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Remedy available for disqualified Director

CS Shailja Tiwari  
on 26 June 2019

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MCA has marked a large number of Directors as Disqualified by deactivating their DINs and digital signatures. These measures were taken in respect of those companies which have not filed their financial statement or annual returns with Registrar of Companies as per the provisions of Companies Act.

MCA has struck off the name of Companies for such non-compliance and made the directors of such companies  disqualified as per the provisions of Section 164(2)(a) which states that

(2) No person who is or has been a director of a company which—

(a) has not filed financial statements or annual returns for any continuous period of three financial years;

or (b)…

shall be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.

So, once a director is disqualified under section 164(2)(a) he cannot be appointed or re-appointed as director in all companies in which he is a director for a period of five years and consequently has to vacate the office as per Section 167 of the Act. Section 164(2) is somewhat similar to Section 274(1)(g) of Companies Act 1956, but this old section does not apply to private companies. 

REMEDY AVAILABLE WITH DISQUALIFIED DIRECTOR

As per Companies (Appointment and Qualification of Directors) Rules 2014, an application for removal of disqualification can be made in Form DIR-10 with the appropriate authority. The procedure to file DIR-10 is yet not given. Only the physical form is available.

The option available for the disqualified director is to file a Writ Petition in Hon’ble High Court for interim stay on disqualification and reactivation of  DIN and digital signatures.

Steps to file Writ Petition in High Court

1. Drafting of Writ Petition.
2. Filing the same along with annexures and affidavits to High Court. 
3. Appearance by Advocate and pleading for the same.
4.Obtaining final order from High Court.
5. If order in favour, then file the same with Registrar of Companies.
6. DIN activation

Till today, various High Courts of the Country has passed various order and gave interim stay on the disqualification and activation of DIN and DSC. The final decision is still in Court and may be decided soon.

So, the disqualified director can approach the concerned High Court for grant of interim stay or other reliefs.


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Category Corporate Law
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CS Shailja Tiwari  

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