Disqualification of Director u/s 164 (2) cannot be invoked in case of a Liquidated Company: Kerala HC [Read Order]

Disqualification - Liquidated Company - Kerala HC - taxscan

The Single judge bench of the Kerala High Court held that disqualification of the director under section 164(2) of the companies act,1956 cannot be invoked in the case of a liquidated company.

The Petitioner, Eanokaran Anthony Tony was the Director of a company named Margin Free Kuries Private Ltd which was decided by the petitioner to strike off and dissolve, as provided in Section 560 of the Companies Act, 1956. As per the guidelines for Fast Track Exit mode which was implemented by the circular issued by the ministry of corporate affairs for defunct companies, the petitioner requested to strike off the above-said company from the Register of Companies.

The Registrar of Company issued an intimation notice which ensures that the company’s name will be struck off from the register and the Company will be dissolved, at the expiration of 30 days from the date of the notice. Contrary to the information,on the website of the Ministry of Cooperate Affairs, the status of Margin Free Kuries Pvt.Ltd was shown as ‘under process of striking off’.

The petitioner’s Director Identification Number (DIN) had been deactivated for the period 01.08.2018 to 31.10.2023 and the petitioner was disqualified from the other companies in which he was the Director. It was contended by the petitioner that the disqualification is not valid as the company was dissolved as per the procedure.

The petitioner was disqualified under Section 164(2) of the Act alleging defaulted in the filing of statutory returns for three consecutive years.It was evident that the applicant company will stand dissolved from the date of publication of the notification as the entire procedure was executed under Section 560 of the Companies Act,1956.

The Bench observed that no action was taken when the anomaly concerning the status of the company was informed to the second respondent.  On the other hand, the petitioner was penalised for their folly.

While allowing the writ petition, Justice V G Arun quashed the order of disqualification under section 164(2) of the Companies Act,1956 and the respondents are directed to forth with activate the petitioner’s DIN bearing No.01858905, enabling him to continue as Director in the active companies.

The Petitioner was represented by Sukumar Nainan Oommen, Sherry Samuel Oommen, Nidhi Jacob, Nitish Sathesh Shenoy and the respondents were represented by Shri Ramachandran.

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