Section 297

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Archana (Querist)
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05 April 2011
Is sole proprietorship outside the purview of this sec.....if transaction are entered between a public ltd. and sole propietorship where directors and sole propietor are relatives..will it attract this section???

udit sharma

udit sharma (Expert)
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05 April 2011 Hi...

A sole proprietorship firm has no seperate legal existence of its own. Hence, when a transaction is to be entered into between a Public Limited Company and a sole proprietorship firm of which a relative of the Director is the sole proprietor, it is in fact a transaction between a Public Limited Company and the relative of the Director. Hence, the provisions of section 297 will be applicable subject to the conditions and exemptions specified therein.

Archana

Archana (Querist)
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05 April 2011 can u pls elaborate wht conditions and exemptions with a supporting case law or any refernce

thnx

Jayashree S Iyer

Jayashree S Iyer (Expert)
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06 April 2011 Udit is right. Soleproprietorship is nothing different from the sole proprietor himself. So when a company enters into a contract with a relative of a sole proprietor who also happens to be the director of the company, Section 297 will definitely be attracted.

Archana

Archana (Querist)
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06 April 2011 thnx jayashree & udit....is there any relevant case law supporting this point...

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