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2012 (5) TMI 129 - HC - CustomsWhether Tata Teleservices (Maharashtra) Ltd. and Tata Consultancy Services Ltd. cannot be considered as group companies under para 9.28 of the Foreign Trade Policy 2004-2009. Held that - The Policy Interpretation Committee has not assigned any reasons as to why the petitioner company and TCS cannot be considered as group companies - petitioner indirectly fulfills the first condition set out in para 9.28 of the Foreign Trade Policy as Tata Sons Ltd held 74% equity shares of TCS and 21% equity shares of the petitioner company giving the petitioner to exercise 26 per cent or more of voting rights in TCS in favour of assessee.
Issues:
Challenge to decision of Policy Interpretation Committee regarding group company status under Foreign Trade Policy 2004-2009. Analysis: The petitioner, a company providing telecommunication services, imported equipment and sought to fulfill export obligations by considering itself and Tata Consultancy Services Ltd. (TCS) as group companies under para 9.28 of the Foreign Trade Policy. The Policy Interpretation Committee rejected this claim. The petitioner argued that since Tata Sons Ltd. held significant equity shares in both companies, they fulfilled the voting rights condition of being group companies, which was not considered by the Committee. The petitioner contended that the orders were flawed as no reasons were provided for rejecting their claim. The Court noted that the Committee did not interpret the policy or consider the petitioner's argument about indirect fulfillment of voting rights condition. The Committee's failure to provide reasons rendered the orders invalid, and the Court quashed them, directing a fresh consideration by the Committee. The respondent argued that the petitioner and TCS could be group companies only if specific conditions of controlling voting rights or board appointments were met, which they did not fulfill. However, the Court emphasized the importance of providing reasons in such decisions and found the respondent's contentions lacking in merit. The Court held that the Policy Interpretation Committee must reconsider the matter within four months, emphasizing the need for a lawful and reasoned decision-making process. The rule was made absolute in favor of the petitioner, with no order as to costs, and all contentions were kept open for further consideration.
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