Clubbing of holding of different persons or Directors not permitted to determine substantial interest settlement application u/s 245C

Delhi High Court held In the case of Rockland Hotels Ltd. vs. IT Settlement Commission that as per clauses (a)(v) and (a)(vi) of section 245C , only if a director of the petitioner companies has a substantial interest in the specified person (company), then, the petitioner companies, their directors and relatives of their directors qualify as related parties. The Petitioner companies would not qualify as a related party merely because any relative of one of its directors has a substantial interest in the specified person. Further, the petitioner companies would qualify as a related party, if a specified person (company) or any of its directors or any relative of any of its directors have a substantial interest in the petitioner companies.

The fact that four directors of the specified person hold 50% shares of the petitioner companies does not satisfy the condition. The requirement is that an individual director must hold more than 20% shares, which apparently is not the case.

Facts of the Case

The following two applicants fall in the category of specified persons: (i) M/s Somya Constructions Pvt. Ltd. (ii) M/s Rockland Hospitals Ltd.

Please become a Premium member. If you are already a Premium member, login here to access the full content.