before the company law board - Company Law Board Mumbai Bench

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24provides that without prior approval of the Central Government, directlyor indirectly, no loan can be made to any director of the lendingCompany/relative of any such director/ firm in which any such directoror relative is a partner. It has been established that the CIS was aproprietorship concern and at one point of time the said body was apartnership concern. The loan has been given to CIS in which thedirector of R1 Company is interested. In view of the clear provision,Sec.295 is squarely attracted against the directors, thereby renderedthemselves vacated from their directorship u/s 283 (1)(h) of the Act.Apart from ceasing to be directors, both the directors i.e. the R2 being asWhole Time Director and the R6 being as Managing Director areresponsible for the loans advanced to the CIS without the approval of theBoard and the Central Government thereby both the directors are equallyliable to refund the loan amount to the R1 with interest, if the same hasnot been repaid to the R1 Company.CP 28/2010Union vs GwaliorThe petitioner alleged that for the financial year ending i.e.31.3.2003 a loan of Rs.11,50,898.52 has been advanced to M/s.VishwaExtrusions Private Limited in which majority of shares are held by R2and his family. The 2 nd respondent denied the allegation and stated thatthe said Company was not a private limited company at the relevanttime, however, became a private limited company from 10.4.2003,therefore, Sec.299 does not apply with respect to the said transaction. Itis further stated that R2 has made disclosure at all relevant times and it
25was the responsibility of the ex-managing director i.e. R6 to obtain therequisite approval of the Board and the Central Government for any noncompliance. The R2 also stated that the present management had fullyrecovered the entire amount due from Vishwa Extrusion PrivateLimited. The R6 simply stated that he was not aware of the amounttransferred to Vishwa Extrusion Private Limited by the R1 Company.However, he states that 99% of the shares in the said Company wereheld by R2, therefore, R2 to 5 with malafide intention transferred theamount to the Vishwa Extrusion Private Limited. The InspectingOfficer also confirmed that the loan was given to Vishwa ExtrusionPrivate Limited by R2 while he was acting as Whole Time Director ofR1. It was also confirmed that R2 holds majority shares in VishwaExtrusion Private Limited and confirmed that the loan was given withoutinforming the Board of Directors of R1 and without taking approval ofthe Central Government, thereby liable for contravention of Sec.299 ofthe Act. It is not in dispute that loan is given to Vishwa ExtrusionPrivate Limited by the 2 nd Respondent, therefore, he is liable to refundthe said amount to the R1 Company along with interest.However, in the Counter it has been stated by him that the amount hasbeen fully recovered. There is no denial to the said averment by any ofthe other respondents. Whatever may be the position, the 2 nd respondentis liable to refund the loan amount to the R1 Company with interest if itis not recovered/repaid.CP 28/2010Union vs Gwalior
Page 5 and 6: 5and M/s.Vishwa Extrusions Pvt. Ltd
Page 7 and 8: 7this regard under Sec.292(1)(e) of
Page 9 and 10: 9present petition is not maintainab
Page 11 and 12: 11sole proprietor of Central India
Page 13 and 14: 13directorship due to alleged contr
Page 15 and 16: 15(ii) Shri Anil P.Sahu (R3) 29.10.
Page 17 and 18: 17the Company for the Financial Yea
Page 19 and 20: 191) Whether Board Meetings dated 4
Page 21 and 22: 21clauses mentioned in Sec.22 of th
Page 23: 2313. Now I deal with Issue No.2, 3
Page 27 and 28: 27the subscribers to the Memorandum
Page 29 and 30: 29International Limited by the Comp

before the company law board - Company Law Board Mumbai Bench

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