Case Law Details
Ashish Gupta Vs. Union of India (Delhi High Court)
The issue under consideration is whether Disqualified Director whose DIN and DSC has been frozen by the ROC due to non compliance will be eligible for Companies Fresh Start Scheme 2020?
The Petitioner, is a director in three companies namely (i) Delhi Control Devices Private Limited (hereinafter, “DCDPL”) (ii) ABMR Tradex Private Limited (hereinafter, “ABMR”), & (iii) DCD Grand Power India Private Limited (hereinafter, “DCD Grand”). He has been disqualified as a director under Section 164 of the Companies Act, 2013 with effect from 1st November 2017, due to the alleged non-compliance by DCDPL in filing its returns from 2014-2017. The DIN and DSC of the Petitioner have also been frozen, though the name of the company, DCDPL has not been struck off and it continues to be an active company.
High Court states that, 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. The launch of the Scheme itself constitutes a fresh and a continuing cause of action. Under such circumstances, the question of delay or limitation would not arise. The Scheme is a fresh lease of life given to defaulting companies, which are not yet declared `Inactive’, to file their returns and do their businesses in accordance with law. The purpose being one to enable businesses, to limit the economic disruption caused due to COVID-19, ought to be interpreted in a manner so as to not render the objective of the Scheme, a failure. The scheme is an ENABLER and not a DISABLER for defaulting but active companies. In view of the above it is held that the Petitioner would be entitled to avail of the Scheme to file documents of the defaulting company, which is still an active company whose name has not been struck off. Accordingly, (1) In respect of DCDPL, the Petitioner is permitted to avail of the Scheme, file the relevant documents and seek condonation of delay; (2) In respect of the other two companies i.e. ABMR and DCD Grand, the DIN and DSC of the Petitioner would not be treated as suspended from the position of Director, as the Petitioner would be entitled to the benefit of the rationale of this court in paragraph 98 of Mukut Pathak (supra).
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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