1. The petitioners, who are Directors of an Incorporated Company, are before this Court seeking to quash Exts.P4 and P5 and to restore the Digital Signature Certificates and the Director Identification Numbers of the petitioners.2. The petitioners were Directors of M/s.Chaya Industries Limited, M/s.Sunvis Systems Private Limited and M/s.Evcel Electrek Private Limited. It is the case of the petitioners that the business of M/s. Chaya Industries Limited were officially closed on 15.01.2008 due to labour unrest. The industry became sick and the 6th and 7th respondentBanks took possession of the land, plant and machinery. Securitisation proceedings were also initiated.3. The petitioners have been filing statutory returns with the Registrar of Companies till 2013. After 2014, the assets of M/s.Chaya Industries were taken over by the banks and part of the assets were sold for recovery of dues. The petitioners therefore could not file statutory returns in the absence of sufficient data.4. In the meanwhile, the Government of India issued Notification No.SO 902(E) dated 26.03.2014 and notified Section 164 of the Companies Act, 2013. Thereupon, the petitioners were disqualified from operating as Directors for a cumulative period from 01.11.2017 to 31.10.2022 on the ground that M/s.Chaya Industries Limited failed to file financial statements and annual returns for the financial years 2014-2015, 2015-2016 and 2016-2017. Exts.P4 and P5 are the web page prints from the website of the 2nd and 3rd respondent-Registrar of Companies.5. The petitioners filed the writ petition stating that they could not make any uploading relating to financial statements and annual returns since they had no access to the exact details of sale of assets effected by the banks. Filing of financial statements and annual returns therefore was an impossibility. Due to the disqualification of the petitioners as Directors of M/s.Chaya Industries Limited, the petitioners are not able to function as Directors of the other two companies also.6. When this writ petition came up for hearing today, the counsel for the petitioners brought to the notice of this Court General Circular No.12/2020 dated 30.03.2020 of the Assistant Director (Policy), Government of India, Ministry of Corporate Affairs relating to Companies Fresh Start Scheme, 2020. Paragraph 4 of the said Circular reads as follows:-“4. In order to give such an opportunity to the defaulting companies and to enable them to file the belated documents in the MCA-21 registry, the Central Government in exercise of powers conferred under section 460 read with section 403 of the Companies Act, 2013 has decided to introduce a Scheme namely “Companies Fresh Start Scheme, 2020 (CFSS-2020) condoning the delay in filing the above mentioned documents with the Registrar, in so far as it relates to charging of additional fees, and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings. Only normal fees for filing of documents in the MCA-21 registry will be payable in such case during the currency of CFSS2020 as per the provisions of section 403 read with Companies (Registration Offices and Fee) Rules, 2014 and section 460 of the Act.”Learned counsel for the petitioners pointed out that as per paragraph 6(ix) of the said Circular, the Scheme shall not apply only to the following companies:-“a. to companies against which action for final notice for striking off the name u/s 248 of the Act (previously section 560 of Companies Act, 1956) has already been initiated by the Designated authority;b. where any application has already been filed by the companies for action of striking off the name of the company from the register of companies;c. to companies which have amalgamated under a scheme of arrangement or compromise under the Act;d. where applications have already been filed for obtaining Dormant Status under section 455 of the Act before this Scheme;e. to vanishing companies;f. Where any increase in authorized capital is involved (Form SH-7) and also charge related documents (CHG-1, CHG-4, CHG-8 and CHG-9).”The company in question does not fall under any of the said categories. Therefore, the petitioners' Company is eligible to resort to the Companies Fresh Start Scheme 2020. However, since the DIN number of the petitioners stands cancelled, they are not in a position to avail the benefit of the Scheme. The petitioners prayed that their DIN number may be activated so that the petitioners and the Company can avail the benefit of the Companies Fresh Start Scheme.7. I have heard Advocate Navod Prasannan Pattali learned counsel for the petitioners and Smt. Thulasi Panicker, Central Government Counsel appearing for respondents 1 to 4. I have also heard Advocate M. Gopikrishnan Nambiar representing the 6th respondent.8. The facts placed before this Court show that the Companies Fresh Start Scheme (CFSS) is a new Scheme which has been notified on 30.03.2020. The Scheme is launched by the Government in order to give retrieve to such companies who have defaulted in filing documents. Such companies, now under the Scheme, are allowed to file the requisite financial statements and annual returns and to regularise their operations. The Scheme also envisages non-imposition of penalty or any other charges for belated filing of the documents.9. Learned Central Government appearing for respondents 1 to 4 argued that respondents 1 to 4 have no objection in the Company resorting to the benefit of the CFSS 2020, if the Company is otherwise eligible, but that cannot be a reason to activate the DIN numbers of the petitioners, which stands suspended pursuant to Exts.P4 and P5.10. A perusal of the Scheme would show that an opportunity for active companies who may have defaulted in filing of documents, to put their affairs in order, has been given by the Government of India. It provides the Directors of such Company a fresh cause of action to challenge their disqualification qua the active companies. The petitioners were Directors of Companies and they are disqualified as Directors of Company. The disqualification and cancellation of DINs would be an impediment for them in availing remedies under the CFSS 2020. The purpose and intent of the Scheme is to allow a Fresh Start for companies which have defaulted.11. Considering the intent and purport of the CFSS 2020, this Court is of the firm opinion that in order for the Scheme to be effective, Directors of the Companies ought to be given an opportunity to avail of the Scheme. The launch of the Scheme itself constitutes a fresh and continuing cause of action and therefore, the question of delay or limitation should not arise.12. Considering the fact that the petitioners are Directors of a Com
Please Login To View The Full Judgment!
pany in respect of which financial statements and annual returns and such other documents are to be filed and the said Company is entitled to avail the benefit of the Scheme, the suspension of DINs would not only affect the petitioners and the Company but the other Companies also in which the petitioners are Directors. Under such circumstances, to disqualify Directors permanently and not allowing them to avail of their DINs and DSCs could render the Scheme nugatory.In the circumstances, the writ petition is disposed of directing respondents 1 to 4 to reactivate the DINs and DSCs of the petitioners forthwith so as to enable the petitioners to avail the benefit of CFSS 2020, if the Company is otherwise eligible to avail the benefits under the Scheme.