Cheque deposit procedure

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 May 2012 is dis a good practice to deposit the cheque of big amount directly to director account and then transfer it to co. a/c for d purpose of internal checks.
wat can b the possible benefit or loss by following above procedure to co.
rpy urgently....

CA Sachin D Jain

CA Sachin D Jain (Expert)
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09 May 2012 How can a director deposit a cheque in the name of the Company in his / her personal account? How can a banker honour this cheque in his / her personal account?

Secondly, there is a big risk in following this procedure, because as per the Companies act, a company cannot give loan to a director. In the instant case, depositing of cheque in director's account, will tantamount to loan to director and hence, contravention of the Companies act. Further, the amount of cheque after being deposited in director's account, may come back to the Companies account.

In my view, this is absolutely rubbish procedure followed by the Company.

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