Radhika Byrn v. Union of India & Anr.

1. This hearing has been done by video conferencing. W.P.(C) 5534/2020 & CM APPL.34969/2020 (for reactivation of DIN and DSC) W.P.(C) 5550/2020 & CM APPL.34971/2020 (for reactivation of DIN and DSC)

2. The Petitioners are Directors of Nanda Industrial Consultants Private 2020:DHC:3817-DB Limited. The present writ petitions have been preferred seeking directions for reactivation of their Director Identification Numbers (hereinafter ‘DINs’) and Digital Signature Certificates (hereinafter ‘DSCs’) numbers in order to enable them to file the necessary documents. The said numbers of the Petitioners have been deactivated owing to non-compliance and nonfiling of balance sheets and returns of the Company for several years. The Petitioners were initially disqualified from acting as Directors, under Section 164(2)(a) of the Companies Act, 2013 which then resulted in deactivation of DIN and DSC numbers.

3. The writ petition was initially listed before a ld. Single Judge of this Court. In view of the fact that the legality and validity of circular dated 15th September 2017 by which disqualification was effected by the Office of the dated 21st August 2020, the petitions were directed to be listed before the Ld. Division Bench to be taken up along with other petitions raising identical issues. On 27th August 2020, notice was issued by the Ld. Division Bench and the matters were listed on 1st October 2020.

4. The submission of the Petitioners/Applicants is that the present case is squarely covered by the judgment of the ld. Single Judge in Mukut Pathak & Ors. V. Union of India & Ors., 265 (2019) DLT 506 and since there is no stay of the judgement of the Ld. Single Judge, the DSC and DIN numbers be reactivated to enable the Petitioner to avail of the “Companies Fresh Start Scheme 2020” (hereinafter, “Scheme”).

5. Heard Mr. Jaspreet Singh and Ms.Parashar, ld Counsels for the parties. The disqualification of the Petitioners is two fold – firstly on 6th September 2017 and 12th September 2017 from acting as Directors in any company for a period of five years w.e.f. 1st November 2014 to 31st October

2019. Subsequently vide circular dated 15th September 2017 the Petitioners have been disqualified under Section 164(2)(a) of the Act from being a Director in any company, for a period of five years effective from 1st November 2016 to 31st October 2021.

6. The present applications seek re-activation of the DINs and the DSCs, as the Petitioners wish to avail of the Scheme of 2020, which is available until 31st December 2020. As per the said scheme, the Directors can make good their defaults, by filing the returns in terms of the scheme. The details of the said scheme have also been considered by a Ld. Single Judge in judgment dated 2nd September 2020, in WP(C) 5490/2020, titled Sandeep Agarwal and Anr. Union of India and Anr., dated 2nd September 2020. The Court has held:

12. The salient features of the Scheme are: i) It has been launched to facilitate a fresh start, on a clean slate, for companies registered in India; ii) Alleviative measures under the Scheme are for the benefit of all companies. It gives an opportunity to file belated documents in the MCA-21 Registry in respect of annual filings, without being subject to higher additional fee on account of delay; iii)It grants immunity from launch of prosecution or of proceedings for imposition of penalty on account of delay associated with certain filings. For the said filings, only normal fee would be payable; iv) Any defaulting company can file the belated documents, which were due for filing on any given date, as per the Scheme. Normal fee would be payable for such filing by the defaulting company under the Companies (Registration Offices and Fee) Rules, 2014 and no additional fee shall be payable; v) To the extent that any prosecution has been launched or penalty has been imposed for the delay associated with the filings of belated documents, it provides that the same shall not be launched and immunity has been provided; vi) Applications can be made for seeking immunity in respect of belated documents. Once the documents are taken on file or approved by the designated authority, such applications would have to be filed within six months from the date of closure of the Scheme; vii) To avail benefit of the Scheme, the defaulting company would have to withdraw any appeal that it may have filed against prosecution launched or orders passed by a court or adjudicating authority under the Act; viii) If a final notice of striking off of a company has already been initiated or in certain other situations as enumerated in Clause 6(ix), the Scheme would not apply; ix) If immunity is granted, the Scheme provides that prosecution shall be withdrawn before the concerned Court and the proceedings for penalties shall also be closed. x) The Scheme also extends to inactive companies who can file the requisite documents and get themselves declared as dormant companies under Section 455 or apply for striking off the name of the company.

13. This Scheme provides an opportunity for active companies who may have defaulted in filing of documents, to put their affairs in order. It thus provides Directors of such companies a fresh cause of action to also challenge their disqualification qua the active companies. In the present case, the Petitioners are Directors of two companies – one whose name has been struck off and one, which is still active. In such a situation, the disqualification and cancellation of DINs would be a severe impediment for them in availing remedies under the Scheme, in respect of the active company. The purpose and intent of the Scheme is to allow a fresh start for companies which have defaulted. In order for the Scheme to be effective, Directors of these companies ought to be given an opportunity to avail of the Scheme…..”