Directors’ Disqualification: Gujarat HC quashes list published by MCA [Read Judgment]

Directors’ Disqualification - Taxscan

The Gujarat High Court has quashed a list of disqualified directors published by Ministry of Corporate Affairs ( MCA ).

Justice Bela M. Trivedi held that Section 164(2) of the Companies Act is prospective in nature and will take effect only from its date of notification, viz, April 1, 2014.

The MCA had published a list of nearly three lakh disqualified directors.

While quashing the list, the Gujarat High Court observed that “Section 164(2) of the Companies Act of 2013, which had come into force from 1.1.2014 would have prospective and not retrospective effect”.

The Court also said that “The defaults contemplated under Section 164(2)(a) with regard to non-filing of financial statements or annual returns for any continuous period of three financial years would be the defaults to be counted from the financial year 2014-15 only and not 2013-14”.

“The respondents could not have treated the Directors as disqualified/ineligible for a period of five years from 1.11.2016 to 1.11.2021, while publishing the impugned list under Section 248 of the Act of 2013. Even if the Registrar removes the name of a company from the register of companies, and even if such company would stand dissolved under Section 248, the statutory liabilities/obligations of such struck of company and its Directors would still remain to be discharged, in view of Section 250 of the said Act of 2013”, the bench also said.

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