Ajay Oza was a director in several companies and was barred from being appointed or reappointed as a director for a term of five years under Section 164(2)(a) due to a failure by one of the firms to file annual returns a

CS Professional · Multidisciplinary Case Studies · PYQS · June 2022
Ajay Oza was a director in several companies and was barred from being appointed or reappointed as a director for a term of five years under Section 164(2)(a) due to a failure by one of the firms to file annual returns and financial statements for the financial year 2015-17. In 2018, the list of directors that were disqualified was made public. Before the Gujarat High Court, Ajay challenged the list of disqualified directors for defaults in the financial years 2013-15 and 2014-17. Was there a requirement to provide prior notice and an opportunity to be heard before publishing the list of disqualified directors?

Answer & Explanation:

The present case is similar to the case of 'Mukut Pathak & Ors. vs. Union of India & Anr. W.P. (C) 9088/2018 & CM Appln. No.35006/2018', judgement dated 04.11.2019. In this case Delhi High Court observed that principles of natural justice are only meant to supplement the law and are a kind of code of fair administrative procedure in the decision making process. However, in the present case, the administrative authorities are not required to take any qualitative decision, in as to when a director would be disqualified. Section 164(2) merely sets out the conditions, which if not complied with, would disqualify a person from being reappointed or appointed as a director. Thus, it was unable to accept that exclusion of the "audi alteram partem" rule resulted in any procedural unfairness.

Topics: Company Law

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