndia Din '01526298 ...pErrroNERs Union Of lndia, The lvlinistry of Corporate Affa irs Represented bv its Secretarv A- Wing, ShastriBhawan, Rajendra Prasad Road, New Delhi - 1 10 -011, The Registrar of Companies, Andhra Pradesh and Telangana, 2nd Floor, _C^op^opte Bhawan, GSI Post, Tattianaram, Nagole, Band-laguda, Hyderabad - 5oo 068 ..RES'.NDENTS 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 any appropriate writ, order or direction more particularly in the nature of a Writ of I /andamus declaring the action of the Respondents in disqualifying the Petitioners invoking Section 164(2) (a) as arbitrary, illegal, contrary to the principles of natural justice, in violation of the provisions of the Companies Act, 2013 and in contravention of the rlghts guaranteed under Article 14 and Article 19 (1) (g) of the Constitution of lndia and consequently direct the Respondents to restore the DIN of I -::-.:-:rr-_:-- ::::: _-,_:---------__ ,'Petitioners being DIN 00479767 and 01526298. That the list cf directions passed by the Ministry of Corporate Affairs (MCA) on the website .i.er. www.mca.gov.in as arbitrary illegal without jurisdiction, contrary of the provisions of the Companies Act 2013 as Rule 11 of the Companies (Appointment of Directors) Rules 20'14 violate the principles of natural justice besides violating the rights guararrteed under the Article 1 4 and Article 1 9 (1 ) (g)of the Constitutions of lndia and quas h /set aside the same to the extent it declares /treats the petitioners 1 to 3 as disqualified in terms of section 1 64(2)(a) of the Companies Act 201 3 in the interest of . ustice. That the petitioners are not disqualified in terms of se ction 1 64(4)(a) of the Companies Act 2013 for the reason of the alleged default c,f non-filing of Annual Returns and financial statements with the by company lA NO: 1 OF 2021 Petition under Section 151 CPC praying that in the ci 'cumstances stated in the affidavit filed in support of the petition, the High Court may be pleased direct the respondents to restore the DlNs of the Petitioners No. 00479767 and 01526298 as to enable the Petitioners to comply with statutory requiremr:nts such as filing of annual returns and other related documents for the companios which are active in which petitioners are also directors, pending disposal of the writ petition Counsel for the Petitioners: SRI T. SRIHARI BABA WP NO: 14963 OF 2021 Between: Hari Prasad Donthu, S]o. Mr Donthu Sathyanarayana ,Aged about 53 years, Occupation- Business Resident of 4-1-103/9, FIat 503, l3havani Nagar Behind Nacharam Police Station, Nacharam Uppal, Hyderabad 500076. ...rrr,r,o\".* AND 1. 2. Union of lndia, Represented by its Ministry of Corporate Affairs, Shastri Bhawan, Dr. Rajender Prasad Road, New Delhi - 110001 The Registrar of Companies, Telangana 2nd Floor, Corporate Bhawan, Thattiannaram, G,S.l, Post, Bandlaguda, Nagole, Hyderabad - UO99*?U.ro*o=\"r. Petition under Article 226 of lhe Constitutjon of lndiir praying that in the circumstances stated in the affidavit filed therewith, the High ()ourt may be pleased to issue a Writ Order or Direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondents in so fe r as deactivating the Director ldentification Number of Petitioners, (Hari Prasad Dorrthu - DIN 01651044) (deactivation with the effect from 0111112016 to 3111012021) and listing the name as Disqualified Director and thereby restricting the Petitioner to cJntinue as Director of the Companies and / or get appoint or reappointed as Director of any Company and file statutory returns 1.e., annual returns and financial statemen.s of the companies in which they are Director as arbitrary, illegal without jurisdir:tion contrary to the provision of the Companies Act, 2013 and Rule 1 1 of the Corrpanies (Appointment Counsel for Respondent5: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL t '.. and Qualification of Directors) Rules 2014 violation of the principles of natural justices besides violating the petitioner rights guaranteed under Article 14 and Articte 19 (1) (g) of the Constitution of tndia l,A 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 stay the disabling and restore the Director ldentification Number 01651044 of Petitioner, Hari prasad Donthu, for the purpose of incorporation of new companies and stay the operation of disqualifying the petitioner as Director in all the companies in which petitioner is appointed as such, and further Counsel for the Petitioner: SMT. MANO RANJANI C S Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL WP NO; 14992OF 2021 Between: AND Junaid Syqd U.!19h, S/o Syed karamath Ullah Aged about 40 years, Occ. Business, R/o. Flat No 104, Plot 65, 9-4-7713127li, yousuf Tekdi,'Totiihowki, Hyderabad - 500008, Telangana State ...pErroNER The Union of lndia,, Rep by its Secretary The tr/inistry of Corporate Affairs, Government of India, 'A'Wing, Shastri