Som Prakash Satsangi vs The Registrar Of Companies Bangalore ...

Som Prakash Satsangi aged 58 years, Son of Mr. Prem Prakash Satsangi an Indian Citizen, residing at C-5/60, First Floor, Vasant Kunj Delhi - 110070 ..... Appellant v The Registrar of Companies, Bangalore, Karnataka having its office at 2nd Floor, Kendriya Sadan, Kormangala, Bangalore - 560034 Karnataka, India ..... 1st Respondent

Hewlett Packard Enterprise India Private Limited a Company incorporated under the Companies Act, 2013 and having its Registered Office at 24, Salarpuria Arena, Hosur Main Road, Adugodi, Bangalore - 560030 Karnataka, India ..... 2nd Respondent

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 1 of 21 Present : For Appellant : Ms. Varuna Bhanrale, Advocate For Respondent No.1 / : Mr. Avinash Krishnan Ravi, Advocate Registrar of Companies

JUDGMENT

(Physical Mode) Justice M. Venugopal, Member (Judicial):

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:-

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 2 of 21 Sl. Particulars Violation of Sec. Total No. 185 of Companies Rs.

Act, 2013 for the year 2017-18 Fine for default

1 Applicant - Hewlett Packard Rs.10,00,000/- Rs.10,00,000/-

Enterprise India Private Limited 2 Mr. Som Prakash Satsangi, Rs.5,00,000/- Rs. 5,00,000/-

Managing Director

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',

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 3 of 21 Bengaluru Bench, in CP No. 615 / BB / 2018 (Filed under Section 441

r/w. 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, r/w. 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

GlobalSoft 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 09.01.2017, 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',

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 4 of 21 dated 20.12.2018 in CP No. 615 / BB /2018, in so far 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 Laon', 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 03.01.2018, the

Unamended Section 185 of the Companies Act was amended, with effect

from 07.05.2018, 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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 5 of 21 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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 6 of 21 `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'.

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 7 of 21

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 Private Limited, reported in (2018) 8 SCC at Page 433,

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 & Anr., 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 and Anr. v. The

State of Bombay, reported in 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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 8 of 21 `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 11.04.2011 in Thirumalai

Chemicals Limited v. Union of India & Ors. (vide Civil Appeal Nos.

3191 - 94 of 2011) reported in (2011) 6 SCC 739, wherein, at Paragraphs

23 and 24, it is observed as under:

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 9 of 21

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 08.05.2008, in State of Punjab &

Ors. v. Bhajan Kaur & Ors. (vide Civil Appeal No. 3406 of 2008),

reported in (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 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..."

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 10 of 21

25. The Learned Counsel for the Appellant, falls back upon 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 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 26.07.2018, in

Central Board of Trustees v. Indore Composite Private Limited (vide

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 11 of 21 Civil Appeal No. 7240 of 2018), reported in (2018) 8 SCC 443, 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 19.04.2022 (vide

Civil Appeal No. 2905 of 2022) in State of Uttarakhand and Anr. v.

Mayan Pal Singh Verma, reported in (2022) SCC Online SC 469,

wherein, at Paragraph Nos. 5 to 9, it is observed as under:

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 12 of 21

5. ``While emphasising the necessity to pass a reasoned order, in the case of Central Board of Trustees Vs. 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 Vs. Bibhu Prasad Sarangi and 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.''

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 13 of 21 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-à-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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 14 of 21 `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 04.01.2017, 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'.

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 15 of 21

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 `Willful 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'.

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 16 of 21

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 moto

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 01.04.2017 to

09.01.2018, 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

03.01.2019, had requested Mrs. Neelam Dhawan and Mr. Kiran

Ramaswamy Belavadi, to file `Additional Compounding Application',

within `ten days' thereof, to make the `Offences' good. TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 17 of 21

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.

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 18 of 21

45. In the instant case, it cannot be forgotten that the Appellant, `Suo

moto', 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-à-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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 19 of 21 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 in as much 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

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 20 of 21 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.

[Justice M. Venugopal] Member (Judicial)

[Shreesha Merla] Member (Technical)

29 / 08 / 2023

SR / TM

TA No. 129 of 2021 (Comp. App (AT) No. 68 of 2019) Page 21 of 21