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2018 (11) TMI 195 - AT - Companies LawRepetitive default - scope of section 451 of the companies act - Compounding of certain offence u/s 441 - Application for compounding the same offence committed by defaulting Company along with its Officers in default - Offence punishable with ‘fine or imprisonment’ or ‘only with fine’ or ‘fine and imprisonment’ on repeated defaults committed within three years - Held that:- Company cannot be imprisoned. The officer of the company who is in default shall be punishable with imprisonment or fine or with both as prescribed under Section 86. Whether such officer is to be imposed punishment of fine or imprisonment or both will dependent on the basis of gravity of offence which can be decided only by the Court of Competent Jurisdiction (Special Court). Such power having been delegated to the Court of Competent Jurisdiction, it cannot be held that in view of Section 451 for committing the same offence for the second or subsequent occasions within a period of three years, the officer is liable to be imprisoned. If such interpretation is given, then it will amount to taking away the power of the Competent Court (Special Court) to decide whether in the fact and circumstances of the case and on the basis of gravity of offence, the officer will be liable for punished of imprisonment or fine or both. Therefore, we hold that the Tribunal is wrong in holding that if Section 451 is read along with Section 441(6) for offence punishable with ‘fine or imprisonment’ or ‘only with fine’ or ‘fine and imprisonment’ on repeated defaults committed within three years, the Tribunal does not have jurisdiction to compound the offence. A bare perusal of the provision makes it evident that Section 451 only provides that ‘fine’ in case of any repeated defaults shall be ‘twice the amount of fine’ in addition or in alternative to any imprisonment for such default if prescribed under the relevant provisions of Act, 2013. It does not make the imprisonment mandatory. Secondly, use of word ‘any’ in Section 451 in the phrase ‘in addition to any imprisonment for that offence’ leaves discretion with the prosecuting authority/court to punish the defaulter with imprisonment. Had the intention of the legislature been to make the imprisonment mandatory, it would not have used the word ‘any’. If the interpretation adopted by the Tribunal is accepted then it will amount to substituting words in a penal provision, which is impermissible in the law. Tribunal failed to appreciate Section 451 of the Companies Act, 2013. We further hold that Section 451 only provides with ‘fine’ in case of any repeated defaults shall be ‘twice the amount of fine’, in addition to any imprisonment for such default under the relevant provisions of the Act, if prescribed and it does not make the ‘imprisonment mandatory’. In view of the aforesaid findings, we set aside the impugned order dated 16th February, 2018 and remit the respective Company Petitions to the Tribunal for decision on its merit taking into consideration the offence committed by the Company and its Officers and the Report of the Registrar of Companies. We make it clear that we have not decided individual claim of one or other Applicants/Petitioner which is to be determined by the Tribunal. The appeals are allowed with aforesaid observations and directions. However, in the facts and circumstances of the case, there shall be no order as to cost.
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