Delhi High Court Directs Reactivation of DIN or DSC By Setting Aside Director's Disqualification

Delhi High Court Directs Reactivation of DIN or DSC By Setting Aside Director's Disqualification

The Delhi High Court (HC) in the case titled Sandeep Ahuja (Petitioner) v. Union of India (Respondents) ordered to reactivate the Director Identification Numbers (DINs) and Digital Signature Certificates (DSCs) of Directors alleged of Non-Filing of Annual Returns.

The single-judge of the HC, Justice Prathiba M. Singh held that since the disqualification of the Petitioner took place prior to 7 May 2018, the Petitioner's disqualification qua the other active companies is set aside and his DINs/DSCs is directed to be reactivated.

The factual background of the case is that the Petitioner was a Director in- M/s Princely Infrapromoters Pvt. Ltd., M/s Smart Home Infra Projects Pvt. Ltd.; M/s Credence Hometech Pvt. Ltd.; M/s Richa Lifestyle Pvt. Ltd. and M/s SD Digitech Solutions Pvt. Ltd.

Due to the non-filing of annual returns and balance sheets in one of the companies, the Petitioner was disqualified as a director in 2017 with effect from 1 November 2017 to 31 October 2022 under Section 164(2)(a) of the Companies Act, 2013. His DIN/DSC was also deactivated, and all five companies are active.

The advocate appearing for the respondent submitted that the writ petition is barred by delay and latches as the disqualification took place in 2017 and the Petitioner approached this Court in 2021.

On behalf of the petitioner, it was contended that the disqualification, of the Petitioner and deactivation of his DIN/DSC results in a continuing cause of action inasmuch as the Petitioner is unable to file any compliances owing to the five-year disqualification. Since the period of disqualification it is not yet completed, the writ petition cannot be held to be barred by delay and latches.

It was noted that the disqualification took place in 2017 but various issues have been raised as to whether the list of disqualified directors was published in time. Moreover, no individual communication has been sent by the ROC to any of the directors informing them of their disqualification.

In most cases, it is only when an application is made to the ROC for filing the relevant documents that a director is informed of his/her disqualification.

The Court put reliance on the judgments of the case titled Mukut Pathak & Ors. v. Union of India & Ors., 265 (2019) DLT 506 and Anjali Bhargava & Anr. v. UOI & Anr. [W.P.(C) 11264/2020, decided on 6 January 2021] and held since the disqualification of the Petitioner took place prior to 7 May 2018, the petitioner's disqualification qua the other active companies are set aside and his DINs/DSCs is directed to be reactivated.

The HC directed that the present order shall be served by the petitioner on the ROC, Delhi, and Mumbai and the Petitioner's DIN/DSC shall be reactivated within 10 days from service of the order.