Can a foreign company pay dividend to Indian Tax Resident share holder via its 100% owned subsidiary

Indian citizen and tax resident is a shareholder in a foreign company. This foreign company is 100% owner of a company in India. There is a tri party agreement signed between the foreign company, Indian company and Indian citizen which says that Indian company will pay dividend to this Indian person as and when the foreign company releases it.

Is such release of dividend allowed? What is the income tax implication on Indian citizen and the Indian company.