COUNTER AFFIDAVIT - DISQUALIFICATION OF DIRECTORS ROC CHENNAI Drive 2 Dated 08.04.2019

IN THE HIGH COURT OF JUDICATURE AT MADRAS (SPECIAL ORIGINAL JURISDICTION) W.P No. 2435 / 2019 3762/2019, 2267/2019, 2273/2019, 2277/2019, 2280/2019, 3056/2019, 3206/2019, 4581/2019,4581/2019, 2524/2019, 2806/2019, 4611/2019, 501/2019, 505/2019, 3672/2019, 3675/2019, 2976/2019, 2976/2019, 3481/2019, 3478/2019, 2428/2019, 2432/2019, 2437/2019, 2195/2019, 3517/2019, 3521/2019,3527/2019, 3531/2019, 3535/2019, 2830/2019, 2819/2019, 2836/2019, 2858/2019, 3409/2019,3415/2019, 3799/2019, 3695/2019, 1994/2019, 1995/2019, 1543/2019, 1521/2019,1765/2019,1945/2019, 1024/2019, 1034/2019, 2046/2019, 2057/2019, 475/2019,1544/2019, 1587/2019, 1735/2019, 1743/2019, 491/2019, 496/2019, 1595/2019, 2452/2019, 2455/2019, 2424/2019, 2435/2019, 1540/2019, 1476/2019, 1474/2019,1470/2019, 1478/2019,815/2019, 818/2019, 1441/2019, 1417/2019, 1424/2019, 1429/2019, 1436/2019, 191/2019,1295/2019, 1292/2019, 1714/2019, 1722/2019, 1267/2019, 40320/2018, 179/2019, 181/2018,882/2019, 885/2019, 887/2019, 884/2019, 883/2019, 881/2019, 878/2019, 34254/2018, 4218/2019,4212/2019,4662/2019, 4665/2019, 4669/2019, 4101/2019, 4102/2019, 4103/2019, 3070/2019, 3073/2019, 4852/20194853/2019, 4049/2019, 4074/2019, 4073/2019, 5169/2019, 2085/2019, 2088/2019, 3989/2019, 3978/20194971/2019, 4555/2019, 4553/2019, 4559/2019, 3820/2019, 3824/2019, 3042/2019, 2923/2019, 2925/20194298/2019, 4334/2019, 4341/2019, 4343/2019, 3301/2019, 3296/2019, 5843/2019, 3291/2019, 4564/2019,5351/2019, 5296/2019, 5301/2019, 5362/2019, 5366/2019, 5369/2019, 5373/2019, 5378/2019, 5381/2019, 6466/2019, 6016/2019, 5595/2019, 6104/2019, 4140/2019, 4171/2019, 4456/2019, 5843/2019, 5930/2019, 6459/2019, 4613/2019, 3791/2019, 3801/2019, 6821/2019, 3149/2019, 3141/2019, 6365/2019, 6367/2019,7122/2019, 5924/2019, 7160/2019, 7157/2019, 3925/2019, 7023/2019, 7710/2019, 7706/2019, 5695/2019,5725/2019, 6654/2019, 3621/2019, 5477/2019, 7718/2019, 7941/2019, 7951/2019, 6535/2019, 8715/20198717/2019, 8783/2019, 8788/2019, 8795/2019, 8989/2019, 7512/2019, 7511/2019, 7995/2019, 8465/2019 8752/2019, 7723/2019, 7729/2019, 7734/2019, 8661/2019,8664/2019 Emmanauel Nancy Sheela

Petitioner Vs

1. Union of India, Represented by its Secretary Ministry of Corporate Affairs, ShastriBhawan, Rajendra Prasad Road, New Delhi - 110001
2. Registrar of Companies Tamilnadu, Chennai Block No.6, B Wing 2nd Floor ShastriBhawan 26, Haddows Road, Chennai - 600 006.

Respondents COMMON COUNTER AFFIDAVIT FILED ON BEHALF OF FIRST AND THE SECOND
RESPONDENT I, A.SeharPonraj S/o K.Arthur Edwin, aged 58 years, working as Registrar of Companies, Tamil Nadu, Andaman and Nicobar Islands having office at 2nd Floor, Pg.no.1 No. of Corrections A. SE A P NRAJ 'registrar of Compan..7..?s. Tamilnadu, Andan1,7:- Nicobar Islands,(0.y.F..-1:1i

ShastriBhavan, No.26, Haddows Road, Chennai — 600006 do hereby solemnly affirm and sincerely state as follows:

1. I am the second respondent herein and I am duly authorized to file affidavit on behalf of the first respondent as well. I am well acquainted with the facts and circumstances of the instant case and competent to affirm this affidavit.

