The proviso under Section 164(2) of the Companies Act is prospective and does not apply to past disqualifications, rendering petitions moot once the disqualification period has expired.

(Per: HONOURABLE THE CHIEF JUSTICE) Date : 29-07-2024 Both the writ petitions challenge the disqualification of Directors. CWJC No. 6605 of 2021 raises the issue of the effect of the Companies (Amendment) Act, 2017 specifically with respect to the introduction of the proviso under Section 164(2) of the Companies Act, 2013 and the insertion of sub-

clause (1) in Section 167(1).

2. Shri Amar Kumar Singh, learned Counsel appeared for the petitioner in CWJC No. 6605 of 2021 and none appeared in the other writ petition. Dr. K.N. Singh, learned Additional Solicitor General of India appeared for the respondents, assisted by Shri Alok Kumar, Central Government Counsel.

3. Learned counsel for the petitioner argued that the proviso under Section 164(2) apply squarely in the case of the petitioner in CWJC No. 6605 of 2021. It is pointed out from the decisions of the various Courts produced along with the rejoinder filed that the proviso introduced enabled the continuation of the petitioner’s directorship for a period of six months and for that purpose his Director Identification Number (DIN) should also be restored.

4. For the respondents, it was first pointed out that the term of the disqualification has now expired and the writ petition has become infructuous. It is also argued that the decisions relied on by the petitioner would have no application in so far as deciding the effect of the introduction of the proviso under Section 164(2). In fact, a judgment of the High Court of Bombay which directed consideration of the defaulting Company’s case under the Condonation of Delay Scheme, 2018 (CODS-2018) had been stayed by the Hon’ble Supreme Court.

5. On facts, we first refer to CWJC No. 6605 of 2021, the petitioner in which was a Director in two Companies, as revealed from Annexure-1 (Divyansh Creation Private Limited) and Annexure-2 (Oasis Creative Construction Private Limited).

Annexure-1 indicates that the petitioner was a Director from 23.04.2012 and Annexure-2 indicates the petitioner’s directorship in the second Company having commenced from 18.04.2016. Divyansh Creation Private Limited was declared a non-compliant Company for reason of the statutory returns having not been filed. The petitioner who was a Director was disqualified as per Annexure-3 for the period 01.12.2017 to 30.11.2022. The petitioner’s contention is that as per the introduction of the proviso under Section 164(2), which even if it acts prospectively, the petitioner’s directorship shall be restored and continued for a period of six months.

6. As far as CWJC No. 15269 of 2021 is concerned, it is filed by a Company challenging the disqualification of the Directors. It is averred in the writ petition that the petitioner Company was a running unit using coal as raw material and due to the supply of coal having been stopped, for reason of termination of the agreement with the Coal Company, the activities of the petitioner Company also came to a stand still. It is admitted that from 2015-16 the petitioner’s Company was not able to file annual accounts and annual returns and the Company was struck off as being inactive and the Directors disqualified.

The petitioner Company approached the National Company Law Tribunal, Kolkata Bench, Kolkata which issued Annexure-

1 order directing restoration of the original status of the Company and also directed filing of all the pending statutory document(s) including annual accounts and annual returns for the years 2015-16 to 2018-19, with prescribed fees/additional fee/fine as decided by the Registrar of Companies within 45 days. A cost of Rs. 40,000/- was also imposed for the restoration directed therein. Obviously, the Company did not comply with the orders passed by the NCLT. The writ petition also refers to the General Circular No. 12/2020 dated 30.03.2020 introducing the Companies Fresh Start Scheme 2020, condoning the delay in filing of the documents and the General Circular No. 30/2020 dated 28.09.2020 which took into accoun