Director Disqualification Under Sections 164 & 167 Companies Act: 3-Year Non-Filing, DIN, Vacation of Office, Strike-Off & Remedies 2026

By Adv. Govind Bali | Updated: 21 August 2026

Director disqualification under the Companies Act, 2013 is often misunderstood because several distinct consequences are frequently treated as if they were the same thing. A company may default in filing annual returns and financial statements; a director may incur disqualification under Section 164(2); the director may vacate office in other companies under Section 167(1)(a); the company itself may later be struck off under Section 248; and the Ministry of Corporate Affairs may separately show a DIN as inactive for a reason permitted by the applicable Rules. Each issue has its own statutory basis and remedy.

This guide explains the current legal position under Sections 164, 167 and 168 of the Companies Act, 2013, with particular focus on the three-financial-year non-filing rule, the five-year disqualification, vacation of office, DIN and DSC consequences, resignation, strike-off and restoration, Form DIR-10, writ remedies, and leading High Court decisions.

Quick answer: what happens after three years of non-filing?

Under Section 164(2)(a), a person who is or has been a director of a company that has not filed its financial statements or annual returns for any continuous period of three financial years becomes ineligible to be re-appointed as director of that company or appointed in another company for five years from the date on which the statutory disqualification is incurred.

For disqualifications incurred under Section 164(2) on or after 7 May 2018, Section 167(1)(a) operates with an important proviso: the director vacates office in all companies other than the defaulting company. The director therefore remains in the defaulting company so that its affairs are not left without a board merely because the statutory default has occurred.

Section 164: the statutory grounds of director disqualification

Section 164 contains two broad sets of disqualifications.

Section 164(1): personal disqualifications

Section 164(1) disqualifies a person from appointment as director on grounds that attach personally to that individual. These include, among others:

being declared of unsound mind by a competent court;
being an undischarged insolvent;
having a pending application to be adjudicated insolvent;
specified criminal convictions and sentences;
a subsisting court or Tribunal order disqualifying the person;
failure to pay calls on shares for the statutory period;
conviction for an offence relating to related-party transactions under Section 188 during the preceding five years;
non-compliance with Section 152(3) concerning DIN;
non-compliance with the directorship-limit provision in Section 165(1).

Some Section 164(1) grounds have consequences distinct from Section 164(2), particularly when Section 167 is applied.

Section 164(2)(a): non-filing for three continuous financial years

The most frequently encountered corporate-compliance disqualification arises where a company has not filed its financial statements or annual returns for any continuous period of three financial years.

Three points are important.

The statutory language concerns a continuous period of three financial years.
The provision refers to failure to file financial statements or annual returns. Compliance should therefore be examined year by year and form by form.
The consequence is a five-year bar on re-appointment in the defaulting company and appointment in another company.

Whether a particular director was actually in office during the relevant default years, whether the filings were later regularised, and whether the disqualification period has been correctly calculated can become material in litigation.

Section 164(2)(b): deposits, debentures, interest and dividend defaults

Section 164(2)(b) deals with a different class of default. It applies where a company has failed to repay accepted deposits or interest, redeem debentures or pay interest due on them, or pay a declared dividend, and the failure continues for one year or more.

This limb should not be confused with the three-year non-filing provision in Section 164(2)(a). It has separate factual ingredients and can have a different remedial route.

Five-year disqualification: what exactly is prohibited?

Section 164(2) provides that the disqualified person is not eligible:

to be re-appointed as director of the defaulting company; or
to be appointed as director of another company,

for five years from the date on which the company incurs the relevant statutory default.

The bar is therefore fundamentally an eligibility disqualification. It is not the same as cancellation of DIN, and it is not the same as striking the company off the register.

Six-month protection for a newly appointed director

The proviso to Section 164(2) protects a person who is appointed as director of a company that is already in default under Section 164(2)(a) or (b). Such a newly appointed director does not incur the disqualification for six months from the date of appointment.