2. It is humbly that the present petitions are liable to be dismissed in limine as the same is devoid of merits and the averments raised by the petitioners in the present petitions are all denied by this respondent as they are untenable either in law or on facts.

3. It is most respectfully submitted that the petitioners herein have not approached this Hon'ble Court with clean hands.

4. It is humbly submitted that the petitioners have failed to file the Annual Returns and Annual Finance Statements for a continuous period of three financial years from 2014-15 to 2016-2017.

5. The petitioners have not put forth any justifiable reasons for such failure in filing the Annual Returns for the said continuous period which were ought to have been filed by the petitioners, being Directors of the Company and as per the Companies Act, 2013.

6. The averments raised by the petitioners in the petition that due to inadvertence and oversight annual accounts and annual returns could not be filed with this respondent and that the petitioners herein were shocked and surprised to find their names in the list of disqualified directors under section 164(2)(a) of the Companies Act, 2013 (hereinafter referred to as the Act) dated 17.12.2018 which was uploaded on 18.12.2018 by the respondent are all untenable.

7. It is humbly submitted that according to section 92(4) of Companies Act, 2013, every company should file a copy of the Annual Returns with the second respondent herein within sixty days from the date of conducting Annual General meeting or from the date on which the Annual General Meeting ought to have been conducted. The time limit for filing the Balance Sheet is 30 days from Annual General Meeting. Tarriiinadu, Ar;daman
   Nicobar islands,Cherinai Pg.no.2 No. of Corrections

8. It is humbly submitted that the 1st Respondent had also extended the date filing of AOC-4 forms upto 28-11-2017 without levying additional fee vide a General Circular No. 14/ 2017 dated 27.10.2017.1t is submitted that in the present case, in spite of providing sufficient opportunities for the petitioners herein had failed to file the Statutory Returns before this Respondent.

9. It is humbly submitted that the list of disqualified directors was uploaded on the MCA Portal only on 18.12.2018 through order dated 17.12.2018 that is after one year from the said General Circulars of extension of time. 10.It is pertinent to note that the petitioners have not availed any of the above opportunities given by the Respondents to avoid their disqualification but they had approached this Hon'ble Court only after listing of the petitioners' name as disqualified director on the uploaded MCA portal. The Petitioners have acted callously in performing their duties as a Director of the Company. 11 It is humbly submitted that the filing period expires on 30.10.2017 that is within 30 days from the date of Annual general meeting ought to have been held. The Ministry issued only a circular before the expiry period i.e. on 27.10.2017. The said circular is not statutory provision as alleged by the Petitioners. The extension period of filing statutory return was provided only for the benefits of the petitioners' companies. But the petitioners have failed to avail such benefit. Hence, the disqualification starts from the statutory date on which the period for filing the Annual Returns expires. 12.The petitioners, being directors of the company, are under an obligation to comply with the necessary statutory provisions laid down in the Companies Act, 2013. The main intention of the Companies Act, 2013 is to protect the interest of the investors, shareholders and interest of such other public. It is submitted that section 166 of the Act which spells out the duties of the Director is unequivocally state that the Directors shall act in the best interests of the Company and its shareholders. In the instant petitions, it is clear that the directors have failed to file the Annual Returns and Annual Financial Statements for a continuous period of three financial years. The Petitioners themselves agreed the said averments in their affidavit. It would show that the Directors have failed in their statutory duties which are explicitly given in section 166 of the Companies Act 2013 knowing very well that such omission is prejudicial to the interests of the Company. Pg.no.3 No. of Corrections A. SEHA ONRAJ Registrar of ComOnies.. Tamiinaciu, Andaman 8, Nicobar islands, Chennai

10. It is a well settled legal proposition that there shall be a balance between rights and duties. In the instant petitions, the Petitioners while averring that they are deprived of their "right for an opportunity of being heard", in which they conveniently overlooked the fact that they have grossly failed in their statutory duties towards the Company and its Shareholders for not only just one year or two years but for a continuous period of three financial years. It is pertinent to note that the Petitioners have committed a breach of duty which is so prejudicial to the interests of the Company that it can potentially result in loss of Corporate Identity of the Company. In these circumstances, the Petitioners cannot seek relief on the ground for not giving the "right of opportunity of being heard".

