Applicability of 295(1)(e) of Companies Act 1956

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

26 March 2010 Dear Sir/ma'am

The Facts are as follows:

Company A (Indian Company) is subsidiary of B Company (Foreign Company).
A co. has many Companies as group Companies.
B Co has appointed a delegate in India to supervise A Company and A Company's group Companies ( Entire Indian operations). That delegate is appointed as the Chairman for A Company and its group Companies. All the Companies are Public companies.

Query:

1) A Company wants to lend money to its group companies. Will the Section 295(1)(e) of Companies Act 1956 be applicable in this situation?? please help me with case laws.

Thank You.
Regards

Ankur Garg

Ankur Garg (Expert)
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27 March 2010 Hello,

As per my understanding in your case section 295 loan to director is not applicable. The above situation is governed by section 372A as this is an Inter corporate loan by the nature of transaction itself.

Further in the above mentioned case please take care of section 299, 300 and 301 in case any director is interested in the case/transaction.

Views of other learned Experts solicited.

Best Regards

Querist : Anonymous

Querist : Anonymous (Querist)

27 March 2010 Thanks Ankur

will your answer remain the same if this chairman's approval is compulsory taken by the management by Co A and its Group Companies..

Can you pls help me with some case laws...UK judgments will also do

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