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TMI Blog2022 (1) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... ing related party entities? - HELD THAT:- From a perusal of Section 188 of the Companies Act it is apparently clear that no member of the Company shall vote on such resolution to approve any contract or arrangement which may be entered into by the Company, if such member is a related party. Admittedly, in the instant case, when the resolution of 15th July, 2014 was passed, the appellants being related party had abstained from voting and, therefore, they had complied with Section 188 of the Companies Act as well as Regulation 23(7) of the LODR Regulations. Section 188 of the Companies Act as well as Regulation 23 of the LODR does not prohibit related party entities from voting for recalling/rescinding resolution which was passed earlier b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tember, 2019 whereby the appellants have been penalised a cumulative sum of Rs.35 lakhs for violation of Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (hereinafter referred to as 'LODR Regulations'). 3. The facts leading to the filing of the present appeal is, that the Company R.T. Exports Ltd. proposed to enter into a transaction with Neelkanth Realtors Pvt. Ltd. for purchase of 40,000 sq.ft. of residential space. This proposal was treated as a material related party transaction in view of clause 49 of the Listing Agreement and, accordingly, such proposal was required to be approved by the shareholders of the Company. Accordingly, a special resolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Gaurav Joshi, Senior Advocate assisted by Mr. Abhiraj Arora, Mr. Karthik Narayan, Mr. Harshvardhan Nankani and Mr. Shourya Tanay, Advocates for the respondent. 7. The short question that arises for consideration is whether the appellants were justified in voting for rescinding the resolution dated 15th July, 2014 inspite of being related party entities. In order to understand the controversy, it would be appropriate to refer to certain provisions of the Companies Act and the LODR Regulations. Section 188 of the Companies Act, 2013 stipulates as follows: 188. Related party transactions.- (1) Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2015. 2(zc) ― related party transaction means a transfer of resources, services or obligations between a listed entity and a related party, regardless of whether a price is charged and a transaction with a related party shall be construed to include a single transaction or a group of transactions in a contract: Provided that this definition shall not be applicable for the units issued by mutual funds which are listed on a recognised stock exchange(s); 8. From a perusal of Section 188 of the Companies Act it is apparently clear that no member of the Company shall vote on such resolution to approve any contract or arrangement which may be entered into by the Company, if such member is a related party. Admittedly, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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