Case Note & Summary
The petitioners, directors of private limited companies, filed writ petitions under Articles 226 and 227 of the Constitution of India challenging the constitutional validity of Section 164(2)(a) of the Companies Act, 2013 and a Press Release dated 6.9.2017 issued by the Ministry of Corporate Affairs. They contended that these provisions were unconstitutional and violated Part III of the Constitution insofar as they applied to directors of private limited companies. The High Court of Karnataka, after hearing the petitioners' counsel, dismissed the petitions, holding that the challenge was without merit. The court found that Section 164(2)(a) and the Press Release were valid and did not infringe any fundamental rights. The court did not elaborate on detailed reasoning but summarily dismissed the petitions.
Headnote
A) Constitutional Law - Validity of Statute - Section 164(2)(a) of Companies Act, 2013 - Disqualification of Directors - The petitioners challenged the constitutional validity of Section 164(2)(a) of the Companies Act, 2013 and a Press Release dated 6.9.2017, arguing that they were unconstitutional and violated Part III of the Constitution insofar as they applied to directors of private limited companies. The High Court dismissed the petitions, holding that the provision and press release were valid and not violative of fundamental rights. (Paras 1-15)
B) Company Law - Disqualification of Directors - Section 164(2)(a) of Companies Act, 2013 - Applicability to Private Limited Companies - The court held that Section 164(2)(a) applies to directors of all companies, including private limited companies, and the Press Release dated 6.9.2017 merely clarified the provision. The challenge was dismissed as lacking merit. (Paras 1-15)
Issue of Consideration
Whether Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 are unconstitutional and in violation of Part III of the Constitution of India qua directors of private limited companies.
Final Decision
The High Court of Karnataka dismissed the writ petitions, holding that the challenge to Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 was without merit.
Law Points
- Constitutional validity of Section 164(2)(a) of Companies Act
- 2013
- Press Note dated 6.9.2017
- Disqualification of directors
- Directors of private limited companies
- Articles 226 and 227 of Constitution of India
- Part III of Constitution of India
Case Details
2018 LawText (KAR) (02) 30
W.P.No.7819/2018, W.P.No.7820/2018, W.P.No.7821/2018 (GM-RES)
Mr. Yenugu Krishna Murthy, Mr. Devarunda Manjegowda Purnesh, Mr. Manjunath Krishnarajanagar Manikyam
Union of India, Registrar of Companies
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Nature of Litigation
Writ petitions challenging the constitutional validity of Section 164(2)(a) of the Companies Act, 2013 and a Press Release dated 6.9.2017.
Remedy Sought
Declaration that Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 are unconstitutional and in violation of Part III of the Constitution of India qua directors of private limited companies.
Filing Reason
The petitioners, directors of private limited companies, believed that the impugned provisions were unconstitutional and violated their fundamental rights.
Issues
Whether Section 164(2)(a) of the Companies Act, 2013 is unconstitutional and violative of Part III of the Constitution of India qua directors of private limited companies.
Whether the Press Release dated 6.9.2017 is unconstitutional and violative of Part III of the Constitution of India qua directors of private limited companies.
Submissions/Arguments
The petitioners argued that Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 are unconstitutional and in violation of Part III of the Constitution of India insofar as they apply to directors of private limited companies.
Ratio Decidendi
Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 are valid and not violative of Part III of the Constitution of India. The provisions apply to directors of all companies, including private limited companies.
Judgment Excerpts
The petitioners- Mr.Yenugu Krishna Murthy in W.P.No.7819/2018, Mr.Devarunda Manjegowda Purnesh in W.P.No.7820/2018 and Mr.Manjunath Krishnarajanagar Manikyam in W.P.No.7821/2018 have filed these writ petitions challenging the constitutional validity of Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017.
The court dismissed the petitions, holding that the challenge was without merit.
Procedural History
The petitioners filed writ petitions under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka. The court heard the petitioners' counsel and dismissed the petitions on 26.02.2018.
Acts & Sections
- Companies Act, 2013: Section 164(2)(a)
- Constitution of India: Articles 226, 227, Part III
