The central government has asked National Dairy Development Board (NDDB) to share detailed information and statements about IndiaGen Ltd and Indian Immunologicals Ltd (IIL) to examine the matter in consultation with the legal department.
Dr Sanjeev Kumar Balyan, minister of state for fisheries, animal husbandry and dairying, in a written reply in the Rajya Sabha, provided information shared by NDDB on setting up subsidiary of its subsidiary, obtaining post-facto approval and further approval for acquiring entire shareholdings in IndiaGen from IIL and Cooperative Resources International Inc (CRI). He said, "NDDB has been asked to furnish further details of statements made by them as mentioned above to examine the matter further in consultation with department of legal affairs."
While NDDB sought permission from the government for setting up IIL as wholly owned subsidiary of the Board in New Zealand, it did not seek any approval from the government for setting up IndiaGen as joint venture with CRI, the minister said.
According to the minister, NDDB had informed that it was asked by the department of animal husbandry, dairying and fisheries (DADF) to seek ex post-facto ratification from DADF regarding a subsidiary of NDDB forming further subsidiary companies. He said, "NDDB took the matter to its 84th Board meeting held on 24 October 2007 and the Board approved the proposal for seeking post-facto approval and further approved acquiring the entire shareholdings from IIL and CRI by NDDB at par considering the need for IndiaGen to carry out some of the development objectives of NDDB. Accordingly, NDDB acquired the entire shares of IndiaGen from IIL and CRI in March 2008 at par. As per NDDB’s information, this matter was informed to government on 26 March 2008 and it was requested to convey post-facto ratification for the formation of IndiaGen by NDDB."
However, while replying to Moneylife
, NDDB had claimed that it does not require permission to set up a stepdown subsidiary. “For an NDDB subsidiary to form another subsidiary, no prior Central government approval was taken as according to legal opinion this was not required,” it says, adding, "The DADF sought the views of the department of legal affairs, who were of the opinion that prior sanction of the government is required for subsidiaries to form other subsidiaries. It also stated that the views of the department of company affairs be taken. The department of company affairs were of the opinion that that the provisions of the Companies Act will apply. Since the memorandum and articles of association does not prohibit it, there is no legal bar on the floating of further subsidiaries."
While NDDB was expecting ex-post-facto approval for acquiring IndiaGen, it did not receive any such permission from the government.
"Talking about transfer of shares, NDDB, based on legal opinion obtained, had mentioned that as Indian Immunologicals is controlled by its object contained in its memoranda and the provisions of the Companies Act, 1956, in the absence of any provisions under Section 43, or any other provision of the NDDB Act, requiring the approval of central government for a wholly owned subsidiary of NDDB to form its own subsidiary, no question of inconsistency with any provision of NDDB Act will arise," the written reply says.
Accordingly, Dr Balyan says, "as per NDDB’s information the entire shares of IndiaGen were transferred at par to Indian Immunologicals by them in December 2008 and thus IndiaGen became the wholly owned subsidiary of Indian Immunologicals. Subsequently, IndiaGen got amalgamated with Indian Immunologicals in April 2010 in line with the amalagamation scheme approved by the High Court of Andhra Pradesh as per information received from NDDB. All the statements are based on NDDB’s reply," he concluded.
Indian Immunologicals was set up as its wholly owned subsidiary by NDDB in New Zealand for production of bovine serum, which is a critical imported raw material used in the production of vaccine for foot and mouth disease (FMD) and rabies.
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