THE BOMBAY HIGH COURT PERMITTED APPOINTMENT OF ONE DIRECTOR TO AVAIL B...

CENTRAL GOVERNMENT SAYS THAT A DIRECTOR CUM
PROMOTOR CAN APPOINT A NEW DIRECTOR TO FILE ALL PENDING FORMS UNDER CFSS 2020
SCHEME WHERE ALL THE DIRECTORS HAVE DISQUALIFIED TO MAKE THE COMPANY ACTIVE.

EXTENSION OF CFSS-2020 SCHEME

Mr.Navneet Sahay vs ROC,Mumbai

Verma and another. And many
other petitioners  … Petitioners.

V/s.

Registrar of Companies and
another. … Respondents

The Petitioners are directors who have been
disqualified. Though the facts in each petition may slightly differ, the common
relief sought at this stage by the Petitioners is to permit them to take
benefit of the CFSS Scheme introduced by the Union of India  known as Companies Fresh Start Scheme, 2020 in
respect of their respective companies. The Scheme is to end on 30 September
2020.

As regards interim relief regarding
disqualification is\concerned, we note the order passed by the Division Bench
of this Mumbai High Court on 7 February 2020 in a group of matters of which
Writ Petition (L) No.2828/2019 was also a part. By a speaking order, the Division
Bench has not granted any interim relief in respect of the disqualification.

The Petitioners, because of their disqualification,
cannot apply under the Companies Fresh Start Scheme in respect of their companies.
This Scheme is to end on 30 September 2020. 

They,therefore, seek a direction that they may be
permitted to apply under the Scheme and for the said purpose their DIN should
be activated.

The learned Additional Solicitor General submitted  that for the Company applying under the
Scheme, the DIN of the petitioners does not need to be activated as there is a provision in the Companies
Act 2013 itself which will serve the same purpose. The learned
Additional Solicitor General has drawn our attention to section 167(3) of the
Companies Act, 2013, which reads as under:

167. Vacation of office of director.- (1) ….. ……
…..(2) ….. ….. ….. …..

(3) Where all the directors of a company vacate
their offices under any of the disqualifications specified in subsection(1), the promoter or, in his
absence, the Central  Government shall
appoint the required number of directors who shall hold office till the
directors are appointed by the company in the general meeting.

The learned Additional Solicitor General submitted
that even though the directors of the company vacate their offices, the promoter/s can nominate a
director to act. Relying on this provision, he submits that the promoter/s of the Petitioners-
Companies can nominate a director/s to apply to take benefit of the Scheme.

The petitioners raised a doubt as to the
applicability of Section 167 (3) submitting that if the disqualified directors of the company were also
promoters and if there are no other directors, they may not be entitled
to nominate a director. The learned Additional Solicitor General submitted that
the provision refers to the
promoter and director separately.

He submitted that if a person is acting in the
capacity of director cum
promoter and is disqualified as a director, for the purpose of this
provision, he can continue
to act in the capacity of a promoter to nominate any other person as a director.
The learned counsel for the Petitioner in WP-LD-VC-345/2020 pointed out that
the Petitioner has, in fact, applied undersection 167(3) of the Companies Act
as a promoter and has nominated
his son as director.

Since the position has been clarified by the learned Additional Solicitor General as above, that in the
capacity of promoter the Petitioner/s can nominate any person as
a director and follow section 167(3) of the Act to apply under the
Scheme, it is not necessary for us
to issue any further directions. This course of action is, therefore, available to the Petitioner/s regarding the Scheme