The strike-off of a company under Section 248 and the disqualification of its directors under Section 164(2) are separate legal consequences, but they are frequently conflated. The Delhi High Court and the NCLT have clarified that a director of a struck-off company is not disqualified merely because the company has been struck off; the disqualification arises only if the company has also failed to file its financial statements or annual returns for three consecutive financial years.
The Three-Year Trigger
Section 164(2)(a) provides that a person who is or has been a director of a company that has not filed its financial statements or annual returns for three continuous financial years shall be disqualified from being appointed as a director in any other company for five years. The disqualification is automatic, and it applies to all the directors of the defaulting company, not only to the directors who were responsible for the filing.
The disqualification is not a penalty imposed by the ROC; it is a statutory consequence that operates by force of the provision. The MCA publishes a list of disqualified directors, and the DIN of a disqualified director is deactivated. A director who is disqualified must vacate office under Section 167.
The Limited Defences
A director who challenges the disqualification must show that the company had in fact filed its financial statements or annual returns for the relevant years, or that the disqualification is based on a factual error. The NCLT and the High Courts have consistently held that the disqualification is not a discretionary power and that the director cannot plead ignorance or good faith as a defence.
The Jai Shankar Agrahari decision and the Delhi High Court's jurisprudence confirm that the disqualification under Section 164(2) is distinct from the strike-off under Section 248. A director of a struck-off company who has also failed to file the returns for three years is disqualified; a director of a struck-off company that filed its returns is not.
The Practical Consequences
The disqualification has serious consequences: the director cannot be appointed in any company, cannot obtain a DIN, and may face prosecution. A director who is approaching the three-year default should take immediate steps to file the outstanding returns and to regularise the company's compliance. The disqualification cannot be cured retrospectively by filing the returns after the three-year period has expired.
Call to Action
Anuj Desai & Associates advises directors and companies on Section 164(2) disqualification—from the verification of filing status and the regularisation of defaults to the challenge of a disqualification order. If you have received a disqualification notice, we can help you assess the position and the available remedies.
📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
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