2024 TaxPub(CL) 166 (NCLAT- Chny)
COMPANIES ACT, 2013
Sections
421 & 185
Company advanced an inter corporate loan to its subsidiary company in
violation of sections 185, therefore, the company and its managing director
was liable for the offence, NCLT rightly levied compounding fee upon them,
thus, appeal against the order of the NCLT was dismissed.
|
Appeal from Orders of Tribunal - Company
advanced an inter corporate loan to its subsidiary company in violation of
sections 185 - Absence of mala fide or wilful intention - Whether
compounding fee is rightly levied upon company and its managing director for
violation of section 185
Company advanced an inter corporate loan to its
subsidiary company in violation of sections 185. Therefore, NCLT levied
compounding fee upon the company and its managing director, who was also
director in the subsidiary company for violation of section 185. The managing
director filed an appeal against the order on the ground that non-compliance of
the ingredients of section 185 took place without any 'Mala fide' or
'Wilful Intention'. Held: It is found the managing director was
liable for non-compliance by means of section 185. Further, as per 'Pre-amended
section 185 (2), the 'Company' in 'Default', is liable for 'Fine', which shall
not be less than Rs. 5,00,000, but which may extend to Rs. 25,00,000 and the
'Director' or other 'Person', to whom the 'Loan' is advanced, is 'Punishable'
with 'Imprisonment' or 'Fine', which shall not be less than Rs. 5,00,000, but
which may extend to Rs. 25,00,000 or with both. Lenient view is already taken
by the NCLT in respect to levy a 'Compounding Fee' of Rs. 10,00,000, on the
company and Rs. 5,00,000 on the Managing Director. No error was found in the
order of the NCLT. Thus, the appeal was dismissed.
REFERRED :
FAVOUR : Against the appellant
A.Y. :
IN THE NCLAT, CHENNAI BENCH
M. VENUGOPAL, JUDICIAL MEMBER
& SHREESHA MERLA, TECHNICAL MEMBER
Som Prakash Satsangi
v. Registrar of Companies
TA No. 129 of 2021
29 August, 2023
Appellant by: Varuna Bhanrale, Advocate
Respondent by: Avinash Krishnan Ravi, Advocate
M. Venugopal, Judicial
Member
TA No. 129 of 2021 (Company
Appeal (AT) No. 68 of 2019):
Introduction:
The 'Appellant'/'Managing
Director' of '2nd Respondent'/'Company', has preferred the instant TA No.
129 of 2021 (Comp. App (AT) No. 68 of 2019), before this 'Tribunal', as an
'Aggrieved Person', on being dissatisfied with the 'Impugned Order', dated
20-12-2018, in CP No. 615/BB/2018, passed by the 'National Company
Law Tribunal', Bengaluru Bench, Bengaluru.
2. The 'National Company Law Tribunal', Bengaluru Bench, while passing
the 'Impugned Order', dated 20-12-2018, in CP No. 615/BB/2018 (Filed by
the 2nd Respondent/Petitioner), wherein, at Paragraphs 6 to 9, had observed the
following :--
'6. After
considering the materials on record and after taking into account the
submissions made by the Practicing Company Secretary appearing for Applicant
that lenient view may be taken, we hereby levy compounding fee for
non-compliance of section 185 of the Companies Act, 2013, on the Applicants as
shown in the table given below :--
S.
No.
|
Particulars
|
Violation
of section 185 of Companies Act, 2013 for the year 2017-18 Fine for default
|
Total
(Rs.)
|
1
|
Applicant-Hewlett Packard
Enterprise India Private Limited
|
10,00,000
|
10,00,000
|
2
|
Mr. Som Prakash Satsangi,
Managing Director
|
5,00,000
|
5,00,000
|
7. As stated
in the Report vide Letter No. ROCB/MM/STA/SEC.441/79699/2018, dated
23-10-2018, two directors during the defaulting period have not made the
application, namely Mr. Neelam Dhawan and Mr. Kiran Ramaswamy Belavadi. The
Registrar of Companies to prosecute the said Directors who have not applied for
compounding of offence as per the provisions of the Companies Act, 2013 and the
rules thereunder.
8. The
compounding fee levied shall be paid by the Applicants within 15 days from the
date of this order in favour of the 'Pay & Accounts Officer, Ministry of
Corporate Affairs, Southern Region, Chennai', payable at Chennai to be handed
over to the Registrar of Companies, Karnataka.
