Amendments Made Under Section 164(2) and 167(1) of the Companies Act in 2014 & 2018 Are Prospective: Calcutta HC

The Calcutta high court in the case of ‘Naresh Kumar Poddar vs UOI’ held that the amendments made under section 164(2) of the Companies Act in 2014 and 167(1) in 2018 regarding the disqualification of directors are prospective in nature. The court further observes that, if the effect of these provisions becomes retrospective, it will be unreasonable, absurd, and anomalous. And, it will further ruin the economy of our country.

Section 164(2) states that the director of a company is disqualified; if the directors of a company fail to file the financial statement and annual returns for a continuous period of 3 years. And, section 167(1) states that the directors have to vacate the office if he disqualifies under section 164(2).

The Court laid down the following points:

  • The Disqualification of Director is Penal

The court clarifies that though the section disqualifies the directors for a period of 5 years only, the effect of such disqualification is penal in nature. Further, the retrospective effect will curtail the fundamental right of trade, profession, and occupation under Article 19(1) (g).

  • The retrospective effect will ruin the economy

The court held that the retrospective effect of these sections will ruin the economy of our country.

  • The court further observes that, as there is no opportunity is given to the directors in case of default. So, there is no scope for natural justice in the case of sections 164(20 and 167(1).

Read the Judgment here-


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