Madras High Court sets aside Registrar of Companies’ disqualification of directors

CHENNAI: The Madras High Court on Friday set aside the disqualification of directors of private companies by the Registrar of Companies (RoC), finding that it had “wrongly given retrospective effect” to relevant clauses under the Companies Act, 2013.

Under the new act, which was notified on April 1, 2014, no person who was a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years, shall be eligible to be reappointed as a director of any company for five years. 

The RoC had consequently released a list of disqualified directors in late 2016. 
However, the High Court in its verdict has found that the RoC, by disqualifying them on November 1, 2016, had applied the law retrospectively since the law came into effect only on April 1, 2014. The first financial year would hence need to be 2014-15. 

However, the court noted that the respondent clearly admitted that “the default of filing statutory returns for the financial years commenced from 2013-14, 2014-15 and 2015-16, that is, one year before the Act 2013 came into force. This is the basic incurable legal infirmity that vitiates the entire impugned proceedings.”