Bhawan, Rajehdra prisad Road, New Delhi, Delhi 110001. Registrar of Companies, (Hyderabad) (For the State of Telangana) l2ndFloor, Q-o1p-o1qte Bhawan, cSl Po3t, Tattiarinaram Nagole, Bandlag\"uda Hyderabad - 500 068 1 2 ...RESPONDENTS 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 Stay operation of the disqualification of the Petitioner Director ldentification DlN. I Petition under Article 226 oI 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 directions one in the nature of Writ of lvlandamus declaring the action of the Respondents in so far as deactivating the Director ldentification Number 03565628 of the Petitioner's herein as arbitrary, illegal, without jurisdiction, contrary to the provisions of the Companies Act, 2013 and Rule 11 of the Companies (Appointment and Qualification of Director) Rules 2014, violative of the principles of natural justice besides violating the Petitioner nghts guaranteed under Article 14 and Article 19 (1Xg) of the Constitution of lndia and to allow the Petitioner to continue as director in the company by unlocking the DIN 03565628, of the Petitioner's and permit the Petitioner to be continued as Director/ get reappointed or appoint as a director in new company or any company without any hassle 03565628 in so far as the Petitioner is concerned and cons,equently enable him to join as a Director in New Company. .Counsel for the Petitioner: SRI SATHAKARNI K G o u n s e I ro r Re s po n d e n \"' iE Lls ffiirt 3B[,t[3i% E N E R A L Between: AND 1. 2. Kartik Reddy Patlola, S/o Patlola lndra Reddy, Age.37 Years, Occ. Business, Ryo. 34/9, SBH Colony, Phase-ll Srinagar Colony, Hyderabad - UOO ?.1f=r,r,or.* Union of lndia, Rep by its Secretary, Ministry of Corporate Affairs, Shastry Bhavan, Dr. Rajendra Prasad Marg, New Delhi. The Registrar, Office of Registrar of Companies, ROC, 2nd Floor, Corporate Bhavan, Near Central Water Board, GST Post, Bandlaguda, Nagole, Hyderabad - 500068 ...REspoNDENTs Petition under Artlcle 226 of the Constitution of ln lia praying that in the circumstances stated in the affidavit filed therewith, the Higtr Court may be pleased to issue any appropriate writ, order or director more particularly in the nature of a Writ of lVlandamus declaring the action of the Responde rts in disqualifying the Petitioner invoking Section 164(2) as arbitrary, illegal, cont'ary to the principles of natural justice, in violation of the provisions of the Companies Act 2013 and in contravention of the rights guaranteed under Article 14 arrd Article 19 (1) of the Constitution of lndia and consequently direct the Respondenls to restore the DIN No. 03279562 of the Petitioner Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERA L WP NO: 15856 OF 2021 Between: AND Mukundlal, S/o Chandanmal Agarwal, Age 67 Years, r)cc Business, R/o. 3-6- 361/30, Street No.20, Himayath Nagar, Hyderabad, Telargana - UOO.9#r,r,or.* WP NO: 15139 OF 2021 lA NO: 1 OF 2021 Petition under Section 151 CPC praying that in the ,:ircumstances stated in the affidavit filed in support of the petition, the High Court nray be pleased to direct the Respondents to restore the DIN of the Petitioner DIN o. 03279562 so as to enable the Petitioner to continue as Director of the Compar y and/or get appoint or reappointed as Director of any Company, wherein the f,etitioner can become Director Counsel for the Petitioner: SMT. VANGA ANITA 1. Union of lndia, Rep by its Secretary, Ministry of Corporate Affairs, Shastry ' Bhavan, Dr. Raiendra Prasad Mar6. New Delhi 2. The Registrar, office or negiitrar o'i 6;p;;6;, RoC, 2nd Ftoor. Coroorate Bhavan, Near Central Water Board, GST'post, Bandlaguda, NagAte, HyderanaO - 500068. ...RESPONDENTS Petition under Article 226 ol the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue any approprlate writ, order or director more particularly in the nature of a writ of Mandamus declaring the action of the Respondents in disqualifying the Petitioner invoking section 164(2) as arbitrary, illegal, contrary to the principles of natural justice, in violation of the provisions of the companies Act 2013 and in contravention of the rights guaranteed under Article '1 4 and Article 1g (1 ) of the constitution of lndia and consequently direct the Respondents to restore the DIN No. 00864547 of the Petitioner 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 Respondents to restore the DIN of the Petitioner DIN No. 00864547 so as to enable the Petitioner to continue as Director of the Company and/or get appoint or reappointed as Director. of any Company, wherein the petitioner can become Director pending disposal of the Writ Petition Counsel for the Petitioner: SMT. VANGA ANITA Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL Between: Vijay Kumar lt4amillapally, S/o. Yedukondala Venkata Reddayya Mamillapally Age. 52 Years, Occ. Business, R/o. D.No.13-1-243120t;,- Flal No.20S, Venkateswara Arcade, Ivloti Nagar, Adjacent to JOB, Hyderabad, Telangana - 5ooo18 .