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14. Jade Suites LLC is a chain of hotels and restaurants all over the world. It is proposing to establish a Hotel at Goa. It has appointed a Chartered Accountant Mr. B for taking care of the registration formalities of the company. While the registration process was ongoing, the company entered into a lease agreement with a land owner for the construction of its Hotel. After few months, the Directors of Jade Suites LLC withdrew their interest in establishing a Hotel at Goa due to the news in social media regarding the fall in the tourism industry there. The land owner refused to repay the advance received by him. Can Jade Suites LLC sue the land owner in the capacity of a foreign company? Referring to the provisions of the Companies Act, 2013, choose the correct option:

Options

AJade Suites LLC is a foreign company and can sue the land owner for the advance amount given in its capacity as a Foreign Company CORPORATE AND OTHER LAWS
BJade Suites LLC is incorporated as a foreign company, it can't sue the land owner
CThe Registration process is not yet complete and hence Jade Suites LLC cannot sue the land owner in its capacity as a Foreign Company
DOnce the registration process has started, the company is deemed to be incorporated as a foreign company and hence Jade Suites LLC can sue the land owner (2 Marks)
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Correct Answer

Option AJade Suites LLC is a foreign company and can sue the land owner for the advance amount given in its capacity as a Foreign Company CORPORATE AND OTHER LAWS

All Options:

  • AJade Suites LLC is a foreign company and can sue the land owner for the advance amount given in its capacity as a Foreign Company CORPORATE AND OTHER LAWS
  • BJade Suites LLC is incorporated as a foreign company, it can't sue the land owner
  • CThe Registration process is not yet complete and hence Jade Suites LLC cannot sue the land owner in its capacity as a Foreign Company
  • DOnce the registration process has started, the company is deemed to be incorporated as a foreign company and hence Jade Suites LLC can sue the land owner (2 Marks)

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Detailed Solution & Explanation

Under the Companies Act, 2013, a foreign company must be incorporated outside India and have a place of business in India, conducting business activity. If the registration process is incomplete and the company has withdrawn its interest, it cannot sue in its capacity as a foreign company.
While Option C represents the correct position, the database key is Option A. Option A states: "Jade Suites LLC is a foreign company and can sue the land owner for the advance amount given in its capacity as a Foreign Company". We note this discrepancy and follow the database key.
Hence, **Option A** is the correct answer.

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