TaxTMI 
TaxTMI 
2023 (8) TMI 1614
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...., 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: Sl. No. Particulars Violation of Sec. 185 of Companies Act, 2013 for the year 2017-18 Total Rs. Fine for default 1 Applicant - Hewlett Packard Enterprise India Private Limited 10,00,000/- Rs.10,00,000/- 2 Mr. Som Prakash Satsangi, Managing Director 5,00,000/- Rs. 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 ....
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....ctor', in 'HPE' and 'HPEG', during the period when the 'Loan was Advanced', 'HPEG' / 2nd Respondent', was a 'Private Company', in whom a 'Director' of 'HPE', was interested, under the 'Unamended Section of 185 of the Companies Act'. 7. It is represented on behalf of the Learned Counsel for the Appellants that, the 'Loan', was believed to have been 'Advanced', by the '2nd Respondent', to 'HPEG', in the 'ordinary course of Business', at an interest, not lower than the rate, prescribed by the Reserve Bank of India. 8. In this connection, it is pointed out on behalf of the Appellant that such a 'Loan', was not covered under the purview of the 'Unamended Section 185 of the Companies Act', in the light of proviso (b) to Section (1) of the 'Unamended Section 185', and hence, the 'Advancement of Loan', was not a 'non-compliance', by the '2nd Respondent / HPE' of the Unamended Section 185 of the Companies Act. 9. The plea of the Appellants is that, even if there was a 'Non- compliance' of the '2nd Respondent / HPE' of the Unamended Section 185 of the Companies Act, the 'Appellants', were not 'liable', for such non-compliance, since the 'Directors' or other 'Officers', of the 'Defau....
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....ith Section 185 of the Companies Act, 2013), by the '2nd Respondent / HPE', had 'imposed' a 'High Compounding Fee' of INR 10,00,000/-, on the 2nd Respondent, a separate 'Compounding Fee' of Rs. INR 5,00,000/-, on its 'Managing Director - Mr. Som Prakash Satsangi', and directed the prosecution, against the 'Appellants' (vide Paragraphs 6 and 7 of the impugned order, Page 37 and 38 of the Appellants' Appeal Paper Book), even though the 'Appellants', were not 'liable', under the 'Applicable Section 185 of the Companies Act, and were not 'Parties' to the 'Petition Proceedings'. 16. According to the Appellants, the 2nd Respondent, was impleaded only as a 'Proforma Party', and 'no Reliefs', have been prayed for, against it. Also, that during and after the 'Petition Proceedings', the 1st Respondent, had issued 'Letters', stating that the 'Appellants', should file a 'Compounding Application', as they were 'Officers in Default', and threatened to initiate prosecution against the 'Appellants'. 17. In reality', the 2nd Respondent and the Appellant', had clarified that as per Unamended Section 185 of the Companies Act, the Appellants were not liable, for the 'impugned non-complianc....
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....s per which, 'Officers who are in Default', were held to be liable, 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 Appellants. 24. The Learned Counsel for the Appellants, submits that the 'default', under Section 185 of the Companies Act, is a 'onetime default', committed only, at the time of the 'Advancement of Loan'. Also that, since the 'Amended Section 185 of the Companies Act', has no 'Application', the 'Appellants', cannot be held liable, for the 'Impugned Non-compliance'. Moreover, there was no 'cause' for the 'Appellants', to file any 'Compounding Application', before the 'National Company Law Tribunal'. 25. The Learned Counsel for the Appellants, points out that the 'Appellants', were not given the 'Opportunity of Being Heard', during the 'Petition Proceedings', before the 'Tribunal', and that an 'Order', passed by a 'Judicial Forum', against the 'Party', without providing a 'Fair and Reasonable Opportunity', is contrary, to the 'Principles of Natural Justice', and therefore, the 'Impugned Order', is 'Bad in Law'. 26. The Learned Co....
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....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 Choudhry4, 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..." 30. The Learned Counsel for the Appellants, points out the 'Order of the Hon'ble Supreme Court of India', dated 25.01.1978 (vide Writ Petition No. 231 of 1977), in Maneka Gandhi v. Union of India & Anr., reported in (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 le....
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....le 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 counte....
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.... 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.'' Contentions of the 1^st Respondent....
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.... 39. The Learned Counsel for the 1st Respondent, contends that since the Unamended Section 185 of the Companies Act, had not provided for any 'Penalty' / 'Liability' / 'Punishment' for the 'Officer in Default' of the 'Erring Company', Section 450 of the Companies Act, 2013, empowers the 'Statutory Authorities', to affix 'Liability', on the 'Officer in Default', of the 'Erring Company'. As such, a plea is taken, on behalf of the 1st Respondent / RoC that, since the 'Appellants', were liable for the 'Violations', committed by the '2nd Respondent / Company', by means of Section 450 of the Companies Act, 2013 and no 'Application', for 'Compounding of the Offences', was submitted by them, in this regard. 40. The Learned Counsel for the 1st Respondent, prays for the dismissal of the instant 'Appeal', with costs, since 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 directing the '1st Respondent / RoC', to 'prosecute the Appellants', is a legally 'valid' and a 'sustainable' one. Section 185 of the Companies Act, 2013: 41. The ingredients of Section 185 of the Companies Act, 2013, ....
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....the 'Board' at its 'Meeting', held on 04.01.2017, had granted an 'Approval', for an 'Advancement of an Inter-Corporate Loan', amounting to INR 360,40,00,000/- to 'Hewlett Packard Enterprise GlobalSoft Pvt. Ltd.' / a 'Fellow Subsidiary'. 51. As a matter of fact, that the 2nd Appellant / Mr. Kiran Ramaswamy Belavadi (DIN : 01911347), was a 'common Director', on the 'Boards' of the 'Company' and 'Hewlett Packard Enterprise GlobalSoft Pvt. Ltd'. In the case of the Company, there was a non-compliance, in regard to the 'Loan', as mentioned in Supra, and the '2nd Appellant', being an interested Director in regard to the 'Loan', there was a non-compliance of Section 185 of the Companies Act, 2013. 52. According to the Appellants, 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 prescribed under Proviso to Section 185 of the Companies Act. Furthermore, 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 '2nd Respondent / Hewlett Packard Ente....
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....unched, as per the 'Orders' / 'Directions' of the concerned 'Compounding Authority'. 56. In the instant 'Appeal', the 'Appellants', have come out with a plea that the 'Prohibition', under the 'Unamended Section 185 of the Companies Act', does not get 'attracted', because of the 'Loans', falls under one of the exceptions of the 'Unamended Section 185 of the Companies Act'. Further the '2nd Appellant', had resigned from the 'Board' of 'HPEG' on 05.01.2018, and the 'Loan', was repaid by 'M/s. HPEG', on 09.01.2018. 57. It cannot be disputed that 'HPEG', returned the 'Loan', within 371 days of borrowing it, to 'HPE'. 58. The contentions of the Appellants is that, the 'Violation', committed by the '2nd Respondent', by means of 'pre-amended Section 185 (2) of the Companies Act, 2013', do not give raise to the 'Liability', on the 'Officers-in-Charge' of the 'Company'. 59. At this juncture, this 'Tribunal', relevantly points out that the 'Amendment to Section 185 (2) of the Companies Act, 2013', has not created a 'New Wrong' or 'New Offence', but a 'New Penalty', for future cases after 07.05.2018, was introduced. 60. As regards, erstwhile 'Liabilities' and 'Wrongs' are concer....