This provision is commercially important where a new director is brought in specifically to regularise a defaulting company. The six-month period should be used to identify all pending statutory filings and cure the underlying defaults wherever legally possible.

Section 167: when does the director actually vacate office?

Section 167 deals with vacation of office. Under Section 167(1)(a), the office of a director becomes vacant if the director incurs a disqualification specified in Section 164.

However, the proviso inserted with effect from 7 May 2018 states that where disqualification is under Section 164(2), the director vacates office in all companies other than the company that committed the default.

The reason for this structure is practical: the law disqualifies the director from continuing elsewhere, while not automatically stripping the defaulting company of every director who must still deal with compliance, filings and corporate administration.

Can a disqualified director continue acting in another company?

No. Once the office has become vacant under Section 167, continuing to act despite knowing that the office has become vacant carries a separate statutory consequence.

Section 167(2) provides for a fine of not less than ₹1 lakh and up to ₹5 lakh where a person functions as director knowing that the office has become vacant on account of the statutory disqualification.

A director faced with a Section 164/167 issue should therefore not treat the dispute as merely an MCA portal problem. The date on which office is said to have become vacant can have substantive consequences for board resolutions, filings, bank mandates and authority exercised thereafter.

Section 164 disqualification and DIN deactivation are not the same

This distinction has generated substantial litigation.

A DIN is a unique identification number allotted to an individual. Section 164(2) creates a temporary statutory disqualification from appointment or re-appointment. It does not itself say that the DIN must be cancelled or deactivated.

In Mukut Pathak v. Union of India, the Delhi High Court held that neither the Companies Act nor the applicable Rules authorised deactivation of DIN merely because a director had incurred disqualification under Section 164(2). The Court emphasised that DIN cancellation/deactivation must trace to the grounds permitted by the statutory Rules.

The Madras High Court Division Bench in Nagarajan Prakash v. Union of India and related cases agreed that the ROC could not deactivate DIN merely as an automatic consequence of Section 164(2) disqualification. Similar reasoning has appeared in other High Court decisions.

When can DIN be deactivated?

DIN can be cancelled or deactivated only on grounds permitted by the Companies (Appointment and Qualification of Directors) Rules, 2014 and applicable MCA requirements. One common operational issue is non-compliance with DIR-3 KYC requirements.

Therefore, the MCA portal may show a person as “disqualified” and the DIN may separately be “inactive” for another reason. The legal remedy depends on the actual cause shown in MCA records.

DIN vs DSC

A Director Identification Number and Digital Signature Certificate are also different. A DIN identifies the director; a DSC is used to authenticate electronic filings. Earlier batches of director-disqualification litigation often involved both DIN and DSC deactivation because directors were unable to file forms for restored or defaulting companies. Courts have repeatedly examined whether disabling those credentials had any independent statutory basis.

Can resignation avoid Section 164(2) disqualification?

Resignation should not be treated as an automatic escape from defaults that occurred during the director’s tenure.

Section 168 permits a director to resign by written notice to the company. The resignation takes effect from the date the company receives the notice or the later date specified in the notice. Importantly, Section 168(2) provides that a director remains liable after resignation for offences that occurred during the tenure.

In a Section 164(2)(a) matter, the critical questions are therefore:

when the person became a director;
when the person ceased to be a director;
which financial years were in default;
when the continuous three-year period was completed;
whether DIR-12 or other resignation records accurately reflect cessation;
whether the alleged default is properly attributable to that person under the statute and relevant case law.

Resignation not recorded by the company: what can a director do?

Where a company fails to file the director’s cessation correctly, the evidence of resignation becomes crucial. The director should preserve the resignation letter, proof of delivery, board correspondence, emails, acknowledgment, and any Form DIR-11 filed or attempted where applicable.

Because Section 168 determines effectiveness by receipt of notice or the later specified date, corporate records should be compared against the actual resignation evidence rather than assuming that the MCA display conclusively determines the legal cessation date.

Strike-off under Section 248 is a separate event

A company may also be struck off by the Registrar under Section 248. This is not the same legal event as director disqualification under Section 164(2).