9. Subject to
the payment of the above mentioned compounding fee by way of Bank draft to the
Registrar of Companies, Karnataka, the offence shall stand compounded.''
and directed the 1st
Respondent/Registrar of Companies, Karnataka, to ensure 'Compliance of the
Directions issued', and 'Disposed of', the 'Company Petition'.
Appellant's Contentions:
3. The learned Counsel for the Appellant, submits that the 2nd
Respondent/Petitioner, before the 'National Company Law Tribunal', Bengaluru
Bench, in CP No. 615/BB/2018 (Filed under section 441 read with section
185 of the Companies Act, 2013), had prayed for 'admitting the Petition', and
to 'Compound the Offence', committed by 'Violating' section 185 of the
Companies Act, read with section 441 of the Companies Act, 2013.
4. According to the Appellant, the impugned non-compliance, pertains
to an 'Inter-Corporate Loan' of Rs. 3,60,40,00,000 ('Loan') that was advanced
by the 2nd Respondent to 'Hewlett Packard Enterprise Global Soft Pvt. Ltd.'
('HPEG'), and in fact, the 2nd Respondent and 'HPEG', are Private Limited
Companies, and the 'HPEG', is a 'Fellow Subsidiary' of the '2nd Respondent', in
the 'Ordinary Course of the Business'.
5. It is represented on behalf of the Appellant that the 'Loan' was
disbursed on 9-1-2017, at an arm's length basis, at a rate of Interest, not
less than the 'Applicable Rate', declared by the Reserve Bank of India. In
fact, the 'Appellant (Som Prakash Satsangi), at the time of 'Disbursement of
Loan', was 'employed', with the 2nd Respondent, but was not an 'Officer', of
the 2nd Respondent, in accordance with the provisions of the 'Act'.
6. The learned Counsel for the Appellant, points out that the
'Appellant', is an 'Aggrieved Person', in respect of the 'Impugned Order',
dated 20-12-2018 in CP No. 615/BB/2018, insofar as the 'impugned order',
holds him 'liable', for the 'Impugned Non-compliance of section 185 of the
Companies Act', and imposes a 'compounding fee', for the alleged 'liability',
as per section 185 of the 'Act'. Furthermore, the 2nd Respondent was impleaded
as a 'Proforma Party', by the 'Appellant', and 'no relief', was sought against
it.
7. The learned Counsel for the Appellant, emphatically comes out with
a plea that at the time of 'Advancement of Loan', the 'Unamended section 185 of
the Companies Act, prohibited a 'Company', directly or indirectly, advancing
any 'Loan', to any of its 'Directors', or to any 'other Person', to whom the
'Director', is interested, except in a few stipulated circumstances.
8. It is the version of the Appellant, under the Unamended section 185
of the Companies Act, only the 'Company', extending and the person, received
the 'Loan', are held liable. Also that on 3-1-2018, the Unamended section 185
of the Companies Act was amended, with effect from 7-5-2018, pursuant to which,
the 'liability', for non-compliance of section 185 was 'imposed', on 'every
officer' in 'Default', in addition to the 'liability' on the concerned
'Company'.
9. The learned Counsel for the Appellant, takes a stand that the 'Impugned
Order', 20-12-2018 in CP No. 615/BB/2018, on the File of the 'National
Company Law Tribunal', Bengaluru Bench is an 'unreasoned' one, and was passed,
without application of mind and without due consideration of the applicable
Laws are correct, and also, not providing an 'adequate and equal opportunity',
to the 'Appellant', to present his case, on the issue of his 'Personal
Liability' of the 'impugned non-compliance'.
10. According to the Appellant, the prohibition under the Unamended
section 185 of the Companies Act, does not get attracted, since the 'Loan',
falls under one of the exceptions of Unamended section 185 of the Companies
Act.
11. The forceful stance of the Appellant is that, the 2nd Respondent
filed the 'Petition' (the 'Appellant', was the 'Authorised Signatory'), seeking
'Compounding' of the 'Impugned Non-compliance', simply out of abundant caution.
12. The learned Counsel for the Appellant, points out that the
'Appellant', was not an 'Officer', when the 'Loan', was advanced, and as such,
he cannot be held 'liable' for the 'Impugned Non-compliance', and this vital
aspect, was not taken into account, by the 'Tribunal', at the time of passing
of the 'impugned order'.