11. It is humbly submitted that the Petitioner have not challenged the Constitutional validity of section 164(2)(a) of the Companies Act 2013. It is further submitted that section 164(2)(a) does not envisage any notice to be given to the directors and company hence it is apparent that the action of the Respondent in releasing the list of Disqualified Directors is very well in compliance with section 164(2)(a) and section 167(1)(a) of the Act. It is further submitted that the disqualification incurred by the Petitioner is by operation of law for not filing of Annual Returns and Annual Financial Statements for a continuous period of three financial years. 15.1t is humbly submitted that the Petitioner has averred that the Respondents have not issued any notice to the Petitioners before releasing the list of disqualified directors and thereby not providing an opportunity of being heard, is not tenable hence denied. It is well settled that "principles of natural justice" shall be adhered with for any executive actions that results in the violation of the fundamental rights of a person. In the instant petitions, the Petitioners have failed to show as to how their fundamental rights are affected by the action of the Respondent. It is submitted that in section 164(2)(a) read with 167(1)(a) does not bar the Petitioners from doing any business, trade or occupation only that Petitioners have been rendered incapable of becoming directors in any companies for a limited period of five years as per the Companies Act, 2013. Hence it is submitted that the disqualification incurred by the operation of section 164(2)(a) and 167(1)(a) does neither affect any fundamental rights nor any common law rights of the Petitioners and therefore does not require any notice to be given to the Petitioners. A. StHAR PO RAJ Registrar of Companies. Tamiinadu, Arr;!,, • Nicobar istaric:s, Pg.no.4 Mr. of Cnrrprfions

16.1t is humbly submitted that the position of "Directorship" is created by the Companies Act and hence the right of any person to be a director is a Statutory Right and not a Fundamental Right. Every statutory right comes with its own statutory duties and restrictions. Hence it is humbly submitted that the statutory right of "directorship" comes with statutory restrictions as given in section 164(2)(a) and 167 (1)(a) of the companies Act, 2013. The petitioners cannot seek for a statutory right without willing the statutory duties and restrictions. 17. It is humbly submitted that the petitioners are seeking relief under the guise of not affording "opportunity of being heard" is frivolous in nature. In light of section 164(2)(a), it can be seen that the Petitioners have failed their duties in filing annual return and annual financial statements for a period of 1095 days for the financial year 2014-15 and for a period of 730 days for the financial year 2015-16, knowing fully well that this default is prejudicial to the interests of the company and can lead to an adversarial legal process under section 92(4) and 137(1) of the Act, 2013. The Petitioners have averred that the failure to file annual returns and financial statements for three financial years has arisen out of inadvertence and oversight, is denied and non-tenable. The continuing default for more than thousand days cannot be attributed to inadvertence or oversight by any figment of imagination. It is a sheer breach duty of the Petitioners arising out of blatant and willful disregard of law and hence the Petitioners does not deserve any mercy in the eyes of law. 18.1t is humbly submitted that the principles of natural justice is not absolutely essential in all conditions. The application of principles of natural justice has to consider the nature of offence and thought has to be given on whether affording principles of natural justice will make any difference. In the judgment delivered in Board of Directors, H.P.T.C.& Anrvs K.C.Rahithe Hon'ble Supreme Court, through a division judge bench held as follows: "The principle of natural justice cannot be put in a straightjacket formula. Its application depends on facts and circumstances of the case. To sustain a complaint of non-compliance of the principle of natural justice, one must establish that he has been prejudiced thereby for non-compliance of principle of natural justice..." In the instant petitions, the Petitioners have failed in their duty for more than thousand days for the first financial year and further at least seven hundred days for the next financial year. Hence it is submitted that the Petitioner is not .SHA NRAJ Registrar of Como 9 anies. Pg.no.5 No. of Corrections

