Condonation Of Delay Scheme, 2018: Delhi HC Allows Disqualified Directors To File Manual Returns [Read Order]

The Delhi High Court, on Thursday, permitted a few disqualified directors to file manual returns under the Condonation of Delay Scheme, 2018, instead of filing them online.

The Bench comprising Acting Chief Justice Gita Mittal and Justice C. Hari Shankar further directed that all charges payable under the Scheme be deposited in the Registry of the Court through a fixed deposit receipt in the name of the Court's Registrar General initially for a period of one year, and shall be kept renewed till further orders. The Petitioners have been directed to enclose, along with the deposit, a computation and the basis of calculation of the amount so deposited.

Noting that the Registry would be closed between 25 March and 1 April, the charges and the documents have been directed to be deposited by 6 April.

The Scheme was introduced to benefit 3,09,614 Directors associated with companies that had failed to file financial or annual returns with the MCA21 online registry for a continuous period of three financial years- 2013-14 to 2015-16- as per Section 164 (4) of the Companies Act, 2013.

The Court was now hearing Petitions from a few of these Directors, contending inter alia that the Registrar of Companies (RoC) had, in violation of principles of natural justice, disqualified the Petitioners and struck off the name of their Companies under Section 248 of the Act. They point out that the RoC was required to send them notices in compliance with Rule 3(2) of the Companies (Removal of Names of Companies from the Registrar of Companies) Rules, 2016. This, they contend, was not done in the case at hand.

They have further challenged the retrospective application of the provisions of the Companies Act, 2013, especially in view of the fact that the consequences were in the nature of a penalty on the Petitioners as well as the Companies.

During the hearing on Thursday, the Court opined that the issues raised by the Petitioners "require adjudication and are of grave importance so far as the working of the spirit, intendment and object of the Companies Act, 2013, more specifically the manner in which the respondents would operate Sections 164 and 248 of the enactment."

Thereafter, noting that despite an interim stay on the disqualification of the Petitioners, their DIN numbers have not been activated, the Court directed that the same be activated soon. It further noted that under the Scheme, the authorities were accepting returns only in an e-format. However, since the names of the companies in which the Petitioners are directors stand struck off, the RoC is not accepting e-filings from them.

The Court, therefore, directed, "In order to balance equities and to ensure that no prejudice results to either party, it is directed that so far as the petitioners in whose favour interim orders stand passed are concerned, these petitioners would, without prejudice to rights and contentions of all parties, stand permitted to file the compliances under the CODS2018 Scheme as hard copies with the respondents. The filings by these petitioners shall be preserved by the respondents and shall abide further orders of this court."

It went on to clarify that the documents and the deposit would be deemed to be in compliance with the requirements of the Scheme. It further clarified that the deposits need to be made on behalf of the Companies and not the Directors.

The authorities have now been directed to produce original records on the impugned notice relating to each Company before the next date of hearing. In the meantime, individual counter affidavits and additional affidavits have been ordered to be filed on behalf of the Petitioners within six weeks. The matter has now been listed on 24 July.