-.pErroNER AND 1. 2. Union of Jndia Rep by its Secretary, N/inistry of Corporate Affairs, Shastry Bhavan, Dr. Rajendra Prasad [ /arg, New Delhi. The Registrar, Office of Registrar of Companies, ROC, 2nd FIoor, Corporate Bhavan, Near Central Water Board, GST Post, Bandlaguda, Nagole, Hyderabad - 500068. RESPONDENTS Petition under Article 226 of the Consiitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any appropriate writ, order or director more particularly in the nature of a Writ of Mandamus declaring the action of the Respondents in disqualifying the Petitioner invoking Section 164(2) as arbitrary, illegal, contrary to the principles of natural justice, in violation of the provisions of the Companies Act 20'13 and in contravention of the rights guaranteed under Article 14 and Article 19 (1) of the t WP NO: 16161 OF 202't Constitution of lndia and consequently direct the Respondents to restore the DIN No. 03506071 of the Petitioner 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 mery be pleased to direct the Respondents to restore the DIN of the Petitioner DIN No. 03506071 so as to enable the Petitioner to continue as Director of the Companl'and/or get appoint or reappointed as Director of any Company, wherein the Petitioner can become Director pending disposal of the Writ Petition Gounsel for the Petitioner: SMT. VANGA ANITA Counsel for Respondents: SRI N. RAJESHWAR RAO ASSISTANT SOLICITOR GENERAL The Court made the following: COMMON ORDER IION' I] t,E SRI .I US'IICE ABIIINAND KUMAR SHAVII I w.P,Nos, I I,l3 I191 l I 12240 13780.1.1963 14992 l5r 39. ls856 &16t6t of 202t 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, 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 3. companies, during the The petitioners, who were directors of the struck off and who are presently directors of active companies, releva nt period in question, failed to file financial statements or annual returns for a continuous period of three yea rs Therefore, the 2nd respondent passed the impugned order under Section 164(2) of the Act, disquaiifying 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 respecttve companies failed to do so, The Director Identification Numbers (DINS) of the petitioners were also I I :-----:=- I deactivated. Aggrieved by the same, the present writ petitions have been filed. 4. This court granted interim orders in the writ petitions directing the 2'd respondent to activate DINs of th3 petitioners, to enable them to functionother than in strike off compa ries. 5. Heard the learned counsel appearing fcr the petitioners in all the writ petitions, Sri Namavarapu Rajeswara Rao, learned Assistant Solicitor General for the respondents - Uniol of India. 6. Learned counsel for the petitioners, cortend that before passing the impugned order, notices have not been issued, giving them opportunity, 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 ._o be a director, provided he has not filed financial statements or annual returns of the company to which he is director, for any continuou:; period of three financial years. Learned counsel further submits that this provision came into force with effect from 1.4.201.4, and p-ior thereto i.e., under Section 27aG)G) 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 cc,ntend that this provision under Act 1B of 2013, will have prospective operation and hence, if the directors of company fail to comply with the requirements mentioned in the said provision subse(luent to the said date, the authority under the Act, is within its jurisdiction to disqualify them, But in the present cases, the 2nd respondent, ,.aking the period prior to 1.4 .2O14, t.e gaving the provision retrospective eFfect, disqualified the petitioners as directors, whichis illegal and arbitrary. B. With regard to deactivation of DINs, learned counsel for the petitioners submit that the DINs, as contemplated under Rule 2(d) of the Companies (Appointment and Qualification of Directors), Rules, 2014 (for 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 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 t 4inistry of Corporate Affairs, has floated ascheme dated 29.t2.2O17 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 2a8$) of the Act, In case of active companies, they can make applicatlon 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. However, under Section 252 onlythe companies, which are carrying on the business, can approach the Tribunal and the companies, wfrich have no business, cannot I I I l approach the Tribunal for restoration. They submit :hat since the penal provision is given retrospective operation, de hors the above scheme, they are entitled to invoke the jurisdiction of tl\"tis court under Article 226 oF the Constitution of India. 10. With the above contentions, learned corrnsel sought to set aside the impugned orders and to allow the writ pet trons. 