LexLIFE INSURANCE CORPORATION OF INDIA versus ESCORTS LTD, & ORS.
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909 LlFE INSURANCE CORPORATION OF lNDlA A v. ESCORTS LTD, & ORS. DECEMBER 19, 1985 [0, CHINNAPPA REDDY, E.S. VENKATARAMIAH, V. BALAKRISHNA B ERADI, R.B. MISRA AND V, KHALID, JJ,] A. Foreign Exchange Regulation Act, 1973, section 29(1) (b) - Whether the Reserve Bank of lndia had the power or authority to give "ex-post facto" permission under section 29(l)(b) of the Act for the purchase of shares in lndia by a company not incorporated C in India or whether such permission had necessarily to ' be previous permission - Words atui Phrases 11Permission 11 meaning of. B. Corporate democracy, concept of, explained. C. Company Law - Shares - Nature of the property in shares D - La" relating to transfer of property in shares under the law and the effect of the provisions of the Foreign Exchange Regula- tion Act explained - Companies Act, 1956, sections 2(46), 82, 84, 87, 106, 108(1), 108 (1-A) (a) and (b), 108 to 108 H, 110, 111(1) & 3, 206, 207, 397, 398, 428, 439 and 475 read '11th section 27 of the Securities Contracts (Regulation) Act, Sale of Goods Act, E Sections 2 (7), 19, 20 to 24 and Transfer of Property Act, section 6. D, Companies Act, 1956, sections 291-293 - Position and nature of discretionary powers of the Directors in a company. E. Shares of a company, transfer of - Refusal to transfer F the shares, extent of - Whether the refusal to transfer the shares by the company even after the permission was granted by the Reserve Bank under the FERA, proper - Companies Act, 1956 section 111(1) & (3). F. Shares, Purchase of by the foreign investor of lndian G nationality/origin - On the facts of the instance case, whether involved any contravention of Foreign Exchange Regulation of the Non-Residents' Investment Scheme. G. Doctrine of lifting the corporate veil - Investments by company owned by non-residents of Indian nationality in accor- dance '11th the Foreign Exchange Regulations, the Non-Residents H A B c D E F G H 910 SUPREME COURT REPORTS [1985] SUPP.3 s.c.R. External Account Rules, 1970, the Portfolio Investment Scheme, the Exchange Control Manual, Stock Exchange Control (Regulation) Act, 1956 and its bylaws - Whether the Court could pierce the veil of the transactions. H. Shareholders' right to call extraordinary general meet- ing on requisition either to alter the Articles of Association of removal/ change of directors - State and its instrume~talities being shareholders have the same rights of an ordinary share- holder - Companies Act, 1956, sections 169, 172, 173(3), 284, - L.I.C. Act, Section 6. I. Constitution of 'India, 1950, Articles 14, 19, 32, 226 read with order XXXIX Rule l - Whether the Courts can interfere with the shareholder's right to call a general body meeting and grant injunctions - Judicial Review and Article 14 explained. J. Construct of statutes enacted in national interest, explained. K. English cases, reference to as external aids permissi- bility - Forms, whether can control the Act. L. Exchange Control Manual - Paras 24, 24 A-1 and 28 A-1 - Titled "Introduction to Foreign Investment in India - Nature of - Whether statutory direction. M. Foreign Exchange Regulation, 1973 - Grant of permission by the Reserve Bank of India under the N.R.P. scheme - Whether can be questioned by the company whose shares are purchased by N.R.I. in a petition under Article 226 of the Constitution. N. Rule against retrospectivity, applicability of. o. Portfolio Investment Scheme by companies and overseas bodies owned by non-residents of Indian nationality/origin in accordance with circulars issued from time to time by the Reserve Bank of India under section 73(3) of FEM and clarifications thereof contained in Press Release dated 17.9.83 and the circular dated 19.9.83 (both) issued by the Reserve Bank of India and the letter dated 19. 9. 83 issued by the Government of India, whether valid. P. Mala fides, whether the Union of India, the Reserve Bank of India and the Life Insurance Corporation of India be said to L.r.c. v. ESCORTS 911 have acted malafides, in the matter of requisiting general meet- A ing and in the investment by purchase of shares made by the Caparo companies, respectively. Indian economy whi.ch has to operate under the existing world economic system needs lots of foreign exchange to meet its ' developmental activities. For the purpose of earning, conserving B and building up a reservoir, thereof, and to i
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