IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF AUGUST 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NO.39351/2019 (GM-RES) BETWEEN:
Sri Gopalakrishna Pillai Kuttappannair, Aged about 46 years, S/o Sri Kuttappannair Vilayilazhikathu Krishnannair, R/o 102, 12 Fortuna Alpha Apartments, 3 Street, Bank Avenue, Babusa Palya, Bengaluru – 560 043. … Petitioner (By Sri S.K. Ravi, Advocate) AND:
1. Union of India, Represented by Ministry of Corporate Affairs, Shastri Bhawan, Dr. Rajendra Prasad Road, New Delhi – 110 001.
2. The Registrar of Companies, Karnataka, E-Wing, 2nd Floor, Kendriya Sadan, Koramangala, Bengaluru – 560 034. …Respondents (By Sri. M.N. Kumar, CGC) This Writ Petition is filed under Articles 226 and 227 of the Constitution of India, praying to declare that Section 164 (2) (a) of the Companies Act, 2013 and the press release dated 06.09.2017 at Annexure-A, disqualifying the Directors of Private Limited Company is unconstitutional, is in violation and in contravention of the provisions of Part-III of the Constitution of India and etc.
This Writ Petition coming on for Preliminary Hearing, this day, the Court made the following:-
ORDER Learned counsel for the parties jointly submit that the controversy involved in the instant petition is squarely covered by an order dated 12.06.2019 passed in W.P.No.52911/2017 and connected matters.
2. In view of the aforesaid submission and for the reasons assigned by a Bench of this Court in the aforesaid order, the writ petition is disposed of on same terms and with the following directions:
(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 rs