13. The learned Counsel for the Appellant, submits that the Amended
section 185 of the Companies Act, was 'prospective in nature', the 'liability'
for 'non-compliance' of section 185, was imposed on 'every Officer of the
Company who is in default', in addition to the liability of the Company.
14. The learned Counsel for the Appellant, brings to the notice of this
'Tribunal', that the 'Appellant', simply signed the 'Petition', as an
'Authorised Representative', who is only authorised to 'Execute Documents', on
behalf of a 'Juristic Entity'.
15. The learned Counsel for the Appellant, points out that a 'Statute'
or 'a part thereof', dealing with 'Substantive Law', cannot be given
'Retrospective Operation', unless the 'Statute', expressly provides for it.
Moreover, the 2nd Respondent, had rectified the 'Potential Impugned
Non-compliance', and as a result, 'No Liability', rests on the 'Directors' and
'Officers' of the 2nd Respondent, including the 'Appellant'. Besides this, the
'Default', as per section 185 of the Companies Act, is a 'One Time Default',
committed only at the time of 'Advancement of Loan'.
16. According to the Appellant, an 'Order' passed by a 'Judicial
Forum', against a 'Person' or 'Party', without giving a 'Fair and Reasonable
Opportunity', is contrary, to the 'Principles of Natural Justice', and
therefore, the 'impugned order' of the 'Tribunal', is 'Bad in Law'.
17. The learned Counsel for the Appellant, relies on the decision of
the Hon'ble Supreme Court of India in Central Board of Trustees v. Indore
Composite (P.) Ltd. (2018) 8 SCC at Page 443, for the proposition that, if
an 'Order', is passed by an 'Adjudicating/Judicial Authority', without either
taking into account, the correct 'Applicable Law' or 'Relevant Facts' or
without providing sufficient reasons, that reflect the conscious application of
mind, such an 'Order' is 'Bad in Law', and it is 'liable', to be set aside.
18. The learned Counsel for the Appellant, submits that section 450 of
the Companies Act, 2013, is not attracted for the 'violation' of the 'Unamended
section 185 of the Act', and further section 450 of the Companies Act, is to be
read and understood in a plain and unambiguous manner, as per decision in Maulavi
Hussein Haji Abraham Umari v. State of Gujarat AIR 2004 SC 3946 (vide
Paragraph 18).
19. The learned Counsel for the Appellant, refers to the decision of
the Hon'ble Supreme Court of India, in Tolaram Relumal v. State of Bombay,
AIR 1954 SC 496 (vide Paragraph 9), for a plea that 'Penal Provisions', are
to be interpreted strictly'.
20. According to the Appellant, he was never 'impleaded', as a 'Party',
to the 'Petition Proceedings', and 'no opportunity'/'intimation', was ever
provided to him, to 'project' his case or 'rebut' or 'respond', to the '1st
Respondent's contentions', in regard to the Appellant's liability for the
'impugned non-compliance'.
21. The learned Counsel for the Appellant, points out that the
'Appellant', was not a 'co-petitioner', in the 'Petition', but the 'Petition',
was filed by the '2nd Respondent', before the 'Tribunal', with the 'Appellant',
only being an 'Authorised Signatory', and this aspect was not looked into by
the 'Tribunal', at the time of passing of the 'impugned order'.
22. The learned Counsel for the Appellant, while concluding, prays for
'allowing' the instant 'TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019),
by 'setting aside' the 'impugned Order', dated 20-12-2018, in CP No.
615/BB/2018, passed by the 'National Company Law Tribunal', Bengaluru
Bench, Bengaluru, 'qua' the 'Appellant', should be 'set aside', to the
extent it imposes a 'Fee' on the 'Appellant'.
Appellant's Citations:
23. The learned Counsel for the Appellant, refers to the 'Judgment of
the Hon'ble Supreme Court of India', dated 11-4-2011 in Thirumalai
Chemicals Ltd. v. Union of India [Civil Appeal Nos. 3191-94 of 2011] : (2011)
108 SCL 78 : (2011) 6 SCC 739 : 2011 TaxPub(CL) 0384 (SC), wherein, at
Paragraphs 23 and 24, it is observed as under :--
'23.
