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TMI Blog2023 (8) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... .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:- 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 Rs.10,00,000/- Rs.10,00,000/- 2 Mr. Som Prakash Satsangi, Managing Director Rs.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 Act, 2013 and the rules there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the 'National Company Law Tribunal', Bengaluru Bench is an 'unreasoned' one, and was passed, without application of mind and without due consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 alteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raphs 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue, 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 observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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