The ministry of corporate affairs (MCA) has received the Supreme Court’s backing against 300,000 disqualified directors for their failure to file financial statements and annual returns for three consecutive years. The apex court on Monday admitted a special leave petition of MCA and stayed a Bombay High Court order, which gave relief to directors of companies struck off by the registrar of companies (RoC) last year, said a report.
After the apex court’s order, similar orders issued by various high courts in around 2,000 cases pertaining to disqualification of directors also stand stayed, according to the report.
Last year MCA had struck off 226,000 registered companies and disqualified more than 300,000 directors for their failure to file financial statements and annual returns for three consecutive years. The directors were also asked to vacate their offices in other companies, in accordance with section 164 of the Companies Act, 2013.
After the directors were disqualified, they moved high courts across the country seeking relief from the ministry decision. The Bombay High Court hearing the matter had directed RoC to accept physical documents of these struck-off companies and treat them as applications for voluntary striking off.
It would essentially mean that directors of these companies, who had been disqualified by MCA, would no longer be considered disqualified.
“Other high court orders in this matter were varied in nature; Madras High Court had passed an order contrary to that of the ministry, while MP High Court had upheld MCA actions, the report said.
The government has been giving advance warning that continuous failure for 3 years will attract disqualification of directors since 2014 and had also in 2017 launched the Condonation of Delay Scheme, 2018.
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