October 2018

Corporate Law Corner

Pooja J. Punjabi, Chartered Accountant

1.  Bhagavan Das Dhananjaya Das vs. Union of India [2018] 96 taxmann.com 189 (Madras)

W.P. NOS. 25455 OF 2017 AND 25456, 25729, 26654, 16903, 16970, 16995, 16999, 17151, 17161 of 2018 & Oths.

Date of Order: 3rd August, 2018

 

Section 164(2) of the Companies Act, 2013 – Disqualification of directors – The provision which came into effect on 01.04.2014 cannot be given a retrospective effect especially when the disqualification clause did not trigger in the previous regime

 

FACTS

B was a director of B Co a private limited company incorporated under the Companies Act, 1956 (“1956 Act”). He was also a director in other company S Co which was also a private limited company incorporated under the 1956 Act. B Co had no operations and was lying dormant till the year 2012.

 

In the year 2012, the directors planned to revive the company and there was infusion of additional share capital as well as introduction of three new members to the Board of B Co (one of them being Mr. B). The revival plan did not fructify and B Co continued to remain a dormant company. B Co did not file its annual returns from financial year 2012-13. The last annual return filed was in respect of financial year 2011-12.

 

Registrar Of Companies (“ROC”) on 18.03.2017 issued a show cause notice for striking off the name of B Co. There being no plans to revive the company, B Co issued a no objection letter to the ROC for striking off. On 08.09.2017 ROC issued a list of directors disqualified u/s. 164(2)(a) of Companies Act, 2013 (“2013 Act”) which included name of B as well. Accordingly, B would be prohibited from acting as a director in any other company for a period of 5 years.

 

Aggrieved, B filed a writ petition before the Hon’ble Madras High Court. B contended that provisions of section 16

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