Setting an example, a High Court dismissed a petition filed by an industrialist for his disqualification as director of a company as an abuse of jurisdiction and asked him to deposit ₹1 lakh with PM CARES Fund as exemplary cost.

Mumbai-based industrialist Vijay Goverdhandas Kalantri who moved to Punjab & Haryana High Court for setting aside the action by a company disqualifying him to act as Director under Section 164(2)(a) of the Companies Act, 2013.

Section 164 of Companies Act deals with norms related with ‘Disqualifications for appointment of director.’ Sub section 2 (a) envisages “no person who is or has been a director of a company which has not filed financial statements or annual returns for any continuous period of three financial years will be eligible to be re-appointed as a director of that company or appointed in other company for a period of five years from the date on which the said company fails to do so.”

The plea was under article 226/227 of the Constitution to set aside the action taken for disqualification. An appellate court has a discretion to consider such a writ. Article 226 empowers a High Court to issue ‘writ of certiorari’, while article 227 says every High Court will have superintendence over all courts and tribunals, barring those set up by army, throughout the territories in relation to which it exercises jurisdiction.

Standing counsel for the Central Government pointed out that Kalantri is a resident of Mumbai and the company is also registered with Mumbai Registrar of Companies (RoC). He argued that RoC of Punjab and Chandigarh has been used only to access this Court. However, the RoC Punjab and Chandigarh has no connection with the present case and this Court has no jurisdiction to entertain the writ petition.

The Court said that the writ seems to have been filed only to gain benefit of the interim order passed by this Court in another matter and other similar cases though ‘the initiation of the writ proceedings before this High Court was clearly unsustainable and an abuse of jurisdiction.’

“The filing of the present writ petition before this High Court was not bonafide. In view of the above, the present writ petition deserves to be dismissed with exemplary costs. Dismissed with costs of ₹1 lakh to be deposited by the petitioners with the PM-CARES Fund,” the Court ruled.

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