Substantive law refers to a body of rules that creates, defines and regulates
rights and liabilities. Right conferred on a party to prefer an appeal against
an order is a substantive right conferred by a statute which remains unaffected
by subsequent changes in law, unless modified expressly or by necessary
implication. Procedural law establishes a mechanism for determining those
rights and liabilities and a machinery for enforcing them. Right of appeal
being a substantive right always acts prospectively. It is trite law that every
statute prospective unless it is expressly or by necessary implication made to
have retrospective operation.
24. Right of
appeal may be a substantive right but the procedure for filing the appeal
including the period of limitation cannot be called a substantive right, and an
aggrieved person cannot claim any vested right claiming that he should be
governed by the old provision pertaining to period of limitation. Procedural
law is retrospective meaning thereby that it will apply even to acts or
transactions under the repealed Act.''
24. The learned Counsel for the Appellant, relies on the decision of
Hon'ble Supreme Court of India, dated 8-5-2008, in State of Punjab v.
Bhajan Kaur [Civil Appeal No. 3406 of 2008] : (2008) 12 SCC at Page 112,
wherein, at Paragraphs, 9, 16 & 17, it is observed as under :--
'9. A statute
is presumed to be prospective unless held to be retrospective, either expressly
or by necessary implication. A substantive law is presumed to be prospective.
It is one of the facets of rule of law.
16. It is now
well-settled that a change in the substantive law, as opposed to adjective law,
would not affect the pending litigation unless the legislature has enacted
otherwise, either expressly or by necessary implication.
17. In Garikapati
v. N. Subbiah Choudhry, the law is stated, thus: (AIR p.553, para 25)
''25. ...The
golden rule of construction is that, in the absence of anything in the
enactment to show that it is to have retrospective operation, it cannot be so
construed as to have the effect of altering the law applicable to a claim in
litigation at the time when the Act was passed...'
25. The learned Counsel for the Appellant, falls back upon the Order of
the Hon'ble Supreme Court of India, [Writ Petition No. 231 of 1977, dated
25-1-1978] in Maneka Gandhi v. Union of India (1978) 1 SCC 248, wherein, at
Paragraph 14, it is observed as under :--
14. ''Since
the life of the law is not logic but experience and every legal proposition
must, in the ultimate analysis, be tested on the touchstone of pragmatic
realism, the audi alteram partem rule would, by the experiential test,
be excluded, if importing the right to be heard has the effect of paralysing
the administrative process or the need for promptitude or the urgency of the
situation so demands. But the rule is sufficiently flexible to permit
modifications and variations to suit the exigencies of myriad kinds of
situations which may arise. It would not, therefore, be right to conclude that
the rule is excluded merely because the power to impound a passport might be
frustrated, if prior notice and hearing were to be given to the person
concerned. The Passport Authority may impound the passport without giving any
prior opportunity to the person concerned, but as soon as the order impounding
the passport is made, and opportunity of hearing, remedial in aim, should be
given to him so that he may present his case and controvert that of the
Authority and point out why his passport should not be impounded and the order
impounding should be recalled. A fair opportunity of being heard following
immediately upon the order impounding the passport would satisfy the mandate of
natural justice and a provision requiring giving of such an opportunity should
be lead by implication into the Act. And if so read, the procedure prescribed
by the Act would be right, fair and just and would not suffer from the vice of
the arbitrariness or unreasonableness. Therefore, the procedure established by
the Act for impounding the passport is in conformity with the requirements of
Article 21 and does not fall foul of that article.''
26. The learned Counsel for the Appellant, seeks in aid of the Judgment
of the Hon'ble Supreme Court of India, dated 26-7-2018, in Central
Board of Trustees (supra), wherein, at Paragraphs 13 and 14, it is observed
as under :--
'13. Indeed,
in the absence of any application of judicial mind to the factual and legal
controversy involved in the appeal and without there being any discussion,
appreciation, reasoning and categorical findings on the issues and why the
findings impugned in the writ petition deserve to be upheld or reversed, while
dealing with the arguments of the parties in the light of legal principles
applicable to the case, it is difficult for this Court to sustain such order of
the Division Bench. The only expression used by the Division Bench in disposing
of the writ petition is 'on due consideration'. It is not clear to us as to
what was that due consideration which persuaded the Division Bench to dispose
of the writ petition because we find that in the earlier paragraphs only facts
are set out.
