Case Law Details
Zacharta Maramkandathil Mohan Vs Union of India (Kerala High Court)
Conclusion: Director Identification Numbers (DINs) of assesses-director allotted under Rule 10 of the Companies (Appointments and Qualifications of Directors) Rules, 2014, were not liable to be deactivated or cancelled solely for the reason that assesses-director stood disqualified for appointment / reappointment as Directors of Companies by operation of Section 164(2).
Held: In the instant case, assessee submitted against deactivation of DINs was that the Companies (Appointment and Qualification of Directors) Rules, 2014 did not empower the Registrar of Companies to deactivate DINs. Assessee argued that deactivation of DIN for the sole reason that a Director was temporarily disqualified to hold office, under Section 164(2), was impermissible. It was held that from the Rule 11, it was evident that the Rule does not empower any authority to cancel or deactivate DIN upon disqualification under Section 164(2). Cancellation or deactivation is contemplated only where the DIN is found to be duplicated or it was obtained in a wrongful manner or by fraudulent means or on the death of the concerned individual or on the concerned individual being declared as of unsound mind or the concerned individual has been adjudged as insolvent. It had to be kept in mind that DIN was an Identification Number and disqualification under Section 164(2) was of temporary nature. It was also submitted at the Bar that the DIN number was common to persons who were at the same time Directors of Companies and partners of Limited Liability Partnerships. In such circumstances, there was no justification for cancelling or deactivating DINs of Directors consequent on their disqualification resulting from Section 164(2). On an analysis of Rules 9 to 11 of the Rules, 2014 the Hon’ble High Court of Madras in Meethelaveetil Kaitheri Muralidharan had also held that DIN of Directors of a defaulting Company could not be cancelled or deactivated solely on the basis of disqualification of Directors under Section 164(2). Thus, DIN of assessees allotted under Rule 10 were not liable to be deactivated or cancelled solely for the reason that assessees stood disqualified for appointment / reappointment as Directors of Companies by operation of Section 164(2).
Writ petitions were disposed of with the following declarations and directions:
1. Section 164(2) and Section 167(1) of the Companies Act, 2013 are not ultra vires Article 14 or Article 19(1)(g) of the Constitution of India.
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