I have a query regarding section 297 of the Companies Act. 1.Whether a Private Company having a paid up capital of more than 1 cr needs to take approval for a contract of sale entered with a Foreign Company with common directors. 2.If a private Company having a paid up capital of more than 1 cr enters into a contract of purchase with another private company with common directors, with which it regularly trades for a transaction of more than Rs.5000 at prevailing market prices, whether Central Govt approval needs to be taken u/s 297.
As far as your first query is concerned the answer is NO... The words used by the draftsman in section 297 of the Act are "Company" not "body corporate" it make difference as soon as he used words company then i ll take you the provisions of section 3 which describes company means which is formed and registered under the provisions of this Act.
and see definition given for body corporate under section 2(7) of the Act which includes Company incorporated outside India.So It does not attract section 297.
Second the answer of your second query is YES...You have to take approval from Central Government. You can not absolve from the provisions of this section by taking plea that you are doing transaction at prevailing market rates.
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