COD Scheme: Delhi HC allows Manual Filing of Returns by Disqualified Directors [Read Order]

In a major relief to disqualified directors, a division bench of the Delhi High Court has permitted some disqualified directors to file returns under Condonation of Delay Scheme ( COD Scheme ) manually instead of online.

A bench comprising Acting Chief Justice Gita Mittal and Justice C Hari Shankar was hearing a bunch of writ petitions filed by persons who were directors in companies incorporated under the provisions of the Indian Companies Act, 1956. These persons were disqualified by the Ministry of Corporate Affairs (MCA) for the reason that there was default in submitting returns which were statutorily required to be filed with the Registrar of Companies with regard to the affairs of the Company in question, for a continuous period of three financial years.

Before the Court, the petitioners contended that the action of the Registrar of Companies in disqualifying the petitioners under Section 164(2)(a) as well as the striking-off the name of the company under Section 248 of the Companies Act, 2013 is in violation of natural justice principles.

In February, the Central Government has decided to introduce a Scheme namely “Condonation of Delay Scheme 2018” which will be implemented from 1st January 2018 to 31st March 2018 with a view to giving an opportunity for the non-compliant, defaulting companies to rectify the default.

Under the scheme, the Registrar of Companies were accepting the returns under the Scheme only in an e-format.

Before the Court, the petitioners submitted that the Registrar of Companies would not accept any e-filing by some of the petitioners for the reason that the names of the Companies in which the petitioners are directors stand struck off.

While granting an interim relief to the petitioners, the bench permitted them to file manual returns.

“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,” the bench said.

The Court further made the following directions.

1. The petitioners must ensure that the fee of Rs.30,000/- and any other charges which are payable under the CODS-2018 Scheme shall be deposited in the Registry of this court by way of a fixed deposit receipt in the name of the Registrar General of this court initially for a period of one year which shall be kept renewed till further orders of the Court. Each of the petitioners shall, with the deposit, enclose a computation and the basis on which the amount which has been deposited stands calculated. Let a copy thereof be furnished to the respondents.
2. Given the fact that the Registry is completely closed between 25th of March, 2018 till 1st April, 2018, the deposit of the charges with the Registry, and documents with the Registrar of Companies shall be positively made till 6th April, 2018.

• The petitioner is entitled to avail the CODS-2018 Scheme, the submission of the documents with the Registrar of Companies and deposit made in this court shall be deemed to be compliances and deposits having been effected in due compliance with the requirements of CODS2018 Scheme with the respondents, of course, subject to making good any shortcomings which may be pointed out by the respondents.

1. So far as the deposits under the CODS2018 Scheme are concerned, the same has to be made by and on behalf of the Company concerned. As such, the payment or deposit by any one director shall be treated to have been made for and on behalf of the company. Other directors would not be required to duplicate the payments even though they may have filed separate writ petitions.
2. In case any of the petitioners have made deposits of any amount, in any form, i.e. say by demand drafts or otherwise, with the Registrar of Companies, in purported compliance of the requirements of the CODS-2018 Scheme, such petitioners are not required to duplicate the payment or make deposits in this court. In case such payments have not been accepted by the by the Registrar of Companies so far, appropriate orders regarding revalidation/substitution of the drafts/instruments can be made at the time of final disposal.
3. Individual counter affidavits/additional affidavits (if counter affidavits stand filed), dealing with the factual averments in each of the writ petitions shall be filed separately in every case within a period of six weeks as prayed. The full details of the issuance and service of the notice(s) shall be placed on record with copies of the supporting documents. Rejoinder(s) thereto, if any, shall be filed before the next date of hearing.