Clarification about section 297 of companies act,1956

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Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2013 Will the interest payments to the sister concerns are covered under 297 of the companies act

Ajay Mishra

Ajay Mishra (Expert)
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20 December 2013 What is the purpose of interest payment. Kindly confirm.

Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2013 sister concern gave loan for working capital purpose and for that the other company was paying interest

Ajay Mishra

Ajay Mishra (Expert)
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20 December 2013
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]

Querist : Anonymous

Querist : Anonymous (Querist)

20 December 2013 Thanks for valuable information sir.

In this case the lending company is private company and the borrowed company is public company and the public company is paying interest to the private company.Loan is not be covered under 297. I am asking whether the interest payment is covered under 297?

Ajay Mishra

Ajay Mishra (Expert)
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20 December 2013 if loan is not covered then interest is also not covered.

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