A company can be struck off because statutory conditions under Section 248 are met, while the director may simultaneously or separately face Section 164 consequences. The remedies must therefore be separated:

Company struck off: restoration/appeal under Section 252 before NCLT may be available.
Wrongful director disqualification or unlawful DIN action: depending on the issue, a High Court writ or the statutory/MCA remedy may be appropriate.

For the complete restoration procedure, see our guide on ROC strike off and company restoration under Sections 248 and 252.

Does Section 252 restoration automatically remove director disqualification?

Not necessarily. Restoration of the company and removal of an individual director’s disqualification are legally distinct questions.

In Mukul Mittal v. Union of India, the company had already been restored by NCLT, but the directors still required High Court relief regarding DIN/DSC consequences so that filings could be completed. The case demonstrates why an NCLT restoration order should not automatically be treated as an order quashing a Section 164 disqualification.

If the disqualification itself is invalid—for example because the statutory period was wrongly computed, the director was not in office during the relevant period, or an impermissible retrospective consequence was imposed—a separate challenge may be necessary.

Historical issue: retrospective operation before 7 May 2018

A large body of High Court litigation arose from the 2017 publication of disqualified-director lists and the later amendment to Section 167.

In Mukut Pathak, the Delhi High Court held that the proviso to Section 167(1)(a), introduced with effect from 7 May 2018, could not operate retrospectively to force vacation of offices based on earlier Section 164(2) disqualifications. The Court also held that DIN/DSC deactivation did not have an independent statutory basis merely because of Section 164(2).

These cases remain relevant where old disqualification periods, legacy MCA records or pre-2018 defaults are still reflected in the system.

Is prior notice required before Section 164(2) disqualification?

High Court decisions have not been entirely uniform on the procedural question of prior notice.

Some courts have treated Section 164(2) disqualification as a statutory consequence that flows automatically from objective default. Other decisions, particularly from the Madras High Court, have emphasised principles of natural justice where the ROC publishes a disqualified-director list and attribution of the company’s default to the specific director is disputed.

Accordingly, a pan-India challenge should not be drafted on the assumption that there is one universal notice rule. The petitioner should plead the governing High Court precedent, the nature of the alleged default, whether the director disputes tenure or attribution, and whether any opportunity to correct factual errors was afforded.

Current 2026 development: Dr. K. Reghu Anchayil v. State of Kerala

In March 2026, the Kerala High Court again examined the relationship between Sections 164 and 167 in litigation concerning eligibility to hold directorial office and DIN-related statutory requirements. Although the case was not a conventional three-year annual-return default case under Section 164(2)(a), the judgment is important because it reinforces that where a statutory disqualification under Section 164 is established, Section 167 can cause vacation of office by operation of law.

The judgment also revisited earlier authorities dealing with DIN and non-filing disqualifications, including the principle that DIN deactivation requires a separate statutory basis.

Form DIR-10: an important limitation many online articles miss

Rule 14(5) of the Companies (Appointment and Qualification of Directors) Rules provides Form DIR-10 for an application for removal of disqualification.

However, the current MCA instruction kit for DIR-10 states that the webform is intended for applications to the Regional Director (North) for removal of disqualification under Section 164(1) and Section 164(2)(b).

This is critical: a director disqualified purely because of three-year non-filing under Section 164(2)(a) should not assume that DIR-10 is a routine administrative route for wiping out the five-year non-filing disqualification. The exact MCA webform eligibility and statutory basis must be checked before filing.

Who files DIR-9 and what is its relevance?

Rule 14 requires the company to intimate the Registrar regarding directors who have incurred disqualification under Section 164(2), using the prescribed process. The current DIR-10 webform also requires the SRN of Form DIR-9. This reinforces that the removal application operates within a defined statutory filing sequence and should not be approached as a generic “DIN reactivation” form.

NCLT, Regional Director or High Court: which forum?

