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TMI Blog2025 (2) TMI 964X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the alleged offences are said to have been committed in the year 2016, it is opined that the amended provision of Section 197 (15) would not apply even in relation to the offences said to have been committed in the year 2016.
Under these circumstances, having regard to the amendment to Section 197 (15) vide amended Act, 2019, Central Act No. 22/2019 w.e.f 02.11.2018, the impugned proceedings as against the petitioner clearly are not maintainable and same deserves to be quashed.
Conclusion - The amendment to Section 197 (15) of the Companies Act, 2013, applies retrospectively, thereby affecting the maintainability of proceedings initiated under the pre-amendment provisions.
The complaint and order of cognizance against the petitioner on the file of the Special Court for Economic Offences, Bengaluru are hereby quashed - Petition allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the incident, Section 197 (15) was not amended and merely because the complaint was instituted subsequently, the impugned proceedings cannot be quashed and the petition is liable to be dismissed. 6. By way of reply, learned counsel for the petitioner submits that by virtue of Section 197 (15) having come into force w.e.f 02.11.2018, in the absence of contrary intention appearing in the substituted provision or in the amended provision, the amendment would relate back to the date of original provision and the said contention of the respondent cannot be accepted. In support of her submission, learned counsel for the petitioner places reliance to the following judgments: i) Commissioner of Central Excise and Service Tax Vs. Fosroc Chemicals (India) P. Ltd.; reported in 2014 SCC Online Kar 12806, wherein this Court has held as under: "xxx 10. What is the effect of "substitution" of a provision in the place of an existing one is no more res integra. The Constitution Bench of the Hon'ble Apex Court in the case of SHAMARAO V. PARULEKAR vs. THE DISTRICT MAGISTRATE, THANA, BOMBAY & Others reported in AIR 1952 SC page 324, dealing with the scope of substitution of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. By reason of the aforementioned amendment no substantive right has been taken away nor any penal consequence has been imposed. Only an obvious mistake was sought to be removed thereby. 17. There cannot furthermore be any doubt whatsoever that when a person is held to be eligible to obtain the benefits of an exemption notification, the same should be liberally construed." 14. The Parliament has enacted the Special Economic Zones Act 2005 (The SEZ Act for short) to provide for the establishment, development and management of the Special Economic Zones for the promotion of exports and for matters connected therewith or incidental thereto. Section 53 of the Act declares that a special economic zone shall, on and from the appointed day, be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations. The word "export" has been defined under Act at section 2(m). According to the definition of the word export, vide Section 2(m) (ii) "export" means supplying goods or providing services, from the Domestic Tariff Area to a Unit or Developer. Such exports were exempted from duty of Central Excise under Section 26 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the Hon'ble Supreme Court has held as under: "xxx 14. However, the question which arises for consideration in this case is as to what would be the effect of the subsequent notification. 15. The word "substitute" ordinarily would mean "to put (one) in place of another"; or "to replace". In Black's Law Dictionary, 5th Edn., at p. 1281, the word "substitute" has been defined to mean "to put in the place of another person or thing", or "to exchange". In Collins English Dictionary, the word "substitute" has been defined to mean "to serve or cause to serve in place of another person or thing"; "to replace (an atom or group in a molecule) with (another atom or group)"; or "a person or thing that serves in place of another, such as a player in a game who takes the place of an injured colleague". 16. By reason of the aforementioned amendment no substantive right has been taken away nor any penal consequence has been imposed. Only an obvious mistake was sought to be removed thereby. 17. There cannot furthermore be any doubt whatsoever that when a person is held to be eligible to obtain the benefits of an exemption notification, the same should be liberally constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Varanasi". It, therefore, cannot be said to be a case where some other seaports or inland container depots have been added for the purpose of extension of the benefit but the newly added seaports or inland container depots had been made a part of the original notification. The Union of India while making a subordinate legislation had advisedly used the word "substitution" in place of the word "addition". The object and purport of the subsequent notification issued by the Union of India was, thus, to grant the same benefit which had been granted to the exporters who were registered at the other seaports, airports or inland container depots as specified in the notification dated 7-4-1997 but also to those exporters, who had been exporting from such seaports or inland container depots as specified in the amended notification dated 27-11-1997. 23. If the Central Government intended to extend the benefit to the members of the respondent Association only with prospective effect, it could have said so explicitly. Such a benefit could also have been extended by taking recourse to the proviso appended to sub-clause (iv) of clause (2) of the notification dated 7-4-1997. It may, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g substituted for the word 'after'. What is the meaning and effect of the expression employed therein - 'shall be substituted'? 24. The substitution of one text for the other pre-existing text is one of the known and well-recognised practices employed in legislative drafting. 'Substitution' has to be distinguished from 'supersession' or a mere repeal of an existing provision. 