disqualified due to a single lapse, but due to persistent repeated and unrelenting default for a continuous period of three years and therefore not giving an "opportunity of being heard" won't result in any prejudice against the Petitioners. 19.1t is submitted that an opportunity to show cause is not necessary where facts are undisputed. The Honorable Supreme Court of India has held in Dharmarathmakara RaiBhadur Arcot Ramaswmay Mudaliar Educational Institution v. Education Appellate Tribunal that "opportunity to show cause was not necessary where facts are undisputed and the affected person could not fourth any valid defence:1n the instant petitions, the facts are undisputed as far as the defaults are concerned, ie. non-filing of annual returns and financial statements for a continuous period of three financial years. Further the Petitioners have given "inadvertence and oversight" as their defense for their serial defaults, which in any measure cannot be termed as a valid defense as the default has been continuing for years. Hence it is submitted that the defaults being apparent and undisputed, combined with the lame excuse of "inadvertence" by the Petitioners renders that the Petitioners does not deserve any relief under the pretense that "opportunity of being heard" is not given. 20.1t is further submitted that similarly in KSRTC v. S.G. Kotturappa, the Court opined that where the respondent had committed repeated acts of misconduct and had also accepted minor punishment, he is not entitled to benefit of principles of natural justice as it would be mere formality. Supreme Court remarked; "the question as to what extent principles of natural justice are required to be complied within a particular case would depend on fact situation obtaining in each case. The principles of natural justice cannot be applied in vacuum. They cannot be put in any straitjacket formula.The principles of natural justice are furthermore, not required to be complied with, if it will lead to a mere empty formality.ln the instant Petitions, the default committed by the Petitioners are repetitive and continuing for more than thousand days. The very fact that the Petitioners have failed in their statutory duties repeatedly for three consecutive years and each such omission by the Petitioner extends for an unreasonable period of time, shows the utter disregard of the Petitioner towards the law and hence sending notice to the Petitioner will lead to a mere empty formality. It is pertinent to mention here that in most of the cases, the second Respondent has sent notice to the Company for not filing Annual Returns and Financial Statements under section 248(1), which is supposed to be acted upon Pg.no.6 No. of Corrections

by the Directors as the Company is an artificial legal person and cannot act upon notices. It shows that the Directors, despite receiving notices under section 248(1) has not acted upon the same. 21.1t is humbly submitted that from the above, it is clear that the petitioner herein is in no way prejudiced as he was well aware with the legal procedures and duties to be complied with by him under the Companies Act. On the contrary, the Companies in which the Petitioners held directorship were severely prejudiced by the default of the Petitioners to an extent that most of them were struck off under section 248 of the Act and such end of corporate life of the Companies were solely attributed to the dereliction of duty by the Petitioners towards the respective Companies and their Shareholders. It is well settled that the "opportunity of being heard" cannot be given mechanically to every instances. In this instant Petitions, the default is repetitive, unrelenting, and wilful and hence does not deserve the application of principles of natural justice. It is further submitted that the legislature has not envisaged any notice to be served to the defaulting Directors while applying section 164(2)(a) and hence the action of the Respondents in releasing the list of disqualified directors is not illegal and arbitrary as allegedly by the Petitioners. It is the legislative intent to not to accord any "opportunity of being heard" to a set of defaults which is repetitive and wilful arising out of blatant disregard of law. 22.The respondent denies the contentions regarding retrospection which has no application to the present case as the non- compliance was taken for the financial years 2014-15 to 2016-17 which is very well after the provisions under section 164(2)(a) came into effect. Furthermore, the liability starts from the last statutory date for filing the Balance Sheet which ends on 30.10.2017i.e from 01.11.2017 and not from the period on which time for extension for such failure expires. 23. This respondent specifically denies the other contentions raised in the petition as the disqualification is only for five years i.e from 01.11.2017 to 31.10.2022. Thus from the above facts and circumstances of the case, it is clear that the petitioners herein have made dereliction of his duty and cannot circumvent the liability imposed by Law with invalid and insufficient reasons put forth by petitioners. A. sEHA ON ,RAJ Registrar of Companies. • 141.00tlaf isiary2s, Pg.no.7 No. of Corrections

Hence, it is prayed that the Hon'ble Court may be pleased to dismiss the above writ petitions with cost and thus render justice. A. SEHAR P NRAJ Registrar of Comp-anies. Tamilnadu, & • Nicobar islands, Chennai BEFORE ME Solemnly affirmed at Chennai on this the day of, April, 2019 signed his name in my presence. ADVOCATE-CHENNAI Pg.no.8 No. of Corrections

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IN THE HIGH COURT OF JUDICATURE AT MADRAS (SPECIAL ORIGINAL JURISDICTION) W.P No. 2435 / 2019 Emmanauel Nancy Sheela and others Petitioner Vs Union of India, Represented by its Secretary and another

Respondents COMMON COUNTER AFFIDAVIT FILED
ON BEHALF OF FIRST AND THE SECOND RESPONDENT Pg.no.9 No. of Corrections