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 financial years, autornatically entail their d isq ua lification under Section 16aQ)@) oF the Act and the statute does not provide for issuance of any notic3. Hence, the petitioners, who have failed to comply with thestatuto-y requirement under Section 764 of the Act, cannot complain of violation of principles of natural justice, as it is a deeming proYision. Learned counsel further submits that the petitioners have altelna[ive remedy ofappeal under Section 252 of the Act, and hence writ: petitions may not be entertained. 12. To consider the contention oF the learned Assistant Solicitor General with regard to alternative remedy o' appeal under Section 252 oftheAct, the said provision is required to be considered, and the same is extracted as under for better appreciation: 252. Appeal to Tribunalr (1) Any person aggrieved by an order of the Registrar, notifying a company as dissolved under Section 248, may file an appeal to the Tribunal within a perioc 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 company from the register of carnpaniesis not )usttfretl in view of the absence of any of the grounds on which the orXer was passed by the Registrar, it may order restoration of the name of the company in the register of companies; Provided that before passing an order under :his sectiont the Tribunal shall give a reasonable opportunitt of making representations and of being heard to the Regist,-ar, 5 (3) If a campanyj or any member or creditor ar worker thereof feels aggrieved by the company having its name struck off from the register af companies, the Tribunal or an application mdde by the company, member, creditorar warkman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-sectian (5) of Sectian 248, if satisfied that the company was, at the time af its name being struck off, carrying on business or in operation or atherwise it is just that the name af the company be restared to the register of companies, order the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the compaoy and all other persons in the same pasition as nearly as may be as if the name of the company has not been struck off frorn the register ot 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 samei can file an appeal. Thus the said provision provides the forum for redressal against the dissolution and striking off the company from the register of companies. It does not deal with the disqualification of the directors, and deactivatjon of their DINs. In the present casei the petitioners are only aggrieved by their 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. I I I I the company and all the persons concerned: Provided further that if the Registrar is satisfied, that the name of the company has been struck off from the register of companies either inadvertenuy or on basis of incorrect information furnished by the company or its directors, which requires restoration in the reoister of companies, he mat within a period of three years'from the date ol passing ol the order dissolving the contpany under Sectian 2,18, file an application before the Tribunal seekino restoration of name of such company. (2) A copy of the order passed by the Tribunal shalt be filed by the companywith the Registrar within thirty days from the date of the order and on receipt of the order, the Registrar shall cause the name of the company to be restored in the register of campanies and shall tssue a fresh certi fi ca te of i ncorporatian. 6 13. Under Section 164(2)(a) of the Act, if the Director of a company fails to file financial statements or annual -eturns for any continuous periodof three flnancial 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 fails to do so. The said provision under the Act 18 of 2013, came into force with effect from 01.04.20L4, and the petitioners are disqualified as directors under the said provision. At this stage, the issue that arises for consideration is - whether the d isq ua lification envisaged under Sectlon 164(2)(a) of the Act, which provision came into force with eFfect from 01.04.2014, can be made applicable with prospective effect, or has to be given retrospective operation?ln other words, the issue would be, from which financial yt:ar, the default envisaged under Section 16a(2)(a) of the Act, has to l:e calculated, to hold the director of the company liable? In this regard, the learned counsel brought to the notice of this Court, the (;eneral Circuiar No.08/14 dated 4.4.2014 issued by the lVinistry of Corporatrorr affairs, which clarifies the applicability of the relevant financial years. The relevant portion of the said circular is as under: \"A number of provisions of the Campaoies Act, 2013 including those relating to maintenance of books of a(count, preparation, adoption and filing of financial statements (and