Taxpublishers.in - Latest/17_CL_01 - Tax Publishers Your Tax Solution Hub

Share via Whatsapp 83 Views

The Tax Publishers

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

JUDGMENT

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.