Problem	Likely statutory route
Company struck off under Section 248	Section 252 application/appeal before NCLT
Disqualification under Section 164(2)(a) alleged to be unlawful	Frequently challenged under Article 226 before the jurisdictional High Court, depending on facts and available alternative remedy
DIN deactivated solely because director is disqualified	High Court precedent strongly supports challenge where Rule 11 does not authorise the deactivation
DIN inactive because DIR-3 KYC not completed	MCA compliance/reactivation process under applicable Rules
Removal of disqualification covered by DIR-10	DIR-10 before the competent Regional Director as permitted by current MCA instructions
Restored company needs old filings completed	Comply with NCLT restoration order and MCA filing requirements; separate director-status issue may still require resolution

What documents should be collected before challenging disqualification?

MCA master data of every company in which the person was a director;
director-signatory details and historical master data;
DIR-12 appointment and cessation records;
resignation letter and proof of delivery, where relevant;
annual returns and financial statements for each disputed financial year;
filing acknowledgments/SRNs;
ROC notices and disqualified-director list entries;
DIN status and DIR-3 KYC status;
strike-off notice and Gazette notification, if any;
NCLT restoration order under Section 252, if the company has been restored;
board minutes and evidence showing who controlled compliance during the relevant period;
documents establishing that the applicant was not a director during one or more alleged default years;
proof of subsequent regularisation of filings.

How to calculate a Section 164(2)(a) case correctly

A useful litigation chronology should separately identify:

date of appointment of the director;
every financial year for which AOC-4/financial statements were due;
every financial year for which MGT-7/MGT-7A or the applicable annual return was due;
actual filing date or non-filing status;
completion of the continuous three-financial-year default period;
date on which MCA records the disqualification as commencing;
five-year expiry date;
other companies in which office is alleged to have become vacant;
whether the defaulting company was later struck off or restored.

Many disputes turn on chronology rather than on the constitutional validity of Section 164 itself.

Common grounds to challenge a director-disqualification entry

Depending on the facts and the law applicable in the jurisdiction, grounds may include:

the person was not a director for the relevant three-year period;
the alleged period is not three continuous financial years;
the filings were in fact completed but not correctly reflected;
the disqualification start/end date is wrongly calculated;
an amendment has been applied retrospectively;
DIN has been deactivated without a ground under the Rules;
the person had resigned before the relevant default crystallised and can prove the effective resignation date;
the MCA action attributes default to a person without addressing jurisdiction-specific natural-justice requirements;
the five-year statutory period has expired but portal status has not been corrected.

What is usually not enough?

The following arguments, standing alone, may not defeat a valid Section 164(2) disqualification:

“I was only a nominal director” without supporting corporate records;
“the accountant did not file returns” where statutory responsibility still attached;
“the company had no business” if filing obligations nevertheless continued;
“the company has now been restored” without addressing the separate director-disqualification issue;
“DIN is active” as proof that the person is legally eligible to act as director.

Can a disqualified director be appointed to a new company?

During the subsisting five-year period under Section 164(2), the person is ineligible for appointment in another company. The fact that a DIN remains technically active does not override the statutory bar.

This is why DIN status and directorial eligibility must be checked independently.

What happens after the five-year period expires?

Section 164(2) itself imposes a five-year period. Once the statutory period has expired, the person should no longer remain disqualified on that particular completed ground. However, MCA portal records and other compliance issues should be checked before any fresh appointment is filed.

If the portal continues to show an outdated disqualification, the director should preserve proof of the statutory dates and use the applicable MCA grievance/filing process or judicial remedy if the record is not corrected.

Can a private company add additional disqualifications?

Yes. Section 164(3) permits a private company, through its articles, to provide additional grounds of disqualification beyond those specified in Sections 164(1) and 164(2). Therefore, the company’s articles must also be reviewed in any directorship eligibility dispute.

Director disqualification vs removal under Section 169

Disqualification is not the same as shareholder removal of a director.

Section 169 allows a company, subject to statutory exceptions, to remove a director by ordinary resolution after giving a reasonable opportunity of being heard. Section 164 disqualification, by contrast, concerns legal eligibility to be appointed or re-appointed and can trigger Section 167 vacation of office.