14. Time and
again, this Court has emphasized on the Courts the need to pass reasoned order
in every case which must contain the narration of the bare facts of the case of
the parties to the lis, the issues arising in the case, the submissions urged
by the parties, the legal principles applicable to the issues involved and the
reasons in support of the findings on all the issues arising in the case and
urged by the learned counsel for the parties in support of its conclusion. It
is really unfortunate that the Division Bench failed to keep in mind these
principles while disposing of the writ petition. Such order, in our view, has
undoubtedly caused prejudice to the parties because it deprived them to know
the reasons as to why one party has won and other has lost. We can never
countenance the manner in which such order was passed by the High Court which
has compelled us to remand the matter to the High Court for deciding the writ
petition afresh on merits.''
27. The learned Counsel for the Appellant, places reliance upon the
Judgment of the Hon'ble Supreme Court of India, dated 19-4-2022 Civil Appeal
No. 2905 of 2022, in State of Uttarakhand v. Mayan Pal Singh Verma 2022 SCC
Online SC 469, wherein, at Paragraph Nos. 5 to 9, it is observed as under:
'5. While
emphasising the necessity to pass a reasoned order, in the case of Central
Board of Trustees v. Indore Composite Private Limited, (2018) 8 SCC 443, it
was observed and held by this Court that the courts need to pass a reasoned
order in every case which must contain the narration of the bare facts of the
case of the parties to the lis, the issues arising in the case, the submissions
urged by the parties, the legal principles applicable to the issues involved
and the reasons in support of the findings on all the issues arising in the
case and urged by the learned counsel for the parties in support of its
conclusion. It was further observed in the said decision that an order bereft
of reasoning causes prejudice to the parties because it deprives them to know
the reasons as to why one party has won and other has lost.
6. In a recent
decision in the case of Union Public Service Commission v. Bibhu Prasad
Sarangi & Ors., (2021) 4 SCC 516, while emphasising that reasons ought
to be given by the High Court while exercising powers under Article 226 of the
Constitution of India, it was observed and held by this Court that the reasons
constitute the soul of judicial decision and how Judges communicate in their
judgment is a defining characteristic of judicial process since quality of
justice brings legitimacy to the judiciary. It is further observed that though
statistics of disposal of cases is important, of a higher value, is the
intrinsic content and of a quality judgment. It is further observed that in
exercise of powers under Article 226 the courts require to independently
consider the issues involved.
7. Applying
the law laid by this Court in the aforesaid decisions to the facts of the case
on hand and the manner in which the High Court has disposed of the writ
petition, in the interest of sobriety, we may only note that the order is
bereft of reasoning as diverse grounds were urged/raised by the parties which
ought to have been examined by the High Court in the first place and a clear
finding was required to be recorded upon analysing the relevant documents.
8. Since we
cannot countenance the manner in which the order has been passed by the High
Court which has compelled us to remand the matter to the High Court for
deciding the writ petition afresh on merits, we do so in light of the aforesaid
observations.
9. In light of
the foregoing discussion, we allow the present appeal and set aside the
impugned order passed by the High Court and remand the matter to the Division
Bench of the High Court for deciding the writ petition afresh in accordance
with law, keeping in view our observations made supra. We, however, make it
clear that we have refrained from making any observation on the merits of the
controversy, having formed an opinion to remand the case to the High Court only
for the reasons mentioned above. The High Court would, therefore, decide the
writ petition, bearing in mind our observations made above and strictly in
accordance with law.''
1st Respondent/RoC's
Submissions:
28. The learned Counsel for the 1st Respondent/Registrar of Companies,
Bangalore, contends that the 'Appellant', is a 'Subsidiary' of a 'Foreign
Company' (which is a 'Multi-National Corporation'), and is also a
'Professionally', managed 'Company', and hence, it is expected to comply with
the requirements of 'Law'.
29. The learned Counsel for the 1st Respondent, takes a stand that a
'Company', is a separate 'Juristic Entity' vis-a-vis its 'Director', and
therefore, can neither seek 'reliefs' nor 'plead' on their behalf. Also that,
the Appellant's prayer to the extent of 'Claiming Reliefs', for its 'Former
Directors', is 'not maintainable', and hence, the instant 'Appeal', is liable
to be 'Dismissed in Limine', with costs.
30. The learned Counsel for the 1st Respondent, refers to the
'Unamended section 185(2) of the Companies Act, and points out that
'contravention of section 185(1) would make the erring Company liable with a
fine which ...... may extend to Twenty-Five Lakh Rupees.'
