Case Law Details
Satish Kumar Gupta Vs Union of India (Bombay High Court)
Conclusion: Where a director was disqualified under section 164(2) of the Companies Act 2013 for not filing Financial Statements and Annual Returns continuously for a period of three years, then, the disqualification was incurred and no interim relief was to be granted for the same as these were ministerial or administrative act of filing which was to be performed by the Company.
Held: Assessee prayed for an interim relief to be granted to directors who were disqualified under section 164(2)of the Companies Act 2013 . He contended that Gujarat, Karnataka and Madras High Courts had held that provisions of Section 164(2) could not be applied with retrospective effect. Revenue however contended that there was a ministerial or administrative act of filing the financial statements or annual returns. If they were not filed continuously for a period of three years, then, the disqualification was invited or incurred. Further, argued that the proviso to Section 164(2) was only clarifcatory in nature and, therefore, it had retrospective operation and this position was envisaged even under Section 16 7(1) clause (a). The argument of assessee’s advocate that Section 167(1)(a) did not envisage vacation of office of a director under Section 164(2), was incorrect. It was held under section 164(2) the re-appointment of director of that company, which had not filed financial statements or annual returns for any continuous period of three financial years would mean that the person can continue till the end of the extant term, but would not be eligible for re-appointment for another five years thereafter. As far as Section 167(1)(a) was concerned, the vacancy would not occur in the case of a director, who had incurred the disqualifications specified in Section 164 more so, when he incurred that disqualification was sufficiently set out in the statute itself. Therefore, the following order would sub-serve the ends of justice. On the applicability of principle of retrospectivity or that Section 164 could not have a retrospective operation, prima facie if the company, in which the person is or has been a director, has not filed financial statements or annual returns for any continuous period of three financial years, on the date on which the company fails to do so, the disqualification is incurred. It is a ministerial or administrative act of filing which was to be performed by the Company. Therefore, if such financial statements or annual returns for any continuous period of three financial years have not been filed, then, the action was triggered. The interpretation of the legal provisions must be based on the language of the statute. In such circumstances, the interim relief as sought could not be granted. A blanket stay or a relief having far reaching legal consequences as sought could not be granted.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
1. The matters were placed before us for considering the prayer for interim relief.
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