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CS Professional · Corporate Restructuring, Valuation and Insolvency · Cross Border Mergers

Rules under the proviso to section 234(1), such as Rule 25A, were made by the Central Government in consultation with the Reserve Bank of India. Suppose both Houses of Parliament, within the period allowed under section 469(4), agree to modify such a rule after a cross-border scheme was already completed under it. What is the effect on that completed scheme?

The completed scheme remains valid. Under section 469(4), a rule modified or annulled by Parliament operates in its modified form or ceases, but the change is without prejudice to the validity of anything previously done under the rule.

  1. AThe modification applies prospectively only, without prejudice to the validity of things previously done under the ruleCorrect
  2. BThe completed scheme becomes void from the start
  3. CThe scheme must be re-approved by the Reserve Bank of India
  4. DThe scheme is valid only if the Tribunal certifies it afresh

Explanation

Section 469(4) says a rule laid before Parliament for thirty days takes effect only in modified form if both Houses agree to a modification. It also says any modification or annulment is without prejudice to the validity of anything previously done under that rule. So the completed scheme stands.

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