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Krishna Kumar Rungta v/s Union of India & Others


Company & Directors' Information:- S. KRISHNA & COMPANY PVT LTD. [Strike Off] CIN = U25191WB1989PTC046821

    WPA. No. 4347 of 2020 & IA. No. CAN 1 of 2021

    Decided On, 08 November 2021

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE SABYASACHI BHATTACHARYYA

    For the Applicant: Shaunak Mitra, Sidhartha Sharma, Ujjaini Chatterjee, Arjun Asthana, Advocates. For the Respondents: Krishnaraj Thaker, Tanoy Chakraborty, Goutam Shroff, Siddharth Shroff, Avinash Kankni, Advocates.



Judgment Text

In Re: CAN 1 of 2021

1. The present application has been filed for recall of an Order dated March 8, 2021 passed by this court in WPA No. 4347 of 2020.

2. Learned counsel appearing for the applicant submits that the applicant was not impleaded as a party to the writ petition, for which the points raised in the recall application could not be properly represented before the court when the order under recall was passed. Learned senior counsel for the applicant contends that the limited scope of the writ petition itself, bearing WPA No. 4347 of 2020, was reactivation of the Directors Identification Number (DIN) of the writ petitioner. The premise of such contention was centered around the deactivation of the writ petitioner’s DIN and the reliefs sought in the writ petition pertained to the same. It is further contended that, in terms of the Master Circular dated February 10, 2012 (Annexure-G at page 55 of the Recall Application), if there is a management dispute in respect of a company, till such dispute is settled, the documents filed by the company and the contesting group of directors will not be approved/registered/recorded and will thus not be available in the registry for public viewing.

3. Hence, it is contended that although the applicant is not aggrieved with the portion of the order under recall whereby the DIN of the writ petitioner was re-activated, the other part of the said order, whereby the operation of the order dated June 24, 2016 passed by the Registrar of Companies holding that till the management dispute was settled, the documents filed by the company and by its contesting groups of directors would not be approved/registered/recorded and not be available in the registry for public viewing was also set aside, ought to be recalled.

4. It is submitted by learned senior counsel appearing for the applicant that the said order dated June 24, 2016, which is appearing as Annexure P-6 at page 25 of the writ petition, has no nexus with the re-activation of DIN, since the management dispute pertaining to the Tirupathi Properties & Investment Private Limited still persists and the company is marked as having a management dispute even as on date.

5. Learned counsel appearing for the writ petitioner controverts such submissions and submits that the Circular dated February 10, 2012 clarifies that wherever there is management dispute, the company is required to mandatorily file the attachment relating to cause of cessation along with Form 32 with the ROC concerned, irrespective of the ground of cessation. Hence, as a result of the re-activation of the writ petitioner’s DIN, the ROC could not refuse to approve, register and record or prevent the documents filed by the writ petitioner from being available in the registry for public viewing. Such portion of the order, as challenged in the present recall application, was a necessary consequence of the re-activation of the writ petitioner’s DIN, it is argued.

6. It appears from the provisions of the Circular dated February 10, 2012 that Clause 2 thereof merely stipulated that wherever there is a management dispute, the company is required to mandatorily file the attachment relating to cause of cessation along with Form 32 with the ROC concerned irrespective of the ground of cessation.

7. Clause 3 thereof stipulates that on receipt of complaint, the ROC concerned will examine the same and mark the company as having ‘management dispute’. Also, the ROC will issue a letter to the company and the parties to settle the matter amicably or get an order/interim order from a court or tribunal of competent jurisdiction. It further provides that, till such dispute is settled, the documents filed by the company and by the contesting group of directors will not be approved/registered/recorded and, thus, will not be available in the registry for public viewing.

8. Upon a consideration of the clauses of the said Circular dated February 10, 2012, it is seen that the first paragraph thereof clarifies that previous circulars were superseded thereby.

9. However, Clause 2 does not, in any manner, affect the independent operation of Clause 3 of the Circular dated February 10, 2012, which specifically empowers the ROC to withhold the approval/registration/recording of the documents filed by the company and by the contesting group of directors and from those being available in the registry for public viewing.

