CROSS BORDER DE-MERGERS: NCLT’S ORDER IN THE SUN PHARMACEUTICAL CASE
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Abstract
The National Company Law Tribunal in a petition filed by Sun Pharmaceutical Industries Limited has further confounded the concept of cross border demergers in India under the Companies Act, 2013 and has reawakened interest in the debate of legislative intent vs strict interpretation of statutes by the judiciary and quasi judiciary in India. With its order, the National Company Law Tribunal has adopted a strict interpretation of the provisions of Section 234 of the Companies Act, 2013, upholding that cross-border demergers are prohibited under the said provision. However, this has contributed more confusion with respect to the legal framework governing cross border inbound and outbound demergers in India, especially since this order contradicts an earlier judgment passed by the same bench of the National Company Law Tribunal permitting inbound cross border demerger. This case comment analyses the factual matrix and the order passed by the National Company Law Tribunal in the said matter and concludes with a comment on the approach adopted by the tribunal therein.
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