2004 (7) TMI 373 - HC - Companies Law

Summary

Issues:
1. Denial of transfer of code based on director's association with another company.
2. Interpretation of Foreign Trade (Regulation) Rules, 1993.
3. Requirement of controlling interest for refusal of license.
4. Lack of communication of order and absence of original records.

Analysis:
1. The petitioner sought the transfer of an importer/exporter code from a limited company, which was denied due to a director's association with another company under investigation for fraudulent activities.
2. The denial was based on Rule 7(1)(f) of the Foreign Trade (Regulation) Rules, 1993, allowing refusal of license if a director is associated with a company facing actions under the Act or Rules.
3. The court interpreted the rule, emphasizing the necessity of both directorship and controlling interest for its application, clarifying that being a director alone is not sufficient.
4. The judgment highlighted the lack of communication of the denial order and the absence of original records, questioning the validity of the decision based on incomplete information.
5. The court quashed the denial decision, allowing an opportunity for an inquiry into the director's controlling interest in the other company within two months, failing which the code transfer should proceed.
6. The writ petition was allowed, with each party bearing its own costs, and related applications were disposed of accordingly.