Post demonetization The mass strike off orders against companies by ROCs across Country has led to a spat of debate and discussions. Such strike off orders issued by ROCs was according to Section 248 of Companies Act 2013. The companies who have not filed the Financial statements & Annual Return with ROCs are presumed to be defunct and non operational. It is relevant here to mention that even the operational companies who have not filed their financial statements & Annual returns were presumed to be non operational hence struck off from Register of Companies maintained by ROCs. Another relevant issue was that all the directors associated with these struck off companies were disqualified under section 164(2) of companies act 2013, such disqualified directors could not be appointed in any company whatsoever. This gave rise to serious concerns of such directors and their companies. For a better understanding we have categorized such companies into 3 scenarios
- Active Companies
- Struck off Companies which are operational
- Struck off Companies which are non operational
Scenario I – Active Companies
Companies who are active on the register of Companies and which have not filed the financial statements and Annual return can do such filings: that is fine! But the problem arises if directors of such companies have been disqualified under section 164 and their DIN blocked. Such directors were not able to file any form or return with the ROC before 1st Jan 2018. Considering the fact that no way-out to such directors was provided under companies Act 2013, an amnesty Scheme was issued by MCA called CODS 2018. The purpose of this Scheme is to give an opportunity to the non-compliant, defaulting companies to rectify their defaults pertaining to non-filing of overdue financial statements. but this scheme is applicable only to such defaulting companies which are still active for filing but cannot file their financial statements due to disqualification of directors whose DINs are blocked. Therefore it can be said that the directors (disqualified) associated with only active companies can remove their disqualifications by availing CODS scheme which is valid till 31st March 2018. The procedure to avail this scheme is very simple. The defaulting companies shall file their overdue documents. Thereafter they shall file E-Form CODS with prescribed fee for condonation of delay for removal of disqualification of Directors. It may be noted that if any disqualified director has not availed this scheme till its validity i.e. 31st March 2018, The DIN of such directors shall be permanently blocked & they cannot act as a director in any company.
Scenario II – Struck off Companies which are operational
Companies which have been struck off by ROCs even if they are operational shall not be eligible to avail CODS 2018 and file documents under this Scheme. Therefore the disqualified directors associated with struck off Companies cannot remove their disqualification through CODS 2018. Such companies can however, make application to NCLT for revival and upon successful order for revival avail benefits of this Scheme during the period of its validity only. Therefore all the disqualified directors associated with struck off companies should without wasting time file the application to NCLT for Revival so that Revival order comes before expiry of CODS scheme 2018.
Scenario III – Struck off Companies which are non operational
We have discussed above the remedy for disqualified directors associated with struck off companies which are operational. But what about non operational struck off companies and their disqualified directors. Since they cannot even revive the company how can the directors associated with such companies remove their disqualifications? The only way as of now for such directors is to move to the high court. A writ petition can be filed in the high court praying initially for a stay on disqualification and availing the benefits of CODS scheme. Only thing to be kept in mind is that such prayer to high court can only be made during the validity of CODS scheme as it is obvious that once the scheme is expired we cannot take the benefits of it. We have numerous judgements of Delhi high Court where relief was granted in favour of Disqualified directors.
Akshay Tiwari Vs Registrar of Companies and Ors (Delhi High Court)
The petitioner has filed the present petition, impugning a “lists of disqualified directors” published by respondent to the extent that it includes the petitioner’s name. The petitioner claims that he is the Director of a private company named M/s Semnote Pvt. Ltd.
The learned counsel appearing for the petitioner unequivocally states that the Company has not carried out any business since past three years. The petitioner also did not file the requisite returns as required under the Companies Act, 2013. Consequently, the petitioner has incurred the disqualification under Section 164(2) of the Act.
The learned counsel appearing for the petitioner makes an unequivocal statement, on instruction of the petitioner, that the petitioner is desirous of availing of the Condonation of Delay Scheme – 2018 (hereafter „CODS – 2018‟). However, since the Company has been struck off from the Registrar of Companies, the petitioner has been disabled from availing the benefits of CODS – 2018.
The petitioner is also not in a position to seek revival of the Company by filing an appeal under Section 252 of the Act as, admittedly, the Company has not carried out any business and was liable to be struck off from the Register. The petitioner states that, in fact, he would voluntarily seek dissolution of the Company under Section 248(2) of the Act, if the petitioner is given an opportunity to do so.
This Court is of the view that since the Company is not carrying out any business for over three years; the petitioner ought to be provided the benefit of the CODS – 2018. Accordingly, this Court directs as under :-
- The petitioner may file all the requisite returns in relation to the Company to avail the CODS – 2018.
- The petitioner may also file the necessary resolutions and documents for voluntarily striking off the name of the Company as required under Section 248(2) of the Act.
- The petitioner would also make a necessary application under CODS – 2018 along with the requisite charges
- The aforesaid documents and applications will not be submitted online but in hard copies to the Registrar of Companies.
- The Registrar shall scrutinize the same, and if the same are found to be otherwise in accordance with Section 248(2) of the Act, the petitioner would be granted the benefit of the CODS – 2018