Second innings…press notes 1 and 3 (2005 series)

Delhi High Court has refused to interfere with a decision of the Foreign Investment Promotion Board (FIPB) granting permission to a foreign investor with a joint venture existing prior to January 12, 2005 [existing joint venture as per press notes 1 and 3 (2005 series)] with an Indian partner, to establish a wholly owned subsidiary to manufacture, distribute and sell its products in India.

The Court held that the parties would be governed by press note 1, in spite of the fact that the bilateral agreements were cancelled and the shares were transferred. The primary and main concern of the FIPB while deciding whether a foreign investor should be allowed to make investment in India, when they already have a joint venture or technical collaboration agreement with the Indian partner in the same/allied field, is whether the said investment will jeopardize the interest of the existing Indian partner/ shareholders /joint venture.