What is meaning of the “ordinary course of business and at arm’s length prices” under Section 188 of the Companies Act of 2013, with examples?

The activities that are performed on normal basis, such as day to day are termed as “Ordinary course of business”, to be very precise, any activity performed in connection to the main objects stated in the memorandum of association are the activities done in ordinary course of business.

For example if a contractor works with financial institution to secure a loan to continue the project, then this activity will be considered as activity performed in the ordinary course of business

Arms length price/transactions are those transactions that are undertaken between two related parties, but in a fair manner,

For example, if ABC private Limited sells its goods to Mr. Strong (who is employee of the company) at Rs. 20,000/- while the same goods are sold to general public at Rs. 30,000/- then this transaction would not be covered under the definition of Arms Length Price/Transaction

To combine both, the transactions that are performed in the normal course of business and at fair market condition then they are termed as “ordinary course of business and at arm’s length prices”