10. In the present case, the challenge in the writ petition was that the DIN of the writ petitioner could not be deactivated since the writ petitioner had complied with the requirements to be complied with by the directors by filing annual reports and financial statements of the concerned financial years. However, it is specifically admitted in paragraph no. 16 of the writ petition that the petitioner is taking appropriate steps in respect of the marking of the respondent no. 4, that is, the Tirupathi Properties & Investment Private Limited as having management dispute. Thus, the marking of the company as having management dispute was not the subject-matter of the writ petition but that of an appropriate challenge before a different forum. A perusal of the Master Circular dated February 10, 2012 makes it clear that Clause 3 thereof is independent of Clause 2, the latter merely contemplating the requirement of the company to mandatorily file the attachment relating to cause of cessation along with Form 32 of the ROC concerned, irrespective of the ground of cessation.

11. However, Clause 3 of the Circular still remains in force and restrains the ROC from approving/registering/recording the documents filed by the company and the directors and from making those available in the registry for public viewing if there is an existing management dispute.

12. Although the writ petitioner succeeded in establishing in the writ petition that the deactivation of the DIN due to non-approval of the documents filed by the petitioners was de hors the law, since the writ petitioner was not responsible for such non-approval, no cause of action was made out in the writ petition for setting aside the operation of the portion of the order dated June 24, 2016 passed by the ROC in terms of Clause 3 of the Master Circular dated February 10, 2012.

13. In fact, since such marking of the company-in-question as having management dispute still continues, independent of the re-activation of the writ petitioner’s DIN, the portion of the order under recall, whereby the order of the ROC dated June 24, 2016 was set aside, was beyond the scope of the writ petition and the dispute involved therein. Although the writ petitioner was not responsible for nonapproval of the documents filed by the writ petitioner due to Clause 3 of the Circular dated February 10, 2012, thereby justifying the reactivation of the DIN, the order dated June 24, 2016 passed by the ROC retained its validity in view of the subsistence of the marking of the said company as having ‘management dispute’.

14. Thus, although the portion of the order under recall, by which the deactivation of the writ petitioner’s DIN was set aside, was justified since there was due compliance of the liabilities of the writ petitioner as director of the company-in-question, the latter portion of the order under recall, setting aside the operation of the order dated June 24, 2016 of the ROC, was in contravention of the Circular dated February 10, 2012 and, thus, bad in law.

15. Since the review applicant was not impleaded as a party to the writ petition, there was no opportunity for the said applicant to point out the aforesaid flaw in the order under recall and/or any scope of arguing the question as raised in the review application at the relevant juncture, the portion of the order under recall setting aside the order dated June 24, 2016 is required to be recalled/set aside.

16. Accordingly, CAN 1 of 2021 is allowed, thereby recalling and setting aside the finding that it was beyond the scope of the jurisdiction of the ROC to direct that the documents filed by the directors would not be approved/registered/recorded and thus would not be available in the registry for public viewing and setting aside of the operation of a portion of the order dated June 24, 2016 by the ROC, Kolkata. The order dated March 8, 2021 passed in WPA 4347 of 2020 is recalled and modified to the following extent:

17. The deactivation of the DIN of Krishna Kumar Rungta, the writ petitioner, is set aside and such DIN is re-activated. The Registrar of Companies (ROC) shall take necessary consequential steps and permit the writ petitioner to discharge his duties as a director of the company being the respondent no.4 in the writ petition, that is Tirupathi Properties and Investment Private Limited.

18. However, the part of the order dated June 24, 2016 passed by the Registrar of Companies, Kolkata withholding the approval/registration/recording of the documents filed by the company and the writ petitioner and non-availability of the said documents in the registry for public viewing, till the ‘management dispute’

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is settled and such marking is removed by the ROC, shall remain in force. 19. It is made clear that, in view of the deactivation of the DIN of the writ petitioner being set aside, the writ petitioner shall be able to discharge his duties as a director of the Tirupathi Properties and Investment Private Limited by filing the documents which are required to be filed by the directors of the company statutorily. However, the bar as to approval/registration/recording and availability in the registry for public viewing of the documents filed by the writ petitioner or the company shall remain in force till the ‘management dispute’ of the company is settled and the marking to that effect is removed. The order dated March 8, 2021 passed in WPA No. 4347 of 2020 is thus modified to the extent as indicated above. 20. There will be no order as to costs. 21. Urgent certified copies of this order shall be supplied to the parties applying for the same, upon due compliance of all requisite formalities.
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