Section 297

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Querist : Anonymous

Querist : Anonymous (Querist)

12 June 2012 Q. if there are 2 cos. & directors & shareholders of both cos. are same, Co. 1 gives advance to Co. 2 for contract , but no performance of contract takes place & Co. 2 refunds advance to Co. 1.
in any case will section 297 of Companies Act, 1956 be attracted?

Ajay Mishra

Ajay Mishra (Expert)

12 June 2012 Hi

Section 297 will apply in all cases except the following:

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]

Regards

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