Procedure for Removal of Disqualification of Director

Are You A Prey Of Non-Compliance Clause Of Companies Act, 2013?

Are you putting up with the trauma of being disqualified as a director?

Are you one among many of those directors who suddenly found themselves disqualified due to non-compliance of a company?

Do you think there is no remedial measure for removal of directors’ disqualification before the mandated 5 years?

How Did This Disqualification Occur?

Ministry of Corporate Affairs (MCA) undertook this massive drive of striking off companies for financial non-compliance mandated under Section 248 of the Companies Act, 2013. In addition to it, by the provisions under Section 164 (2) of the Act, an automatic disqualification of the Directors of such companies occurred.

Be Informed That There Are Ways for Removal of Disqualification of Director

If the struck off company did not take advantage of Condonation of Delay Scheme, a window that was specially opened to provide relief to genuine companies, which defaulted because of lack of clarity of the provisions of the Act, that did not exist before. Applying under the CODS activated the DIN of the directors temporarily so that the overdue documents were filed, and if the company becomes active again, then the directors can also get their disqualification removed.

Those companies which could not avail the benefit of CODS took the step of applying to NCLT for relief. The NCLT will decide on the fate of a company based on the facts presented by it.

But there are companies which do not want to revive themselves, and then the directors of such companies cannot opt for any remedy under the Companies Act, 2013.

The Most Effective Remedy Available

Another procedure for removal of disqualification of director is going the legal way. Article 226 of the Indian Constitution provides that such disqualified directors can file a writ petition in the concerned High Courts to seek relief.

This solution has been explored, since 2017, by many of the disqualified directors in various High Courts and the judgements in most of them have given a new lease of life to their career.

In the case of Srinivasan Sandilya & Others vs. Union of India, Delhi High Court in October, 2017, has ordered stay on the matter.

Whereas, in another similar case of Bhagavan Das Dhananjaya Das vs. Union of India, the Madras High Court has quashed the order of the ROC calling it illegal, arbitrary and devoid of merit.

Facts In Your Favour

What’s important to understand is that since 2017, there have been numerous cases, and most of the High Court’s are of the opinion that the related provisions in the Companies Act, 2013, are ambiguous and lack clarity.

In process of different hearings, several factors have been raised by the learned lawyers of the plaintiffs, that would need clarification from MCA.

1. Flouted the Principle of Natural Justice: Most of the struck off companies got no Notice, which is a mandatory clause, thus were caught unawares. This was considered as against the principle of natural justice because the affected parties were not given a chance to clarify their stand.

2. Retrospective Implementation: The Courts took a strong stand that when the Companies Act, 2013, was implemented from 1 April, 2014, and was a prospective one, therefore, applying any provision retrospectively was unjustified.

3. Against The Provisions of Companies Act, 1956: The private companies were governed by the Companies Act, 1956, which has no provision of disqualification of directors for non-compliance.

Act Fast!

Now that you are aware of your rights, it is clear that the best remedy for you is nearer than you thought!

Take a decisive step and contact MUDS at the earliest and get your disqualification removed!

By | 2019-04-18T11:44:10+00:00 April 9th, 2019|Removal of Disqualification of Directors|0 Comments

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