Delhi High Court sets aside Director's Disqualification; orders reactivation of DIN and DSC

Delhi High Court sets aside Director's Disqualification; orders reactivation of DIN and DSC

The Delhi High Court (HC) while setting aside the Director's disqualification passed an order of reactivation of Director Identification Number (DIN) and Digital Signature Certificate (DSC)

Justice Prathiba M. Singh of the Delhi High court observed that Ms. Anjali Bhargava & Anr. (Petitioners) fall in the category of directors who have been disqualified before 7 May 2018, qua other companies in addition to the defaulting company.

The HC further held that the Petitioners' DIN or DSC would be liable to be reactivated regarding their company named Talent Scanner Pvt. Ltd. They would not be treated as suspended from the position of Directors in Talent Scanner Pvt. Ltd.

The facts of the case are that the petitioners are the directors of two Companies namely Bhargava Films Pvt. Ltd. and Talent Scanner Pvt. Ltd. The Petitioners were disqualified as directors in respect of Bhargava Films Pvt. Ltd. due to non-filing of balance-sheet and other returns with the Registrar of Companies. The company was also struck off from the Register of Companies. On 1 November 2016, the disqualification occurred.

A petition was filed before the HC wherein the petitioners prayed that their DIN and DSC should be reactivated allowing them to avail of the Companies Fresh Start Scheme, 2020 (CFSS-2020/ Scheme).

The Court noted that four categories of Directors are approaching Courts seeking setting aside of disqualification and activation of DIN/DSC numbers, that are mentioned as under-

- Directors who have been disqualified before 7 May 2018, qua other companies in addition to the defaulting company.

- Directors who have been disqualified post 7 May 2018, qua other 'active' companies.

- Directors of 'active' companies who have been disqualified.

- Disqualified directors of struck off companies seeking appointment as directors in other/new companies.

According to the Court, the Scheme was introduced during the COVID-19 pandemic to enable a fresh start to the defaulting companies and the directors of such companies. It was last extended till 31 December 2020.

The Court observed that as the scheme is extended beyond 31 December 2020, the directors who fall in any of the categories mentioned above ought to be given an opportunity to avail of the same.

The HC while referring to the case of Mukut Pathak & Ors. v. Union of India & Ors., 265 (2019) DLT 506, stated that as far as the petitioners' another company is concerned i.e. Bhargava Films Pvt. Ltd. they are permitted to file the relevant documents and seek condonation of delay according to the applicable laws and regulations if the same is permissible.