Section 297 ( Its URGENT)
This query is : Resolved
02 July 2010
Dear Friends
I have executed contract falling u/s 297 of the companies Act, 1956 and i have not taken approval of central goverment.
Whether can i file e-form 24A for Central goverment approval since back date.
PLZ answer
Regards
sanjay srivastava
I have executed contract falling u/s 297 of the companies Act, 1956 and i have not taken approval of central goverment.
Whether can i file e-form 24A for Central goverment approval since back date.
PLZ answer
Regards
sanjay srivastava
02 July 2010
Consequences and penalty where consent is not taken
If a contract, which requires consent in advance or subsequently, is entered into without taking the consent, the contract is voidable at the option of the Board.
The section does not provide any penalty for non-compliance. The penalty would therefore be as per the provisions of section 629A. (Section 629A indicates penalty for such sections of the Companies Act, 1956 for which no penalty has been specifically provided)
Accordingly, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend up to Rs. 500 for every day after the first day during which the contravention continues.
Consequences where previous approval of Central Government has not been obtained
Where the prior approval of Central Government is required to be obtained and if it is not obtained then failure to obtain such previous approval will make the contract void and illegal, provisions of sub-section (5) of section 297, which makes the contract voidable at the option of the Board of directors being applicable only to the cases where only the consent of the Board of directors is required to be obtained.
Regards
If a contract, which requires consent in advance or subsequently, is entered into without taking the consent, the contract is voidable at the option of the Board.
The section does not provide any penalty for non-compliance. The penalty would therefore be as per the provisions of section 629A. (Section 629A indicates penalty for such sections of the Companies Act, 1956 for which no penalty has been specifically provided)
Accordingly, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend up to Rs. 500 for every day after the first day during which the contravention continues.
Consequences where previous approval of Central Government has not been obtained
Where the prior approval of Central Government is required to be obtained and if it is not obtained then failure to obtain such previous approval will make the contract void and illegal, provisions of sub-section (5) of section 297, which makes the contract voidable at the option of the Board of directors being applicable only to the cases where only the consent of the Board of directors is required to be obtained.
Regards
02 July 2010
Offence under section 297 is compoundable
One thing I forget to mention is that the offence committed under this section is compoundable in accordance with the provisions of section 621A of the Companies Act, 1956.
So you may go for compounding of the same
One thing I forget to mention is that the offence committed under this section is compoundable in accordance with the provisions of section 621A of the Companies Act, 1956.
So you may go for compounding of the same
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