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IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 6^thJanuary, 2021

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W.P.(C) 7280/2020 & CM APPLs. 24543-44/2020

ANANT NARAIN & ANR.

..... Petitioners

Through:

Mr. Varun Jain, Advocate.

versus

UNION OF INDIA & ANR.

..... Respondents

Through:

Mr. Manik Dogra, Adv. for ROC.

CORAM:

JUSTICE PRATHIBA M. SINGH

Prathiba M. Singh, J. (Oral)

1.

This hearing has been done by video conferencing.

2.

The Petitioners were directors in M/s Innowin Info Solutions Private

Limited, which company was struck off due to non-filing of the company’s

financial statements or annual returns for a continuous period of three

financial years. The Petitioners were disqualified and their Director

Identification

Number

and

Digital

Signature

Certificate (hereinafter, “DSC”) were also deactivated. The Petitioners now

wish to start a new business and accordingly, pray for reactivation of their

DIN/DSC.

3.

The legal aspects arising out of disqualification of directors under

Section 164 and 167 of the Companies Act, 2013 and the deactivation of

their DIN and DSC numbers have been dealt with in the following

judgements:

i.

Mukut Pathak & Ors. v. Union of India & Ors., 265 (2019)

DLT 506,

ii.

Sandeep Agarwal & Anr. v. Union of India & Anr.

2021:DHC:43

[W.P.(C)5490/2020, decided on 2^ndSeptember, 2020] and

iii.

Radhika Byrne v. UOI & Anr. [W.P.(C) 5534/2020, decided

on 28^thDecember, 2020].

4.

There are four categories of Directors that are approaching Courts

seeking setting aside of disqualification and activation of DIN/DSC

numbers.

a)

Directors who have been disqualified prior to 7^thMay 2018, qua

other companies in addition to the defaulting company:

As per the proviso to Section 167 (1) (a) of the Companies Act, 2013, once a

director is disqualified qua one company i.e., the defaulting company, the

office of the said director would become vacant in all companies. The said

proviso, has, however, come into effect only on 7^thMay, 2018. In Mukut

Pathak (supra) it was held that this proviso cannot have retrospective effect

and would only apply if the disqualification took place after 7^thMay 2018.

Paragraph 98 of Mukut Pathak (supra) reads as under:

Since there is no stay on the judgment in Mukut Pathak (supra), it

continues to hold the field. Thus, in cases where directors have been

disqualified prior to 7^thMay, 2018, the proviso to Section 167(1)(a) would

2021:DHC:43

not apply and the directors would continue to be directors in companies

other than the defaulting company. The disqualification of such directors

qua active companies would therefore be liable to be set aside and their DIN

and DSC’s reactivated.

b)

Directors who have been disqualified post 7^thMay 2018, qua other

`active’ companies:

As held in Mukut Pathak (supra), in all cases where the directors have been

disqualified on or after 7^thMay, 2018, the proviso to Section 167 (1) (a)

would apply and such directors would cease to be directors in all companies

including the defaulting company. In March, 2020, in light of the COVID-

19 pandemic, the Ministry of Corporate Affairs vide General Circular No.

12/2020 introduced CFSS-2020 to allow a fresh start for defaulting

companies and directors of such companies. This Court, in Sandeep

Agarwal (supra) has analyzed CFSS-2020 to conclude that the purpose of

the scheme is to provide an opportunity for ‘active’ companies i.e.,

companies whose names have not been struck off, who may have defaulted

in filing of documents, to put their affairs in order. The relevant portion of

the judgment is extracted below:

2021:DHC:43

2021:DHC:43

Applying the scheme to the facts of the case, this Court in Sandeep Agarwal

(supra) directed reactivation of the DINs and DSCs of directors of two

companies – one whose name had been struck off and one, which was still

active. Thus, the DINs and DSCs of disqualified directors of struck off

companies, who are also directors in active companies, may be reactivated

qua the a