Proportionality in compounding fines justified reduction, while bona fide non-appearance supported waiver of earlier costs.

A waiver of costs imposed for non-appearance was allowed where the absence was found bona fide, supported by sufficient cause, and not intentional or mala fide. The compounding fine was also reduced on the basis that compounding is discretionary and the penalty must remain fair, reasonable, and proportionate to the default and surrounding circumstances, including resignation from the company, subsequent management responsibility, financial hardship, and prolonged litigation. The earlier cost was waived, and the compounding amount was further reduced, with the balance directed to be paid within the time granted.

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Issues: (i) Whether the cost imposed in the application for waiver deserved to be set aside. (ii) Whether the compounding fine imposed on the petitioners was liable to be further reduced.

Issue (i): Whether the cost imposed in the application for waiver deserved to be set aside.

Analysis: The application sought waiver of the cost earlier imposed for non-appearance. The explanation given for absence was accepted as bona fide and not intentional or mala fide. The record showed sufficient cause for the non-appearance, and the cost order was therefore found to require interference.

Conclusion: The cost imposed earlier was waived.

Issue (ii): Whether the compounding fine imposed on the petitioners was liable to be further reduced.

Analysis: The Court examined the petitioners' plea that they had resigned from the company and that the default was attributable to the subsequent management, along with their financial hardship and prolonged litigation. It also considered that compounding is a matter of discretion and that the quantum of penalty must be fair, reasonable, and proportionate to the misconduct. Applying proportionality to the circumstances, the Court found the existing amount still capable of reduction, though not to the extent of complete waiver.

Conclusion: The compounding fine was further reduced from Rs. 1,50,000/- to Rs. 1,00,000/- each.

Final Conclusion: The petitioners obtained partial relief: the earlier cost was waived and the compounding amount was reduced, with the remaining balance directed to be paid within the time granted by the Court.

Ratio Decidendi: While exercising discretion in compounding matters, the penalty must bear a reasonable and proportionate relationship to the nature of the default and the surrounding circumstances, and may be reduced where strict insistence would be excessive or unduly onerous.

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