25. Substitution of a provision results in repeal of the earlier provision and its replacement by the new provision (see Principles of Statutory Interpretation, ibid., p. 565). If any authority is needed in support of the proposition, it is to be found in West U.P. Sugar Mills Assn. v. State of U.P. [(2002) 2 SCC 645] , State of Rajasthan v. Mangilal Pindwal [(1996) 5 SCC 60] , Koteswar Vittal Kamath v. K. Rangappa Baliga and Co. [(1969) 1 SCC 255] and A.L.V.R.S.T. Veerappa Chettiar v. S. Michael [1963 Supp (2) SCR 244 : AIR 1963 SC 933] . In West U.P. Sugar Mills Assn. case [(2002) 2 SCC 645] a three-Judge Bench of this Court held that the State Government by substituting the new rule in place of the old one never intended to keep alive the old rule. Having regard to the totality of the circumstances ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstruction. 30. It is not a case where the respondents, like the cases of Mahaan Dairies [(2004) 11 SCC 798] and Tata Iron & Steel Co. Ltd. [(2005) 4 SCC 272] were ineligible from claiming the benefit. The subsequent notification, thus, should receive a beneficent construction. 31. The learned Additional Solicitor General relied upon CCE v. Parle Exports (P) Ltd. [(1989) 1 SCC 345 : 1989 SCC (Tax) 84] for raising the contention that the interpretation of the executive should receive due consideration. It is not a case where the doctrine of "contemporanea expositio" can be invoked. The order relied upon by the learned counsel has been impugned by the respondents by filing the writ petition. It, therefore, cannot be said that by reason thereof the notification had been constructed on administrative side. 32. In Parle Exports [(2004) 11 SCC 798] [(2004) 11 SCC 798] it was observed: (SCC p. 357, para 17) "17. ... The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned judgment. The appeal is dismissed. No costs." iii) B. Kannan Vs. The Deputy Registrar of Companies passed in Crl. O.P. No. 2735/2017 and Crl. M.P. Nos.1933 and 1934/2017 dated 12.12.2022. 7. In this case, the complaint is of the year 2017. The law as stood on the date of complaint for the alleged violation committed by the petitioner is as follows: "...(6) If a person accepts an appointment as a director in contravention of sub-section (1), he shall be punishable with fine which shall not be less than five thousand rupees but which may extend to twenty-five thousand rupees for every day after the first during which the contravention continues." 8. At the relevant point of time, contravention was considered as an offence. Further, there was no Explanation II, which specifically clarified for the purpose of reckoning in the limit of Directorship of the 20 companies, the dormant companies shall not be included. By virtue of the Companies (Amendment) Act, 2019 and the Companies (Amendment) Act 2020, the contravention is now liable for penalty by the adjudicating officer appointed by the Central Government. If the contravention is liable for fine, it is triable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the punishment for an offence punishable under s. 16(1)(a) of the Act, there is no reason why the accused should not have the benefit of such reduced punishment. The rule of beneficial construction requires that even ex post facto law of such a type should be applied to mitigate the rigour of the law. The principle is based both on sound reason and common-sense. This finds support in the following passage from Craies on Statute Law, 7th edn. at pp. 387-88 : "A retrospective statute is different from an ex post facto statute. "Every ex post facto law ... "said Chase J. in the American case of Calder v. Bull(1) "must necessarily be retrospective, but every retrospective law is not an ex post facto law. Every law that takes away or impairs rights vested agreeably to existing laws is retrospective, and is generally unjust and may be oppressive ; it is a good general rule that a law should have no retrospect, but in cases in which the laws may justly and for the benefit of the community and also of individuals relate to a time antecedent to their commencement : as statutes of oblivion or of pardon. They are certainly retrospective, and literally both concerning and after the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies Act as well, reads as follows: ".....The Committee recommended that the existing rigour of the law should continue for serious offences, whereas the lapses that are essentially technical or procedural in nature may be shifted to in-house adjudication process. The Committee observed that this would serve the twin purposes of promoting of ease of doing business and better corporate compliance. It would also reduce the number of prosecutions filed in the Special Courts which would in turn facilitate speedier disposal of serious offences and the offenders shall be penalised." Though this Bill lapsed, the subsequent Act in the year 2019, 2020 brought about the same amendment in Section 165 (6) of the Act. In the 2019 Amendment Act, penalty was fixed at Rs.5,000/- for each day the contravention continues. However, the 2020 Amendment Act further mollifies it by fixing Rs.2000/- per day as penalty, subject to a maximus of Rs.2,00,000/-. Therefore, the object and reason in 2018 Bill are relevant, though it had lapsed. When that being the intention of the Legislature, we find that there is no reason why the said Amendment cannot be applied in favour of the accused in the pendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 197 (15) reads as under: 197 (15) If any person contravenes the provisions of this Section, he shall be punishable with fine which shall not be less than one lakh rupees, but which may extend to five lakh rupees. 8. Subsequent to the amendment, Section 197 (15) reads as under: 197 (15) If any person makes any default in complying with the provisions of this Section, he shall be liable to a penalty of one lakh rupees and where any default has been made by a company, the company shall be liable to a penalty of five lakh rupees." 9. The aforesaid provisions contained in Section 197 (15) was amended vide Companies (Amendment) Act, 2019 by Central Act No. 22/2019. A bare perusal of the amendment Act is sufficient to come to the conclusion that Section 197 (15) has been substituted by the amended provisions. In this context, in the absence of anything to the contrary in the amendment the substitution of Section 197 (15) vide amendment w.e.f. 02.11.2018 would relate back to the date of original provision of the year 2013 and in the light of the undisputed fact that the alleged offences are said to have been committed in the year 2016, I am of the considered opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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