1. Facts of the Case
Mr. Sunil Tolaram Kukreja found that his DIN status was shown as “Disqualified” on the MCA
website, with effect from 1 November 2024.
The authorities stated that the disqualification was connected with non-filing of annual returns
and financial statements for three consecutive financial years — 2021-22, 2022-23 and 2023-
24.
However, Mr. Kukreja argued that:
He was not given any prior notice.
He was not given an opportunity to explain or defend himself.
The authorities had relied upon an internal document called CRF dated 17 December
2024, but this document was never supplied to him or uploaded on the MCA website.
The authorities had effectively deactivated/disqualified his DIN by relying on Section
164, whereas DIN deactivation is dealt with under Rule 11.
2. What was the main issue?
The High Court had to decide mainly:
Whether Section 164 can be used to deactivate/disqualify a person's DIN, and whether the
person should be given an opportunity of hearing before such action is taken.
3. What did the Petitioner say?
The petitioner said:
Section 164 is about disqualification from being appointed as a director. It does not itself
provide for deactivation of a DIN. He further argued that if the authorities wanted to deactivate
his DIN, they had to follow Rule 11 of the Companies (Appointment of Directors) Rules, 2014.
He also relied on earlier decisions, including Imraj Ali Molla v. Union of India and Jai Shankar
Agrahari v. Union of India, to argue that an affected director should be given an opportunity to
be heard.
4. What did the Government/ROC say?
The respondents argued that the director became disqualified because the company had failed
to file its financial statements and annual returns for three continuous financial years.
They relied on Section 164(2)(a), which provides for disqualification where a company has not
filed its financial statements or annual returns for a continuous period of three financial years.
They also argued that because of the amended law, no prior notice was necessary in this
situation.
5. What did the Court find?
The Court did not accept the respondents position.
The Court noted that the important document relied upon by the respondents — the CRF dated
17 December 2024 — was merely an internal correspondence between authorities.
It had:
not been given to the petitioner; and
not been uploaded on the MCA website.
Therefore, the petitioner had no opportunity to know about or challenge that document.
6. Important point regarding Section 164 and DIN
This is the most important part of the judgment.
The Court explained that:
Section 164 deals with disqualification for appointment as a director.
It does not provide for deactivation of a DIN.
For cancellation, surrender or deactivation of DIN, the relevant provision is Rule 11 of the
Companies (Appointment of Directors) Rules, 2014.
So, simply saying that a director is disqualified under Section 164 does not automatically mean
that the authorities can deactivate the person's DIN under that same section.
7. Opportunity of Hearing
The Court also considered the principle that a person affected by such an action should get an
opportunity to be heard. In this case, admittedly, no opportunity of hearing was given to the
petitioner. The Court referred to the earlier cases of Imraj Ali Molla and Jai Shankar Agrahari,
where the courts had recognised the requirement of giving an opportunity of hearing in such
circumstances.
8. Final Decision
The Calcutta High Court set aside and quashed the MCA website notice showing the DIN status
as disqualified under Section 164(2)(b).
In simple words:
The disqualification shown against the petitioner's DIN on the MCA website was removed
because the authorities had not followed the proper legal procedure and had not given him an
opportunity of hearing. However, the Court clarified that the authorities are still free to take
appropriate action in accordance with law if the petitioner has actually violated the Companies
Act.
9. Learning / Key Takeaway
The main learning from this case is:
Section 164 = disqualification of a director.
Rule 11 = cancellation/surrender/deactivation of DIN.
Therefore, director disqualification and DIN deactivation are not the same thing.
Also, an internal communication between government authorities, which was never supplied to
the affected person, cannot by itself justify an adverse action without following the proper legal
procedure.