A key regulatory ruling has gone against Linde India after the Securities Appellate Tribunal upheld market regulator directions on how related party transactions must be assessed.
In its decision dated December 5 2025, the Tribunal dismissed Linde India’s appeal against a regulatory order issued on July 24 2024. The ruling confirmed that companies must aggregate all transactions with a related party during a financial year while testing whether shareholder approval is required.
The Tribunal made it clear that materiality cannot be checked contract by contract. If the total value of annual transactions with a related party crosses Rs 1,000 crore or 10 percent of annual turnover, shareholder approval becomes mandatory. It observed, “we find merit in the reasoning given by the respondent that for the purpose of testing the materiality of a transaction with ‘a related party’ during a financial year, under Regulation 23(1), All transactions with the said related party are to be considered”. It further added, “There is no provision for excluding transactions of one contract for calculating materiality of other contract”.
The ruling also covered the Joint Venture Strategic Handling Agreement of March 2020 between Linde India and Praxair India. The Tribunal held that the territorial and product reallocation under this agreement amounted to a related party transaction involving transfer of valuable business resources. Linde exited south and central regions while acquiring east and north operations and also transferred product lines such as HYCO and CO2 without any compensation.
The Tribunal said this resulted in the transfer of complete profit making business units including assets, liabilities, goodwill and future cash flows. It rejected Linde’s claim that future business cannot be valued and noted that valuation is standard practice using models such as discounted cash flow.
Linde India had argued that each transaction with Praxair was separate, conducted at arm’s length and below thresholds. It also said the business allocation involved only future opportunities and no present transfer of value. The Tribunal rejected these arguments and said accepting such logic would allow companies to split contracts to avoid shareholder approval.
The regulator also pointed out that Linde had itself acknowledged the need for aggregate approval in its 85th AGM notice. With the appeal dismissed, Linde India must now aggregate all related party transactions annually and carry out an independent valuation of business transfers under the agreement.
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