Bombay HC in the case of Mr. Navneet Sahay Verma

Case Covered:

Mr. Navneet Sahay Verma

Versus

Registrar of Companies

Facts of the Case:

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 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.

In WP-LD-VC-345/2020, the Petitioner No.1 is the director and promoter of the company. Petitioner No.2 is an erstwhile director. The Petitioners have challenged the action of their disqualification as directors. In Writ Petition (L) No.3219/2019, an identical position exists where the Petitioner is both director and promoter and has challenged her disqualification and deactivation of DIN. In Writ Petition (L) No.1692/2019, an interim application is taken out by the directors challenging their disqualification and for activation of DIN. Writ Petition (L) No.2828/2019 is filed by a director, who has been disqualified, challenging the said action, and also seeking a direction to permit the Petitioner to take necessary steps for striking of the name of the company. According to this Petitioner, there is discord with the other directors of the company who are not interested in its affairs.

Observations of the Court:

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-VC345/2020 pointed out that the Petitioner has, in fact, applied under section 167(3) of the Companies Act as a promoter and has nominated his son as director. The learned Counsel for the petitioner/s in the other Petitions submitted that they would follow the course of action indicated by the learned Additional Solicitor General. As regards Writ Petition (L) No.2828/2019 is concerned, the theory of discord between the directors is too general to prove it by evidence. Nothing stops this Petitioner from persuading the other directors or the promoter from nominating any other person as a director to apply under the Scheme. We have to also keep in mind the delay and the stage at which the Petitioner has approached this Court regarding Scheme.

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.

The decision of the Court:

As regards the other questions raised by the Petitioners, they will be considered in due course after the Respondents file their reply-affidavit. Stand over to 6 October 2020.

This order will be digitally signed by the Personal Assistant/ Private Secretary of this Court. All concerned to act on production by fax or email of a digitally signed copy of this order.

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