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disqualification of director

PRAVESH JAIN (EMPLOYEE) (144 Points)

19 October 2017

on triggering any of the disqualication u/s 164(2)

whether he can continue as director in same company and also other companies.?

whether he can be reappointed in same company?

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6 Replies

SEEMA PODDAR (13 Points)
Replied 19 October 2017

No, as per sec. 164(2) if any director disqualifies under this sec. he shall not be reappointed in the same co. & also not be appointed in any co. for a period of 5 years.
Further sec. 167 provides vacation on office immediately being disqualified under sec. 164.
hence can not continue to be as director in same co.

Madhwesh K (272 Points)
Replied 19 October 2017

The erstwhile provisions of Co. Act 1956 provided same wordings for disqualification of directors. I.e., when a company defaults in filings, the directors of that company get disqualified from getting re-appointed in the same company or other existing company and also from getting appointed in new companies. In other words, their existing directorships remains in-tact, until their tenure or until they resign or they are removed.
The same wordings are used in the present provisions of Co. Act 2013 too.
In the erstwhile provision, there was no link between vacation and disqualification. I.e., even if a director is disqualified, his existing directorships would remain. In the new provision, where disqualification is attracted, vacation of office occurs in that company where default has occured. I.e., vacation of office does not happen in other companies where there are no defaults.

hence answer to your questions: he can't continue as director in same company; he CAN continue as director in other companies; he can't be reappointed in same company (as well as other companies).

however, The actual problem faced is not in operation of law, but in MCA online system. The system is designed in such a way that a director disqualified is unable to use his DIN / DSC across all existing companies in which he is a director - whether such company is in default or not. This is done assuming that he has vacated office from all such companies. Such technical issue needs to be rectified by MCA.

there are already few writ petitions filed in this regard

1 Like

PRAVESH JAIN (EMPLOYEE) (144 Points)
Replied 19 October 2017

@ madhwesh k tysm sir....u made it crystal clear for me

PRAVESH JAIN (EMPLOYEE) (144 Points)
Replied 19 October 2017

@ seema poddar thanks👍

PRAVESH JAIN (EMPLOYEE) (144 Points)
Replied 19 October 2017

@ madhwesh k sir thanks a lot👍🙋

for academic purpose we can write in exam as a conclusion of your interpretation that
1) Such dir will have to vacate his office but he can continue as director in other company

2)he cannot b reappointed in same company as well as he cannot b appointed as dir in any other company for 5 years

am I correct in catching gist