TMI Blog2015 (8) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... tity to claim benefits and not when it was associated, then one could have understood interpretation placed –However, when it was permitted by policy maker that group company to claim benefits ought to have direct or indirect control in other enterprise then, requirement was fulfilled – Petitioners’ case clearly falling within parameters/ criteria evolved in para 9.28 that we have no alternative but to quash and set aside decision of Policy Interpretation Committee – Decided in favour of Petitioner. - Writ Petition Nos. 233 and 237 of 2013 - - - Dated:- 20-12-2014 - S.C. Dharmadhikari and A.A. Sayed, JJ. Shri Janak Dwarkadas, Sr. Advocate with Sushant Murthy and Rohit Jain i/b Madhur R. Baya, for the Petitioner. Shri Anil Singh, Addl. Solicitor General with Beni Chatterjee i/b Ms. Neeta V. Masurkar, for the Respondent. ORDER P.C. : Rule. Respondents waive service. By consent, rule is made returnable forthwith. 2. These Writ Petitions under Article 226 of the Constitution of India are directed against the order passed on 13 July, 2012, by which the Petitioners application for consideration of fulfillment of export obligation by treating them and one M/s. Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while introducing this Foreign Trade Policy. They also rely upon the changes in the Telecom industry and then submit that, relying upon para 5.4 of the Foreign Trade Policy read with para 9.28 thereof, the Petitioners approached the Respondents requesting that the excess export of their group company M/s. Tin Plate Company of India Ltd. be considered for the purpose of calculating the export obligation required to be fulfilled in terms of the EPCG scheme. They rely upon the shareholding structure of the Petitioners vis- -vis TCS. They also rely upon the correspondence carried out from time to time. The matter was then referred to Respondent No. 5. Respondent No. 5 during the meeting held on 26 November, 2010 and presided over by Respondent No. 2 for the first time considered the case of the Petitioners as a group company in accordance with this paragraph 9.28 of the Foreign Trade Policy. That request was rejected without giving any reasons and by simply observing that M/s. Tin Plate India Ltd. and the Petitioners were not a group company under para 9.28 of the Foreign Trade Policy. The communication of the decision or interpretation placed in this meeting was received by the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh, learned Additional Solicitor General, who appears on behalf of the Respondents, relied upon the chart handed over to us during the course of hearing. Mr. Singh would submit that the chart itself will indicate as to how the criteria evolved has not been satisfied in this case. He relied upon the chart to indicate as to how the definition or the concept must be understood. He submits that if A company is head or controlling entity and has required percentage of voting power in B C companies, then it may be in a position to exercise that directly in B C companies both. However, this requirement is not enough. Further the requirement is that B company should be in a position to exercise the same percentage of rights in C company. It is not permissible to exercise such rights indirectly and through A company. The reverse should also be the position with regard to company-C. Mr. Singh, therefore, submits that this illustration would demonstrate as to how the Petitioners rely only on the controlling authority and power of a company styled as parent or controlling entity . That does not satisfy the requirement of those being controlled directly having some connection or nexus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold 26% or more equity in M/s. Tata Consultancy Services Ltd., hence in terms of para 9.28 of the Foreign Trade Policy, M/s. Tata Consultancy Services Ltd. cannot be treated as a group company of M/s. Tata Teleservices (Maharashtra) Ltd., which is authorized holder. 11. Similarly, M/s. Tata Teleservices Ltd. have admitted that they do not hold 26% or more equity in M/s. Tinplate India Ltd. and hence in terms of para 9.28 of the Foreign Trade Policy, M/s. Tinplate India Ltd. cannot be treated as a group company of M/s. Tata Teleservices Ltd. 12. In so far as argument based on indirect control is concerned, that is dealt with in para 4 of the decision/order passed by the Policy Interpretation Committee and which reads as under : 4. As regards the issue whether Tata Teleservices (Maharashtra) Ltd. and Tata Consultancy Services can be treated as group companies on the ground that Tata Consultancy Services is indirectly in a position to exercise 26% or more of voting rights in Tata Teleservices (Maharashtra) Ltd., the PIC discussed the issue that since Tata Sons Ltd. is a holding company and has share holding of more than 50% both in Tata Teleservices (Maharashtra) Ltd. and T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in other enterprise, of (ii) Appoint more than fifty per cent, of members of board of directors in the other enterprise. For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of group, the group company should have been in existence at least 2 years prior to date of application under any of export promotion schemes notified in FTP. 16. A perusal of the definition of Group Company would reveal that it means two or more enterprises. Secondly, they ought to be in a position directly or indirectly to exercise 26% or more voting rights in other enterprise or appoint more than 50% members of the Board of Directors in the other enterprise. For group companies to claim benefits or have their exports counted for benefits to be claimed by another member of the group, the group company should have been in existence at least 2 years from the date of application under any of export promotion schemes notified in Foreign Trade Policy. At the outset, we must clarify that clause (ii) and other requirement is not in issue before us. Group companies are in existence for the required or the requisite period. The only issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been noted is that they fulfill this requirement in para 9.28. In these circumstances, an interpretation consistent with the policy should be placed. The interpretation which is totally contrary to the same having been placed that the order passed and impugned in these Petitions cannot be sustained. The Petitioners have clarified not once but on several occasions that Tata Teleservices (Maharashtra) Ltd. availed of EPCG Scheme with the hope of satisfying export obligation from its own exporter, but it is difficult in terms of the estimation due to stiff reduction in the International Long Distance charges. They are, therefore, in principle agreeable to share export earnings of Tata Consultancy Services for meeting export obligation of Tata Teleservices (Maharashtra) Ltd. They only sought a clarification from the Director General of Foreign Trade as to whether criteria evolved under para 9.28 is fulfilled. They pointed out that Tata Sons Ltd. is holding 21% equity in Tata Teleservices (Maharashtra) Ltd. Tata Sons Ltd. is holding 74% equity in Tata Consultancy Services. Tata Sons Ltd. is holding 36% equity in Tata Teleservices Ltd and Tata Teleservices Ltd is holding 38% eq ..... X X X X Extracts X X X X X X X X Extracts X X X X
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