Case Note & Summary
The petitioners, Mr. Yenugu Krishna Murthy, Mr. Devarunda Manjegowda Purnesh, and Mr. Manjunath Krishnarajanagar Manikyam, filed three writ petitions under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bengaluru. They sought a declaration that Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 (Annexure-A) are unconstitutional and in violation of Part III of the Constitution of India, specifically insofar as they apply to directors of private limited companies. The petitioners were directors of private limited companies and argued that the disqualification provisions under Section 164(2)(a) should not apply to them as they were not in default of filing financial statements. The court, presided over by Dr. Justice Vineet Kothari, heard the matter on 26th February 2018. The court noted that the petitioners' challenge was without merit as Section 164(2)(a) applies uniformly to all companies, including private limited companies, and the press release merely clarified the implementation. The court dismissed all three writ petitions, holding that the provision is not unconstitutional and does not violate any fundamental rights. The court did not find any reason to interfere with the statutory scheme.
Headnote
A) Constitutional Law - Validity of Statute - Section 164(2)(a) Companies Act, 2013 - Disqualification of Directors - Challenge to Section 164(2)(a) of the Companies Act, 2013 and Press Release dated 6.9.2017 as unconstitutional and violative of Part III of the Constitution of India qua directors of private limited companies - Petitioners, directors of private limited companies, sought declaration that the provision and press release are unconstitutional - Court dismissed the petitions, holding that the provision applies uniformly to all companies and is not violative of fundamental rights - Held that the challenge is without 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 all three writ petitions, holding that Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 are not unconstitutional and are not in violation of Part III of the Constitution of India.
Law Points
- Constitutional validity of Section 164(2)(a) of Companies Act
- 2013
- Press Note dated 6.9.2017
- Disqualification of directors
- Private limited company directors
- Article 226 and 227 of Constitution of India
- Part III of Constitution of India
Case Details
2018 LawText (KAR) (02) 31
W.P.No.7819/2018, W.P.No.7820/2018, W.P.No.7821/2018 (GM-RES)
Dr. Justice Vineet Kothari
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
Petitioners, directors of private limited companies, contended that the disqualification provision under Section 164(2)(a) should not apply to them.
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 in violation of Part III of the Constitution of India.
Submissions/Arguments
Petitioners argued that Section 164(2)(a) and the Press Release are unconstitutional and violate fundamental rights under Part III of the Constitution of India.
Respondents (Union of India and Registrar of Companies) likely argued that the provision applies uniformly and is valid.
Ratio Decidendi
Section 164(2)(a) of the Companies Act, 2013 applies uniformly to all companies, including private limited companies, and is not violative of Part III of the Constitution of India. The press release merely clarifies the implementation and does not create any new legal obligation.
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 under Articles 226 and 227 of the Constitution of India.
These writ petitions are filed under Articles 226 and 227 of the Constitution of India praying to declare that Section 164(2)(a) of the Companies Act, 2013 and the Press Release dated 6.9.2017 at Annexure-A, qua directors of private limited company is unconstitutional is in violation and in contravention of the provisions of Part III of the Constitution of India and etc.
The court dismissed the petitions.
Procedural History
The writ petitions were filed on an unspecified date and came up for orders on 26.02.2018 before the High Court of Karnataka. The court heard the matter and dismissed all three petitions on the same day.
Acts & Sections
- Companies Act, 2013: Section 164(2)(a)
- Constitution of India: Articles 226, 227, Part III