documents required to be attached thereto), Auditors reports and the Board of Directors report (Board's repott, have been brought into force with effect from lst April, 2014. Provisions of Schedule II 'useful lives to campute depreciation) and Schedule III (fornat of financial statements) have also been brought into farce from that date. The relevant Rules pertaining to these provisions have also been notified, placed on the website of the t'linistry and have come into force From the same date. The Ministry has received requests for clarificaticn with regard to the relevant financial years with effect fron. which such provisions of the new Act relating to mainten.nce of books of account, preparation, adoption and filing of fi'Dncial statements (and attachments thereto), auditors repc,rt and Board's report will be applicable. Alhotlgh the position in this behalf is quite clear, tt) make things absolutely clear it is hereby notified that the ft'tanoal statements (and docutnents required to be aLtached thereto), auditors report and Board's report in resDect of - all a I f-r\"\":\"! 1 financial yearsthat commenced earlier than tst Aprit shall be governed by the relevattt provisons/schedutes/;ubs of the Companies Act, 1956 and--that in respect of finaniiat years commencing on or after 1* April, 2014, the provisions of the new Act shall apply.,, A reading of the above circular makes it clear the financial statements and the documents required to be attached thereto, auditors report and Board,s report in respect of financial years that commenced earlier than 0t.04.2014, shall be governed by the provisions under the Companies Act, 1956 and in respect of financial years commencing on or after 0L.04.20L4, the provisions of the new Act shall apply. 14. At this stage it is required to be noticed that the analogous provision to Section rcae)@) of the -Act 18 of 2013, is Section 27C(t)(g) of Act 1 of 1956. The said provision under Act 1 of 1956 is extracted as under for ready reference: Section 274(11 A person sha not be capabte of being appointed director of acompany, if - (g) such person is already a director of a public campany which, (A) (B) 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 Provided that such person shall not be etigibte to be appointed as a director of any other pubtic company for a period of five years from the date on which such public company, in which he is a director, failed b fite annual accounts and annual returns under sub-clause (A) or has failed to repay its deposits or interest or redeem its debentures on due date or pay dividend referred to in clause (B). A reading of the above provisjon 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 thre!. financial years coitnencing on I I, ! ti 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 comp.rny, in which he is a director, Failed to flle annual accounts and annua returns. So the statutory requirement of filing annual accounts and aitnual 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 and annual returns by the directors of the p:ivate company, will not disqualify them as directors under the provi:;ions of Act 1oF 1956. 15. of 2013, no Under Section 764(2) of the new legisl.rtion i.e,, Act 1g such dlstinction between a 'private :ompany, 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 con!inuous period of three financial years, will not be eligible for appointment as a director of a company. As already noted above, thr: said provision, came into force with effect from Ol.O4.2Ot4. 16. Coming to the facts on hand, the 2nd respondent has disqualified the petitioners under Section 16a(2)(a) cf the Act 1B of 2013, for not filing financial statements or annual ret,rrns, for period prior to 01.04.2014. 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 1g ofZOL3, retrospective eFfect, which is impermissible. 9 17. The Apex Court in COMMISSIONER OF INCOME TAX (CENTRAL)-II NEW DELHI v, VATIKA TOWNSHIP PRIVATE LIMITEDT has dealt with the general principles concerning retro s pectiv ity, The relevantportion of the judgment is thus: 27. A legislation, be it a statutary Act or a statutory Rule or a statutory Notification, may physicallY cansists of words printed on papers. 