IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF OCTOBER 2019 BEFORE THE HON’BLE MR. JUSTICE B. VEERAPPA WRIT PETITION NOS. 48541-48543 OF 2019 (GM-RES) BETWEEN:
1 . ABDUL KAREEM ABDUL SAMAD S/O. LATE ABDUL KAREEM AGED ABOUT 86 YEARS, RESIDING AT #33, BESON ROAD CROSS, BENSON TOWN, BANGALORE-560046 KARNATAKA INDIA 2 . MOHAMMED MOHSIN S/O. ABDUL KAREEM ABDUL SAMAD AGED ABOUT 50 YEARS RESIDING AT #33, BESON ROAD CROSS, BENSON TOWN, BANGALORE-560046 KARNATAKA INDIA 3 . MOHAMMED FAISAL S/O. ABDUL KAREEM ABDUL SAMAD AGED ABOUT 45 YEARS RESIDING AT #33, BESON ROAD CROSS, BENSON TOWN, BANGALORE-560046 KARNATAKA INDIA ... PETITIONERS (BY SRI. JEEVAN KUMAR B.S., ADVOCATE) AND 1 . THE UNION OF INDIA REPRESENTED BY THE MINISTRY OF CORPORATE AFFAIRS, SHASTRI BHAVAN, DR. RAJENDRA PRASAD ROAD, NEW DELHI-110001.
2 . THE REGISTRAR OF COMPANIES KARNATAKA REGION, E-WING, 2ND FLOOR, KENDRIYA SADAN, KORAMANGALA, BENGALURU-560034.
3 . THE MINISTRY OF CORPORATE AFFAIRS A WING SHASTRI BHAWAN RAJENDRA PRASAD ROAD, NEW DELHI-110001, REPRESENTED BY ITS SECRETARY ... RESPONDENTS (BY SMT. ANUPAMA HEGDE, CGC) THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE PROVISIONS OF SECTION 164(2) OF THE COMPANIES ACT 2013 ARE UNCONSTITUTIONAL ARBITRARY AND CONTRARY TO THE PRINCIPLES OF LAW AND CONSEQUENTIALLY STRIKE DOWN THE SAME AND ETC.
THESE WRIT PETITIONS COMING ON FOR ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER The petitioners in the above writ petition have sought to declare that the provisions of Section 164(2) of the Companies Act, 2013 are unconstitutional, Arbitrary and contrary to the principles of Law and consequentially strike down the same etc.
2. The learned counsel for both the parties submits that the issue involved in this petition is already considered by this court made in W.P.No.52911/2017 dated 12.06.2019. The said submission is placed on record. In view of the above submission, the present writ petition is disposed off on the same terms as under:
(i) Where the disqualification of the petitioners is based by taking into consideration any financial year “prior to 01.04.2014 as well as subsequent thereto” while reckoning continuous period of three financial years under Section 164(2) (a) of the Act, irrespective of whether the petitioners are directors of public companies or private companies, such a disqualification being bad in law, the Writ petitions are allowed and the impugned list is quashed to that extent only;
(ii) If the disqualification of the petitioners is based by taking into consideration any financial year prior to 01.04.2014 only i.e., the disqualification has occurred under the provisions of the 1956 Act in respect of the public companies, the writ petitions are dismissed.
(iii) If the disqualification of the directors is based by taking into consideration of three continuous financial years subsequent to 01.04.2014, irrespective of whether the petitioners are directors of public companies or private companies, they stand disqualified under the Act;
(iv) Where the disqualification of the directors is based by taking into consideration any financial year prior to 01.04.2014 in respect of private companies, such disqualification being bad in law, the writ petitions are allowed to the aforesaid extent only;
(v) The writ petitions, wherein the challenge is also made to the vires of Section 164(2)(a), and/or 167(1)(a) and/or proviso to Section 167(1)(a) of the Act, are dismissed to the aforesaid extent;
(vi) The respondents are directed to restore the DIN of those directors whose disqualification has been quashed by this Court;
(vii) Those petitioners who have challenged only the striking off of the companies in which they are directors have an alternative remedy of filing a proceeding before National Company Law Tribunal (NCLT) under Section 252 of the Companies Act, 2013, which provides for an appeal to be filed within a period of three years from the date of passing of the order dissolving the company under Section 248 of the Act. Hence, those writ petitions are dismissed reserving liberty to those petitioners who are aggrieved by the dissolution of the companies under Section 248 of the Act (struck off companies) to approach NCLT, if so advised;
(viii) Parties to bear their own costs.
SD/- JUDGE sd/-