DILIPRAJ PUKKELLA & Ors v. UNION OF INDIA & Ors

What happened

The petitioners sought review of the order of 25 July 2025 in Writ Petition No. 3465/2021 (GM-RES). The delay of four days in filing was condoned. Their senior counsel said that material aspects of sections 164 and 167 of the Companies Act had not been brought to the Court's notice: the scheme distinguishes between a company in default, where the director continues in office despite disqualification so that he can discharge statutory obligations, and companies not in default, where the disqualified director must vacate and the company can appoint a replacement.

Questions before the court

• Does a director disqualified under section 164(2) vacate office in the company that is in default, and in other companies?

Why the court ruled this way

The Additional Solicitor General of India fairly concurred: if the director vacated office even in the defaulting company, regulators could not proceed against the person responsible for compliance and the director could not remedy the default (paragraph 5). The Court held that the distinction between a defaulting and a non-defaulting company warranted recognition in review and had not been expressly addressed earlier (paragraph 6). A harmonious reading of sections 164(2) and 167(1) shows that in the defaulting company the disqualified director does not vacate office, which is needed both for proceedings against him and for him to make the compliance required to rectify the default (paragraph 7), whereas in companies not in default the office of the disqualified director is vacated under section 167, allowing the company to appoint another (paragraph 8).

Controlling point

A disqualified director continues in office in the company in default, and vacates office in other companies; disqualification operates to prevent re-appointment in the defaulting company and continuance or appointment elsewhere.

Order and next steps

The Court ordered corrections to paragraphs 11.13 to 11.18 and 13.1 of the earlier judgment: adding the words companies other than the at 11.13; replacing a director who is in default with the re-appointment of the director in the company in default or appointment in any other company at 11.14; adding from being re-appointed at 11.15; adding other than the company at 11.16; deleting the sentence rejecting the claim at 11.17; replacing paragraph 11.18 with a holding that disqualification under section 164 is limited to disqualification from re-appointment in the defaulting company and from continuance or appointment in other companies; and replacing dismissed by disposed of at 13.1. Because the DIN is to be reactivated on expiry of the five-year disqualification period, the respondents were directed to reactivate the DIN within two weeks of receiving the order, after which compliances could be made. The Registry was to carry out the corrections and issue a fresh certified copy.

Practical implications

A director disqualified under section 164(2) because of default in one company can rely on this ruling to stay on the board of that company to rectify the default, while resigning or vacating in the others, and can ask for DIN reactivation when the five-year disqualification ends.

Limits of this ruling

• The ruling is a correction in review of the court's own earlier judgment and rests on the Court's reading of sections 164(2) and 167(1); it is a single-judge ruling of the Karnataka High Court and does not bind other courts.