Quick Answer
The Madras High Court ruled that director disqualification under Section 164 cannot be applied retrospectively. Since the section took effect on April 1, 2014, the Registrar of Companies cannot disqualify directors for the financial years 2013-14, 2014-15, and 2015-16, as the first three-year cycle concludes on March 31, 2017.
Are you one the director whose DIN was disqualified by MCA, as part of Director Disqualification exercise? Are you looking for Director Disqualification Relief?
Are you looking for relief form Director disqualification?
Are you not able to form a new company registration or get appointed as director in any other Company?
Madras High Court has ruled in Directors favour and has given relief to disqualified directors the question of law that was to answered was, whether Director Disqualification be retrospective and cover previous periods?
The Honerable Madras High Court has ruled that DISQUALIFICATION CANNOT BE RETROSPECTIVE
The court said that since Section 164 came into effect from April 1, 2014, the respondents (i.e. RoC) cannot disqualify the petitioners for the financial years 2013-14, 2014-15, 2015-16, as it would tantamount to giving retrospective effect.
Section 164 states that if the financial statements are not filed for three continuous financial years, then the director can be disqualified.
However, if Section 2(41), which defines ‘financial year’ is taken into account, then the first financial year would end on 31.3.2015, the second financial year on 31.3.2016 and the third on 31.3.2017.
Based on the above the respondents (i.e. RoC) cannot disqualify the petitioners for the financial years 2013-14, 2014-15, 2015-16, as it would tantamount to giving retrospective effect.
Due to disqualification, the directors are debarred to act as directors in other companies.
Some companies are not able to file their accounts and other returns due to deactivation of DIN of such directors.
Such companies and directors can approach the concerned High Courts to get relief for them as per the decision of Madras High Court.
Please ensure the following so that you DIN does not get disqualified again
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No, the Madras High Court ruled that disqualification cannot be retrospective. Because Section 164 became effective on April 1, 2014, the Registrar of Companies cannot disqualify directors based on financial years 2013-14, 2014-15, and 2015-16, as that would constitute retrospective enforcement of the law.
According to the definition of financial year under Section 2(41), the first financial year ends on March 31, 2015, the second on March 31, 2016, and the third on March 31, 2017. Consequently, disqualification for three continuous years of failing to file financial statements applies after this period.
If a Director Identification Number (DIN) is disqualified, the director is debarred from acting as a director in other companies. Additionally, some companies find themselves unable to file their annual accounts or other necessary returns because the DIN of their director has been deactivated by the authorities.
Disqualified directors and affected companies can approach the concerned High Courts to obtain relief based on the ruling provided by the Madras High Court. This legal recourse allows them to challenge the deactivation of the DIN and restore their ability to act as directors in other companies.
To prevent future DIN disqualification, directors must ensure they file their DIR-3 KYC (Directors KYC) update regularly and submit all company annual returns on time. Staying compliant with these filing requirements is essential to maintaining an active status for the Director Identification Number.