Removal of Disqualification of Director- Without Revival of Company – High Court


Removal of Disqualification of Director- Without Revival of Company –
“High Court”

Short Summary:

In this Flash editorial, the author begins by referring the provisions of Removal of Disqualification of Director. While, MCA has issued Condonation of Delay scheme, 2018 as an opportunity to Disqualified Directors to remove their Disqualification. However, even after the scheme there are many questions/ difficulties in the mind of professionals and Corporates. In this article author endeavor to solve those queries. Like:

I.            How to remove the Disqualification of Director, in situation:
§  When a person having Directorship in Struck off Company / Companies only.
§  When a person having Directorship in Struck off and Active
Company both
§  When a person having Directorship only in Active Companies
Author has already issued some articles/ editorial on the Topic Disqualification of Director, Link of the same shall be given at the end of this article.

This is article no. 318 of the series of editorials written by the author on corporate laws {Including Companies Act, 2013, SEBI, RBI Regulations, IBC, LLP Act, 2008 etc.}.
  
How to Remove the Disqualification of Director:
I. When a person having Directorship in “Struck off Company/ies”

First: There is no way out under Companies Act, 2013 for removal of Disqualification of Directors.

Second: As there is no way out under Companies Act, 2013, Ministry of Corporate Affairs came out with a scheme “Condonation of Delay Scheme, 2018
According to this scheme a person by availing this scheme and if made compliance according to the scheme his Disqualification shall be removed by the ROC. However, even after the scheme a person having Directorship in the “Struck off Company” not able to get his disqualification removed. Because, this CODS is applicable on all the Defaulting Companies (Other than the Companies which have been struck off).

Third:  As Struck off Company can’t avail the CODS, 2018. However, they are having following below mentioned 2 (two) ways:-
   1.     To file an application with NCLT for revival of Company, if received revival order from NCLT then avail the CODS,2018.
2 2.  If Director doesn’t want to revive the Company, however want to remove the disqualification. Then file a Writ Petition with “HON’BLE HIGH COURT”.
Above mentioned conditions can be understand easily by the below mentioned Chart.

Chart on Situation Third:






In this editorial author shall endeavor to through lights on the situation Third- Part II- If Director doesn’t want to revive the Company, however want to remove the disqualification.

In This Situation:

a)     Company has been struck off by the ROC due to non filing of Financial Statement or Annual Return with ROC.

b)     Directors don’t want to file application with NCLT for revival of Company as the Company not having any business from previous 3 financial year or directors don’t want to continue the business in the Company.

c)      Directors want to avail the CODS scheme to remove their disqualification; however due to strike off status they are not able to do so.

d)     Directors even want to Close / Strike Off the Company voluntarily also, if opportunity given to them.

Case Law
Court
Hon’ble Delhi High Court
Parties
Pradeep Jain V/s Union of India And ORS.
Hon’ble Justice
Mr. Justice Vibhu Bakhru
Even many other orders have been passed by the Hon’ble High Courts on the above mentioned issue on the same facts.

FACATURAL BACKGROUND:
I.       Name of the petitioner has been mentioned in the list of Disqualified Director issued by the            Registrar of Companies
II.      The Company has not carried out business for past three years.
III.     Company’s Bank Account is also not in operation for past three years.
IV.    The petitioner also did not file the requisite returns as required under Companies Act, 2013.
V.     The petitioner becomes disqualified u/s 164(2).

VI.    The petitioner is desirous of availing of CODS, 2018. However, Company is struck off, it has              been disable from availing the benefit of CODS-2018.

VII.   The Company also not in position to seek revival, since admittedly the Company has not                   carried out any business and was liable to be struck off from the ROC

VIII.  In fact company, would voluntarily seek dissolution of the Company u/s 248(2) of the Act, if           it has opportunity to do so.

RELIEF WANT FROM THE HON’BLE HIGH COURT:
I.       Allow the Company to avail CODS, 2018.
II.     Allow the Company for voluntarily dissolution u/s 248(2)
III.   Allow the Company to file all the pending documents with ROC.
IV.   Remove the Disqualification of Directors Permanently.

DECISION OF HON’BEL “HIGH COURT”::
The Hon’ble High Court has passed the following order on the basis of above mentioned fact.  The Court directs as under:
Company shall file the below mentioned documents and application with Registrar of Companies in hard copies.
a)     The petitioner may file all the requisite returns in relation to the company to avail the CODS-           2018. (All the pending documents required to be filed with ROC with additional fees)
b)     The petitioner may also file the necessary resolutions for voluntarily striking off the name of         the Company as required under Section 248(2) of the Act. (Documents of voluntary Strike off         Company)
c)      The petitioner would also make a necessary application under CODS-2018 alongwith the                  requisite charges. (CODS form with fees Rs. 30,000/-)
According to the order above mentioned documents shall be file in Hard Copies with Registrar of Companies.                     
After filing ROC shall scrutinize the documents and if the same are found to be in order for strike off u/s 248(5) or availing benefit of CODS-2018.
The removal of Company from the Register u/s 248(1) would be deemed as striking off the Company /s 248(2), and application under CODS-2018 would be sympathetically considered by the Registrar.

Conclusion:
One can opine that if any director of struck off Company want to avail the benefit of CODS-2018 or want to remove its disqualification can file a writ petition in Hon’ble High Court for the same.
The author shall discuss the other questions as mentioned at starting of this article in its next article Series No. 319.

Link of articles already published on Disqualification of Director:



1.        
FAQ’s Condonation of Delay Scheme


2.        
Way out for Removal of Disqualification of Director


3.       
Remedy for Disqualified Director




Comments

  1. what will do if one director hold directorship in 3 companies in which one company active , second company defaulted in filing of 3 yrs returns with roc and its strike of by roc and third company not filed returns for 10 yrs because of that it was strike off ?????

    ReplyDelete
  2. Go for revival of struck off Companies. once both companies get revived from NCLT then complete annual filings in all the comapneis.

    ReplyDelete
  3. How long will it take from filing of the writ petition for removing of director disqualification and getting an order for the same.

    ReplyDelete
    Replies
    1. File a writ petition on urgent basis and try to mention that matter on next day, and then u will get the order within a week.

      Delete
  4. Hi, after filings CODS form, what is the next step for removal of disqualification. Form CODS is in STP mode and it got approved automatically.

    ReplyDelete
  5. if a company not filed its financials for the last 8 years and the status of the company is active but director received a notice for disqualification and another company wants to appoint him as director then what we should do to? Can we do so, if not then what is the way to make his appointment valid

    ReplyDelete

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