2B However, conceptually it is a great deal rnore than an ardinary prose. There is a special peculianty in the mode af verbal communicatioo by a legislation. A legislation is not just a series of 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 principtes af 'lnterpretation of Statutes'. Vis-e-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 variaus rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appeaq 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 adiustment of it. Our belief in the nature of the law is faunded an the bed rock that every human being is entitled to arrange his affairs by relyinq 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 laoks forr'tard not backward. As was observed in Phillips vs. Eyre t(1870) LR 6 QB 11, 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 transactians 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 abserved in the decision repofted in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co Ltd. t{1994) 1 Ac 4861. Thus, legislations which madified accrued rights or which impose obligatians or impose new duties 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 legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legistation. We need not note that cornucopia of case law available on the subject because aforesaid legal position clearly emer.ges from the various decisions and this legal position wes conceded by the counsel for the t (tots)t ft-L't t: I 10 parties. In any casel we shall refer to few judgments containing this dicta, a little later. 31. We would also like to paint out, for ttte sake of completenesst that where a benefit is conferred by a legislation, the rule against a retrospecti /e construction is different. lf a legislation confers a benefit on some persons but without inflicting a correspondittg detriment on some other person or on the pubtic generally, and whereto confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purpasi/e construction, would warrant it to be given a retrospective effect. This exactly is the justificatiai) ta treat pracedural provisions as retrospective In Government of India & Ors. v. lndian Tobac.o Association, [(2A0, 7 'CC 396], the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to De given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State o/ Maharashtra & Ors., [(2006) 6 ,CC 289]. It was h€td that where a law is enacted for the benetit of community as a whole, even in the absence af a provision the statute may be held to be retrospective in nature. However, we are (sic not) confronted with any such situation here. 32. ln such cases/ retrospectivity is attached ta benefit the persons in contradistinction ta the provision imposing some burden or liability where t,re presumption attached towards prospectivity. In tne instant case, the proviso added to Section 113 af tne Act is not beneficial to t e assessee. On the contrary, it is a provision which is onerous to fhe assessee. Therefore, in a case like this, we have to proceed wtth the normal rule af presumption against retrospecti/e operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall De construed to have a retrospective operation unless su,:h a construction appears very clearly in the terms of ttle Act, or arises by necessary and distinct implicatian. Dogmatically Framed, the rule is no mare than a presunlption, and thus could be displaced by olt weighinq factors. 43. There is yet another very interesting piece af evidence that clarifies that provision beyond any parc cf doubt viz., the understanding of CBDT itself regarding this provision. It is cantained in CBDT Circular Na,B of 2002 dated 27.8.2002, with the subject \"Finance Ad, 2002 - Explanatory Notes on provision relating ta Direct Taxes\". This circular has been issued after the passing of the Finance AcL 2A02, by which anendment ta section 113 was made. In this circular, va|iots amendments ta the lncofite tax Act are discussed ati)t.ly demonstrating as to wltbh amendments a.e clarificatary/retrospective in operation and tyhi,:h amendments are prospective. For example, Explanation to section 158-BB is stated to be clarificatory in nature. Likewise, it is mentioned that amendments in Section 145 whereby provisions cf that section are made applicable to block assessments is made clarificatory and would take effect retrospectively from l\"t day of )uly, 1995. When it comes to amendment to Section 113 of the Act, this very circul)r provides that the said amendment along with the amendments in Section 158-BE, would be prospecti./e i.e., will take effect from 1.6.2002.\" i1 ; 18. Thus, the Apex Couft 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 inlention, to make the said provision appricabre 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 applicabirity ot the provisions, has to be construed as an impodant piece of evidence, as it would clarify the provision beyond any pare of doubt. In the present case, asalready noted above, the Mjnistry of Corporation affairs has issued thecircular No.0g/2014 dated 4.4.2014 clarlfying 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 01.04.2074, shall be governed by Act 1 of 1956. At the cost of repetition, since in the present cases, as the 2no respondent / competent authority, has disqualified the petitioners as directors under section r64(2)(a) of the Act 18 of 2013, by considering the period prior to 01.04.20t4, the same is contrary to the circular, and also contrary to the refe rred judg ment. law laid down by Apex Court in the above 19. If the said provision is given prospective effect, as