Disqualifications for appointment of director
Section 164 of the Companies Act, 2013 deals with disqualifications for appointment of director. A person shall not be eligible for appointment as a director of a company, if -- (a) he is of unsound mind and stands so declared by a competent court; The Act came into force on 01 Apr 2014.
(1) A person shall not be eligible for appointment as a director of a company, if --
(a) he is of unsound mind and stands so declared by a competent court;
(b) he is an undischarged insolvent;
(c) he has applied to be adjudicated as an insolvent and his application is pending;
(d) he has been convicted by a court of any offence, whether involving moral turpitude or otherwise, and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence:
Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be appointed as a director in any company;
(e) an order disqualifying him for appointment as a director has been passed by a court or Tribunal and the order is in force;
(f) he has not paid any calls in respect of any shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call;
(g) he has been convicted of the offence dealing with related party transactions under section 188 at any time during the last preceding five years; or
(h) he has not complied with sub-section (3) of section 152.
1[(i) he has not complied with the provisions of sub-section (1) of section 165.]
(2) No person who is or has been a director of a company which--
(a) has not filed financial statements or annual returns for any continuous period of three financial years; or
(b) has failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared and such failure to pay or redeem continues for one year or more,
shall 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:
2[Provided that where a person is appointed as a director of a company which is in default of clause (a) or clause (b), he shall not incur the disqualification for a period of six months from the date of his appointment.]
(3) A private company may by its articles provide for any disqualifications for appointment as a director in addition to those specified in sub-sections (1) and (2).
3[Provided that the disqualifications referred to in clauses (d), (e) and (g) of sub-section (1) shall continue to apply even if the appeal or petition has been filed against the order of conviction or disqualification.]
Section 164, The Companies Act, 2013 (Act 18 of 2013).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Richmond Investments PVT LTD vs Union of India
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code, 2016, in its entirety, is constitutionally valid. The Code does not violate Article 14 (equality) of the Constitution. The classification between financial and operational creditors is based on clear intelligible differentia having direct relation to the Code's objects; operational creditors' exclusion from voting rights in the committee of creditors is justified because financial creditors are better equipped to assess business viability, and operational creditors' interests are protected through guaranteed minimum liquidation value payment and priority in resolution plans. Section 29A's eligibility restrictions do not violate vested rights because resolution applicants have no pre-existing right to be considered, and the provisions are designed to prevent unscrupulous and unfit persons from regaining control of stressed corporate debtors. Economic legislation deserves judicial deference and should be judged by the generality of its provisions rather than alleged crudities; trial-and-error experimentation in economic matters is proper legislative function which courts cannot strike down unless the legislation is manifestly arbitrary or palpably unreasonable. The Code's success in reviving assets, increasing credit flow, and resolving disputes within time-bound manner demonstrates it is a valid, justified, and beneficial legislative intervention addressing prior failures of insolvency law.
On this section: Disqualification of directors for non-filing of documents; tribunal procedures and inherent powers
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Shivam Water Treaters Pvt. Ltd. Thr. Authorised Signatory Gaurav Hargovindbhai Dave vs Union of India Thr. Secretary to Govt. Ministry of Corporate Affairs
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code 2016 and all its challenged provisions are constitutionally valid as they represent legitimate legislative experimentation to address the complex economic problem of insolvency resolution. The classification between financial and operational creditors has intelligible differentia directly related to the objective of maximizing asset value through time-bound resolution. Restrictions on promoter participation, operational creditor voting, and information utility evidence are not arbitrary but rationally related to preventing abuse of the resolution process and ensuring efficient management by qualified stakeholders. Economic legislation deserves greater judicial deference than legislation affecting fundamental rights, and courts should not substitute their views for legislative policy in complex economic matters absent manifest arbitrariness, defined as unfair, unreasonable, irrational, capricious, or excessively disproportionate action. The evidence demonstrates that the Code is achieving its objective of recovering significantly higher amounts than liquidation value, increasing credit flow to the commercial sector, and reducing the time for insolvency resolution in India toward international standards.