31. According to the 1st Respondent, since the Appellant', was liable
for the 'Violations' and 'Non-compliance', committed by it, by means of section
185 of the Companies Act, 2013, the 'impugned order', to the extent of
'imposing Compounding Fee' on the 'Appellant' and its 'Director', and
prosecution against its 'Former Directors', is legally 'sustainable', 'valid',
and 'need not be interfered with', by this 'Tribunal', sitting in 'Appellate
Jurisdiction'.
Appraisal:
32. Before the 'Tribunal' ('National Company Law Tribunal', Bengaluru
Bench), the '2nd Respondent/Petitioner', had filed CP No. 615/BB/2018,
had averred that the 'Board', at its 'Meeting', that took place on 4-1-2017,
had granted an 'Approval', for 'Advancement' of an 'Inter-Corporate Loan',
amounting to INR 3,604,000,000 to 'Hewlett Packard Enterprise GlobalSoft Pvt.
Ltd.' (A 'Fellow Subsidiary'). Further, at the time of 'Advancement of Loan'
Mr. Kiran Ramaswamy Belavadi (DIN : 01911347), was a 'common Director', on the
Board of the Company and 'Hewlett Packard Enterprise GlobalSoft Pvt. Ltd.'.
33. According to the 2nd Respondent/Petitioner, the proviso (b) to
sub-section (1) of section 185 of the Companies Act, 2013, carves out an
'exception for Companies', which in the 'Ordinary Course of its Business',
provides 'Loans' or gives 'Guarantees or Securities', for the 'due repayment'
of any 'Loan', and in respect of which, an 'interest', is charged at the rate,
not less than the Bank rate, declared by the 'Reserve Bank of India'.
34. Added further, the said 'Loan Transaction', was believed to be
carried in an 'Ordinary Course of Business' of the 'Company', at a rate, not
less than the 'Bank Rate', declared by the Reserve Bank of India, as specified
under Proviso to section 185 of the Companies Act, 2013.
35. According to the 2nd Respondent/Petitioner, that the
'non-compliance' of the ingredients of section 185 of the Companies Act, 2013,
took place, without any 'Mala fide' or 'Wilful Intention', on the part of the
'Petitioner Company' or 'any of its Directors'.
36. That apart, the 2nd Respondent/Petitioner, admits that it had
contravened the ingredients of section 185 of the Companies Act, 2013, in
regard to the 'Inter-Corporate Loan'.
37. It is projected on the side of the 2nd Respondent/Petitioner that
the 'Default', was not intentional and was not of such character, so as to
prejudice the interests of the 'Directors', 'Members', 'Creditors' or 'others',
dealing with the 'Company'. Moreover, the '2nd Respondent/Petitioner', in CP
No. 615/BB/2018 (before the 'Tribunal'), had prayed for a 'Relief' (a) To
compound the offence, under section 185 of the Companies Act, 2013 and (b) To
impose a 'Minimum Compounding Fee'.
38. On behalf of the 1st Respondent/RoC, Bangalore, it is pointed out
that as per 'Pre-amended section 185 (2) of the Companies Act, 2013', the
'Company' in 'Default', is liable for 'Fine', which shall not be less than Rs.
5,00,000, but which may extend to Rs. 25,00,000 and the 'Director' or other
'Person', to whom the 'Loan' is advanced, is 'Punishable' with 'Imprisonment'
or 'Fine', which shall not be less than Rs. 5,00,000, but which may extend to
Rs. 25,00,000 or with both.
39. According to the 1st Respondent, on the basis of 'Suo motu
Applications', received from the 'Company', and the 'Managing Director', for
'Compounding the Offence', committed under section 185 of the Companies Act,
2013, for the period from 1-4-2017 to 9-1-2018, and in the 'Report' dated
23-10-2018, filed before the 'National Company Law Tribunal', Bangalore, the
1st Respondent, has stated that Mrs. Neelam Dhawan and Mr. Kiran Ramaswamy
Belavadi, the 'Directors' of the 'Company' of M/s. Hewlett Packard Enterprise
India Private Limited', ought to 'apply' for 'Compounding of Offence',
committed as per section 185 of the Companies Act, 2013.