per the circulardated 4.4.20f4 and the law laid down by the Apex Court, as stated jn the writ affidavits, the fiist financial year would be from 0L-04-20L4 to 31.03.2015 and the second and third years financial years wourd be for the years ending 31.03.2016 and 31.03.2017. The annuai returns and financial statements are to be filed with Registrar of Companies only after the conclusion of the annual general meetino I T I2 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 closinq of financial year i'e, by 30,0g.2017. Further, the time limit for filing annua returns under Section g2G) of the Act, is 60 days from annual gene:ral meeting, or the last date on which annual general meeting ought to have been held with normal fee, and within 27O daYs with addit onal fee as per theproviso to Section 403 of the Act. Learned counsol submit that if the said dates are calculated, the last date for filing the annual returns would be 3o'11'2017, and the balance sh{let was to be filed on 30.LO.2OL7 withnormal fee and with additional fee, the last date for filing annual returns is 27.07.2018. In other words, the disqualification could get triggered only on or after '17'07 2018 8ut the period considered by the 2nd respondent in the present writ petitions for clothing the petitioners with disqualification, pertains prior to 01.04.2014. Therefore, when the omission, which is now pointed out, was not envisaged as a ground for disq lalification prror ta 1.4,20!4, the petitioners cannot be disqualified on :he said ground' This analogy is traceable to Article 2O(1) of the Cons:itution of India, which statesthal \"No person shall be convicted of an/ offence except for viotation 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 which might have been inflicted under the law in force at the time of the commission of the offence\". In vlew of the same, the ground on which the petitioners were disqualified, cannot stand to legal scrutiny, and the same is liable to be set aside. 20. A learned Single Judge of the High Court of KarnatAKA iN YASHODHARA SHROFF VS' UNION OF l:l INDIA2 considering Section I64(Z)(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: 208. ]n view of the aforesaid discussion, I have arrived at the fol low i ng concl usions : (a) ]t is hel.1 that Section 164(2)(a) of rc Act is nat Ltttra virus Article 14 of the Constitution. The said bravision is not manifestly arbttrary and atso does not fall within the scope of the doctrine of proportionality. Neither does the said provisionviotate Article j9(1)(g) ot 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 af the circumstances stated therein and the same is in order to achieve probity, accountability, and transparency in corporate governance, (b) That Article (sic) Section 164(2) oF the Act applies by operation of law on the basisof the circumstances stated therein, the said provision does not envisage any hearing, neither pre-disqualification nor post-disqualification and thts is not in vialation of the principles of natural )ustice, is not ultta vires Afticle J4 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) lt)sofar as the private compautes are conce )ed, disqualification on account of the circumstances stated under Section 164(2)(a) of the Act has been brought into force for the first time under the Act and the conseqrences of disqualification could not have been impased on directors of private companies by taking into consideration any period prior to 01.04.2014 for the purpose of reckoning continuous period of three financial years under the said provision. The said conctusian is based on the principal drawn by way of analogy from Afticte 20( 1) of the Constitution, as at no point of time prior to the enforcement of the Act, a disquatification based on the circumstances under Section 164(2) of the Act was ever envisaged under the 1956 Act vis-e-vis directors of private campanies. Such a disqualification could visit a director of only a public company under Section 274(j)(9) of 1956 Act and never a director of a private company. Such disq ua liFication of the petitioners who are directors of private companies is hence quashed. (f) (g) Consequently, where the disqualification under Section 164(2) of the Act is based on a continuous period of three financial years commencing from 01.A4,20j4, wherein financial statements or annual returns have nat been filed by a public or private company, the directors ol such a I 2 w.p.No.s29l I of 2017 ancl barch darecl 12.06.2019 I _-t - u I T ! l4 3special Civil Application No 22l35 of20l7 and batch dated I8 12'20I8 o W.P.No.25455 of 2017 and batch dated 27 07 201E 29. In fine, (a) When the New Act 2013 came into . effect fron l.i,iolqt the second respondent herein has wrongly given retrospective effect and erroneously 'i)tiiriiti,ii the petitione;' directors from 1 1 2016 itsetf before the deadline commenced wrongly fi