Section 297

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Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2012 Is Sole Properitorship firms & subsidiary companies are also related parties as per section 297 of the Companies Act, 1956?

Thanks

Ajay Mishra

Ajay Mishra (Expert)

10 September 2012 Hi

Section 297 of the Companies Act, 1056 is applicable if one partner is partnership firm is relative of director. Such section not talking the relation about proprietor. So as per my under standing this section will not apply to proprietorship firm.

Other views are also solicited.

Ajay Mishra

Ajay Mishra (Expert)

10 September 2012 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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Querist : Anonymous

Querist : Anonymous (Querist)

10 September 2012 Thank your sir.

All the contracts stated by you, to which section 297 does not apply, are they covered u/s 299?

Subsidiary Cos are related parties u/s 297?

Ajay Mishra

Ajay Mishra (Expert)

10 September 2012 Hi

Yes, subsidiary will be covered under related party.

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