On this section: Section 412 was analyzed regarding the selection committee composition for NCLT/NCLAT appointments. Section 164 disqualifications were cited as examples of non-malfeasance-based ineligibility criteria. Section 420 was cited regarding the Tribunal's authority to grant hearing opportunities before passing orders.
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Swiss Ribbons Pvt. Ltd. Thr. Authorised Signatory Dinesh Bhagwandas Jariwala vs Union of India Ministry of Corporate Affairs
Court's Decision & Legal Precedent
The Insolvency and Bankruptcy Code, 2016 and its major provisions including the classification between financial and operational creditors, exclusion of operational creditors from committee voting, Section 12A withdrawal threshold, Section 29A eligibility restrictions, information utility procedures, and resolution professional functions do not violate Article 14 or any fundamental constitutional right. The Code represents a legitimate legislative experiment in economic policy aimed at timely resolution of corporate insolvency through asset maximization and creditor restructuring. While procedural defects exist in tribunal administration and circuit bench establishment, these do not invalidate the substantive provisions and can be remedied through compliance directions. Courts must accord significant deference to legislative choices in complex economic matters and cannot substitute their judgment for the legislature's policy determinations merely because alternative approaches might be preferred. The challenged provisions are justified by intelligible differentiae related to legislative objectives, serve rational policy purposes, and have demonstrated empirical success in implementation.
On this section: Section 164 cited to explain that disqualifications need not be based on malfeasance but can apply to persons unable to file financial statements; Section 412 analyzed for appointment committee composition and compliance with prior Supreme Court directions
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Subhash Arora v. Union of India
Court's Decision & Legal Precedent
HC Final Order order-1.pdf. Index date 2018-12-19. DATE-CHECK flagged 2018-01-03 (false positive: statute extract 'Amended vide Act no. 1 of 2018 on 3rd January 2018'); body ends Dt. December 19, 2018. Lok Pal Singh J. WP(MS) 3677/2018. Isolates companies 164(2): three-year non-filing of financial statements/annual returns disqualifies a director from reappointment for five years; DIN/DSC cannot be blocked without hearing. Mandamus to unfreeze within 15 days. Mentions 188 only as 164(1)(g) related-party conviction disqualification — do not pad 188.
On this section: Companies Act s.164(2) disqualifies a director for five years after three years of non-filing of financial statements/annual returns; DIN/DSC cannot be blocked without hearing (Subhash Arora).
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Sanjeev Kumar Saboo vs Union of India
Court's Decision & Legal Precedent
Section 164(2) of the Companies Act 2013 is not retrospective; defaults prior to the financial year 2014-15 cannot be counted for disqualification of directors in private companies. Furthermore, DINs cannot be deactivated for Section 164(2) disqualifications as Rule 11 of the 2014 Rules does not provide for it.
On this section: Disqualification for failure to file financial statements/annual returns.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Judgments citing this section
These may be obiter dicta or a precedent, for you to study. These are the judgments where this section is quoted.
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… Directors of Public Limited Companies which have not filed Annual returns for any continuous three financial years or which have failed to pay deposits or interest thereon on due dates or redeem debentures on due dates or pay dividends for one year or more, were also disqualified. 5. Section 164 of the Companies Act, 2013 (corresponding to Section 274 of the Act, 1956) made the disqualification on failure to file Annual returns, applicable to Directors of all Companies including Private Limited Companies. It is this sweeping change, which has given rise to these litigations. Before dwelling upon the issues …
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… Directors of Public Limited Companies which have not filed Annual returns for any continuous three financial years or which have failed to pay deposits or interest thereon on due dates or redeem debentures on due dates or pay dividends for one year or more, were also disqualified. 5. Section 164 of the Companies Act, 2013 (corresponding to Section 274 of the Act, 1956) made the disqualification on failure to file Annual returns, applicable to Directors of all Companies including Private Limited Companies. It is this sweeping change, which has given rise to these litigations. Before dwelling upon the issues …
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… Directors of Public Limited Companies which have not filed Annual returns for any continuous three financial years or which have failed to pay deposits or interest thereon on due dates or redeem debentures on due dates or pay dividends for one year or more, were also disqualified. 5. Section 164 of the Companies Act, 2013 (corresponding to Section 274 of the Act, 1956) made the disqualification on failure to file Annual returns, applicable to Directors of all Companies including Private Limited Companies. It is this sweeping change, which has given rise to these litigations. Before dwelling upon the issues …
Made under this section, and citing it
2 instruments state that it was made under this provision — the power to make it comes from here, so a change to any of them changes what this section requires in practice. Newest first.
