Companies Act_Practical Problems_37

M/s. Raman Limited having a paid up share capital of Rs. 5 crores owns an agency of Cement Corportion of India Ltd. and proposes to supply cement, on credit, to M/s. Raman Enterprises Private Limited. Mr. Raman is a common Director in both the companies.

State the requirements of the Companies Act, 1956, if any, to be complied with by the company on the facts of this case.

Will it make any difference, if -
(i) M/s. Raman Enterprises Private Limited were a public company;
(ii) M/s. Raman Limited were carrying on real estate business and it proposes to sell a flat to M/s. Raman Enterprises Private Ltd. for Rs. 50 lakhs?

Companies Act_Practical Problems_10

X Constructions P Ltd has purchased Transferable Development rights (TDR) from Y builders Pvt. Ltd. Paid up capital of both companies is 3 crores and Mr. D is common Director in both the companies, Whether TDR are “goods / services” for the purposes of section 297 ? If Mr. Rajiv is a common director in X & Y who does not hold any shares in either of the companies, can it be said that transaction between X & Y attracts 297 but not 299? Whether answer would be different if Mr. Rajiv was holding 5 % shares as nominee of some other person?

Companies Act_Practicle Problems_9

X Constructions P Ltd has purchased Transferable Development rights (TDR) from Y builders Pvt. Ltd. Paid up capital of both companies is 3 crores and Mr. D is common Director in both the companies, Whether TDR are “goods / services” for the purposes of section 297?

Companies Act_Practicle Problems_8

Since consequences of not complying with 297 are already mentioned in sub-section 5 i.e. such contract becoming voidable, whether provisions of section 629A are applicable? Can it be argued that since consequences of not complying of 297 are prescribed in sub section 5, it can not be a case of “not prescribing punishment’ which is essential to attract section 629A. In other words Whether “contract becoming voidable“ is a punishment?

Companies Act_Practicle Problems_7

X Pvt. ltd is partner is XY & co a partnership firm. Other Partner is Mr. Y. Mr. Y is also a Director in X Pvt. Ltd. The profit & loss sharing is 99.999% by X Pvt. Ltd and 0.001% by Y. Paid up capital of X Pvt. Ltd is 5 crores. It proposes to buy raw material of Rs. 2,00,000 per month from XY & Co on credit.

a) Whether Government approval would be required to be obtained by X. Pvt. Ltd?

b) Can company argue that XY & Co is nothing but only a different form of business organization created only for tax planning purposes?

c) Will the answer be different if Mr. Y is not a director of X Pvt. Ltd?

Companies Act_Practicle Problems_6

X a director of a Public limited company with a paid up capital of Rs 5 Crores has provided unsecured loan of Rs. 150 Lakhs to the company. X does not have a license of Money lending but is carrying on the business of money lending regularly. Whether ‘supply of money’ is ‘supply of service’ as contemplated by section 297? Whether this transaction will attract section 297? Whether answer would be different if X has a license as Money lender? Whether lending of money by an NBFC which is private Limited company in which X is a director will attract section 297?

Companies Act_Practicle Problems_5

X Pvt. Ltd is a private limited company registered in India in which P Inc. (American Company) holds 45 % shares and Q Inc ( Another American Company ) holds 45% shares. Y Pvt. Ltd is another Indian company in which both P Inc & Q Inc holds 30 % shares each. P & Q have no relations with each other. None of directors of X Pvt. Ltd & Y Pvt. Ltd are common. Whether X Pvt. Ltd and Y Pvt. Ltd has any relation with each other? Can X Pvt. Ltd. transact with Y Pvt. ltd without attracting any provisions of “Related Party Transaction” and section 297 , 299 etc?