before the company law board - Company Law Board Mumbai Bench

27the subscribers to the Memorandum of Association holding 100 sharesout of 200 shares. The 2 nd respondent who advanced the unsecured loanto M/s.Flora Infotech has contravened the provisions of law and alsoliable for refund of the said amount with interest to R1 Company, if it isalready not repaid.The allegation in respect of M/s.Flora Finin is concerned, the 2 ndRespondent denied that he was directly or indirectly interested in thesaid Company. It is stated that Flora Finin was an associate of R1 andhe was not holding any shares in his individual capacity and he was anominee director of the said Company. The 6 th respondent also admittedthe fact that the Flora Finin was an associate company. The inspectingofficer also confirmed that Flora Finin was a subsidiary of R1 but hesought clarification on various points. However, the Inspecting Officercould not draw any conclusion. From the perusal of Return of Allotmentin Form 2 dated 12.12.2002 filed by Flora Finin Private Limited clearlyreveals that on 11.12.2002 500 equity shares of Rs.10/- each has beenallotted in favour of R2. Therefore from the above it is clear that the R2is holding shares in Flora Finin in his individual capacity only andtherefore, the loan granted in favour of Flora Finin Private Limitedattracts Sec.295 and failure to obtain prior permission of CentralGovernment for granting such loans by R1 would render R2 to vacatehis office of directorship in R1 as per the provisions of Sec .283(1)(h) .CP 28/2010Union vs Gwalior