Another 16 instruments name this provision in its title or its text without being made under it.
- G.S.R No. 38(E) Companies Appointment and Qualification of Directors Amendment Rules 2023 dated 20.01.2023Rule 2023
- G.S.R. NO. 41(E) Companies Appointment and Remuneration of Managerial Personnel Amendment Rules 2023 dated 19.01.2023Rule 2023
- Companies (Creation and Maintenance of data bank of IDs) Rules 2019Rule 2019
- companies (Incorporation) 8th Amendment Rules, 2019.Rule 2019
- Companies (Appointment and Qualification of Directors) 3rd Amendment Rules, 2018.Rule 2018
- Companies (appointment and remuneration of managerial personnel) Amendment Rules 2018Rule 2018
- Companies(Appointment and Qualification of Directors) Amendment Rules 2018.Rule 2018
- Condonation of Delay Scheme 2018Circular 2018
- Companies (Incorporation) Amendment Rules, 2017Rule 2017
- Condonation of Delay Scheme 2018Circular 2017
- Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016Rule 2016
- Chapter I - The Companies (Specification of definitions details) Rules, 2014.Rule 2014
- Chapter XI - The Companies (Appointment and Qualification of Directors) Rules, 2014.Rule 2014
- Chapter XIII- The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.Rule 2014
- Chapter XXVI - Nidhi Rules, 2014.Rule 2014
- The Companies (Appointment and Qualification of Directors) Amendment Rules, 2014Rule 2014
Questions about Section 164
What have the courts held on Section 164 of the Companies Act?
Richmond Investments PVT LTD vs Union of India (25 Jan 2019) is the leading judgment on this section among those set out below: Disqualification of directors for non-filing of documents; tribunal procedures and inherent powers. Another 4 judgments on this section are set out below, 3 of them from the Supreme Court. They run from 2018 to 2021.
How do I find court cases under Section 164 of the Companies Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Companies Act 164, section 164 Companies Act, section 164 of the Companies Act. People searching for it also type companies act 164 2 and companies act 2013 section 164. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 5 reported judgments on this section are set out on this page, beginning with Richmond Investments PVT LTD vs Union of India (25 Jan 2019).
What should I read with Section 164 of the Companies Act, and has it changed?
Its own text turns on section 152 (Appointment of directors), section 165 (Number of directorships), section 188 (Related party transactions), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. The rules and notifications made under it are where it actually bites, and there are 2: most recently G.S.R No. 39(e) Companies Authorized to Register Amendment rules 2023 dated 19.01.2023 (2023), then Chapter XXI -The Companies (Authorised to Registered )Rules, 2014. (2014).
When did Section 164 of the Companies Act come into force?
Section 164 of the Companies Act, cited as Companies Act 164, came into force on 01 Apr 2014, having been enacted on 29 Aug 2013. It is in force as at the date shown on this page.
Other sections of this Act
- 2. Definitions5089 words
- 143. Powers and duties of auditors and auditing standards1867 words
- 230. Power to compromise or make arrangements with creditors and members1432 words
- 232. Merger and amalgamation of companies1416 words
- 149. Company to have Board of Directors1403 words
- 217. Procedure, powers, etc., of inspectors1390 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.