For shareholder disputes where removal forms part of a wider pattern of unfair prejudice, the issue may also overlap with Sections 241 and 242. See our guide on oppression and mismanagement under Sections 241–244.

Leading authorities

Mukut Pathak v. Union of India — Delhi High Court

The Delhi High Court held that DIN could not be cancelled or deactivated merely because a director incurred Section 164(2) disqualification. It also held that the 7 May 2018 proviso to Section 167(1)(a), which makes the director vacate offices in other companies, could not be applied retrospectively to earlier disqualifications.

Nagarajan Prakash v. Union of India — Madras High Court

The Division Bench agreed with the line of authority holding that ROC is not empowered to deactivate DIN merely because of Section 164(2). The decision also emphasised procedural fairness in attribution of default.

Jai Shankar Agrahari v. Union of India — Allahabad High Court

This decision is part of the consistent High Court line distinguishing statutory disqualification from DIN cancellation and requiring DIN action to be supported by the Rules.

Mukul Mittal v. Union of India — Delhi High Court

The case involved directors of a company that had been struck off and later restored by NCLT. The High Court directed reactivation of DIN/DSC in the factual setting before it, illustrating that restoration of a company and correction of director-status consequences may require separate legal steps.

Dr. K. Reghu Anchayil v. State of Kerala — Kerala High Court, 12 March 2026

The Kerala High Court considered the operation of Sections 164 and 167 in a contemporary directorial-eligibility dispute and reiterated that a statutory disqualification can result in vacation of office by operation of Section 167. The judgment also surveyed prior DIN-disqualification authorities.

Practical compliance checklist for companies

maintain a year-wise statutory filing calendar;
do not allow annual returns or financial statements to remain unfiled into a third continuous financial year;
verify DIN and DIR-3 KYC status before board appointments;
record resignations promptly and file DIR-12 within the prescribed framework;
maintain evidence of board responsibility for compliance;
where a company is restored under Section 252, complete every filing required by the NCLT order;
check whether any director remains under a separate Section 164 disqualification after restoration;
do not permit a person to act as director where Section 167 has already caused vacation of office.

Frequently asked questions

Is a director automatically disqualified if a company misses one annual return?

No. Section 164(2)(a) requires non-filing of financial statements or annual returns for a continuous period of three financial years.

How long does Section 164(2) disqualification last?

The statutory period is five years from the date on which the relevant company default attracts Section 164(2).

Does the director vacate the defaulting company?

For a Section 164(2) disqualification incurred under the post-7 May 2018 framework, Section 167(1)(a) provides that office becomes vacant in other companies, but not in the company that committed the Section 164(2) default.

Can ROC deactivate DIN because the director is disqualified?

High Courts including Delhi and Madras have held that DIN deactivation must be authorised by the applicable Rules; Section 164(2) disqualification by itself does not supply an independent DIN-cancellation power.

Can company restoration under Section 252 remove the director’s five-year bar?

Restoration of the company and director disqualification are separate statutory issues. The precise effect depends on the grounds of disqualification and the relief granted. A restoration order should not automatically be assumed to quash a valid Section 164 disqualification.

Can Form DIR-10 be used for a Section 164(2)(a) non-filing disqualification?

The current MCA instruction kit for DIR-10 describes the form as available for removal applications under Section 164(1) and Section 164(2)(b). A director facing three-year non-filing disqualification under Section 164(2)(a) should therefore verify the currently permitted statutory route rather than assuming DIR-10 is available.

Can a director resign before the third year and avoid disqualification?

The answer depends on the effective resignation date, the actual period of directorship and when the statutory default crystallised. Resignation does not erase liability for offences that occurred during tenure.

Primary legal sources

This article is a legal information resource. Director-disqualification cases are highly date-sensitive: the financial years of default, date of appointment/resignation, date on which disqualification was recorded, and whether the company was struck off or restored can materially change the legal remedy.

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