40. Furthermore, the 1st Respondent, through its Letter, dated
3-1-2019, had requested Mrs. Neelam Dhawan and Mr. Kiran Ramaswamy
Belavadi, to file 'Additional Compounding Application', within 'ten days'
thereof, to make the 'Offences' good.
41. The 'Tribunal' was pleased to levy a 'Compounding Fee' of Rs.
10,00,000, on the Appellant's Company and Rs. 5,00,000 on Mr. Som Prakash
Satsangi, Managing Director.
42. The stand of the 1st Respondent is that, during the period of
'Default', the 'Company' and Mr. Som Prakash Satsangi, Mrs. Neelam Dhawan and
Mr. Kiran Ramaswamy Belavadi are/were directors of the Company and Mr. Kiran
Ramaswamy Belavadi was the common and interested director in this matter and
therefore, liable for 'payment of fine', as per section 185(2) of Companies
Act, 2013, for default committed.
43. According to the 1st Respondent, Mrs. Lekha Ashok, Practicing
Company Secretary (PCS) of SVJS Associates, had represented the 'Company', in
the 'Compounding' matter, before the 'National Company Law Tribunal',
Bengaluru, and it cannot be said that the 'Tribunal', had not provided enough
and adequate opportunity, before passing the 'impugned order'.
44. It is projected on the side of the 1st Respondent that, as per
section 185 of the Companies Act, 2013, the 'Loan', can be granted to the
'interested Concerns', only for 'Repayment of Loan', and not for otherwise.
45. In the instant case, it cannot be forgotten that the Appellant, 'suo
motu', voluntarily had sought 'Compounding' of the
'Non-compliance'/'Violation' of the 'Statutory Mandate', enshrined in section
185 of the Companies Act, 2013, by filing a 'Petition', before the 'Tribunal',
for 'Compounding of the Offence'.
46. It is to be remembered that in 'Law', a 'Company', is a 'Separate
'Juristic Entity' vis-a-vis its 'Directors', and therefore, can neither claim
'Reliefs' nor 'Plead' on their behalf. As such, the 'Appellant'/'Managing
Director' of '2nd Respondent/Company', to the extent of claiming 'Reliefs', for
its 'Erstwhile Directors', is 'not maintainable' in 'Law', as opined by this
'Tribunal'.
47. By means of section 185(2) of the Companies Act, 2013, the
'Violation' of section 185(1) of the Act, would make the 'Erring Company',
liable with a 'Fine' which ...... may extend to Twenty-Five Lakh Rupees'.
48. Furthermore, the 'Appellant', is not 'Aggrieved', in respect of the
'impugned order', to the extent that it directs 'Prosecution', against its
'Erstwhile Directors', and therefore, the 'impugned order', passed by the
'Tribunal', to the extent of 'imposing Compounding Fee' on the 'Appellant', and
its 'Director', and 'Prosecution', against its 'Former Directors', is a valid
and sustainable one, in 'Law', because of the fact that the 'Appellant', was
liable for 'Non-compliance', by means of section 185 of the Companies Act,
2013, as opined by this 'Tribunal'.
49. The 'Appellant Company'/a subsidiary of a 'Foreign Company', the
Company and the 'Directors', are expected to comply with the provisions of
'Law', true letter and spirit. In fact, the 'Company' and its 'Directors', are
liable, for the relevant period, to the 'maximum Fine of Rs. 25,00,000', in
terms of section 185 of the Companies Act, 2013.
50. In the light of foregoing deliberations, on a careful consideration
of contentions advanced, on behalf of the respective sides, taking into account
of the facts and circumstances of the present case, in a 'holistic and
conspectus manner', keeping in mind that the 'Default', remained for one year
and six days, this 'Tribunal', comes to a consequent conclusion, that inasmuch
as the 'Appellant', is liable for the 'Violations', and 'Non-compliances'
committed by it, by means of section 185 of the Companies Act, 2013, the 'Impugned
Order', dated 20-12-2018, in CP No. 615/BB/2018, passed by the
'National Company Law Tribunal', Bengaluru Bench, to the extent of 'imposing
Compounding Fee' on the 'Appellant' and its 'Directors', and 'Prosecution'
against 'Former Directors', is free from any 'Legal Infirmities'. Accordingly,
the 'Appeal' is devoid of merits and it fails.
Disposition:
In fine, the instant TA No.
129 of 2021 (Comp. App (AT) No. 68 of 2019) is 'Dismissed'. No costs.