Applicabiilty section 297

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Soumyabrata (Querist)
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08 April 2013 1. 2 public companies having paid up capital> Rs. 1 Crore and one common director have entered into a contract for renting of office premises. Whether this transaction falls under section 297?

2. What is the interpretation of "directly or indirectly, concerned or interested in a contract..." as provided in Section 299(1)?

Ajay Mishra

Ajay Mishra (Expert)
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08 April 2013 Hi

Section 297 does not apply to:

1. Giving or taking loans.
2.Contract in respect of immovable property (as it is not 'good' ).{Letter No. 9/4190-CL-X dated 27.03.1990}.
3.Contract between two public Companies.
4.Contract of employment of director or managing or whole time director.[ Circuler No.8/11/75-CL-V dated 27.03.1975]
5.Contract for employment of relative of director.
6.Contract entered into by the company with the dealer on principle to principle basis. [Circuler No. FM 8/297/56-PR dated 02-08-1956]
7. Professional services of the nature given by firms of solicitors and advocates, etc.[circuler No. 8/11/75-CL-V dated 05.06.1975]
8.hiring of office premises on rent as the transaction is in immovable property. [Department Clarification dated 10-09-1990]

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Soumyabrata

Soumyabrata (Querist)
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09 April 2013 Thank you sir. Moreover I understand that in the above case, both the companies are public companies which does not attract S. 297. The other company must be a Private Company. But since the Paid up capital is more than one crore, does that effect the applicability?

Please also revert on my second questeion.

Ajay Mishra

Ajay Mishra (Expert)
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09 April 2013 First the nature of company is decided for section 297 thereafter paid up capital. So if the section is not applicable to both public company, no matter of its paid up capital.

Ajay Mishra

Ajay Mishra (Expert)
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09 April 2013 A director is said to be directly concerned or interested in a contract or arrangement, when he himself has personal interest in a particular contract or arrangement. Whereas a director is said to be indirectly concerned or interested when any of his relatives and associates has got personal interest in the particular contract or arrangement.

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Soumyabrata

Soumyabrata (Querist)
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09 April 2013 Thank you so uch sir

Ajay Mishra

Ajay Mishra (Expert)
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09 April 2013 My pleasure dear...........

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