Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
30 June 2014Friends
Is section 188, as it stands today on 30th June, applicable for 'contracts' or 'arrangements' before 1st April 2014. ? It is clear that the said section is effective from 1st April 2014 vide notification dated 26th March 2014. One statutory auditor is insisting that it is applicable for contracts before 1st April 2014 as the wordings used are "entered or to be entered into". How to negate his stand.
Regards,
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 30 June 2014
There is no question of Sec.188 being applicable to contracts entered into upto 31.3.2014. Sec.188 is applicable only from 1.4.2014 and covers both the cases:
a) Contracts already entered into: Ref.Sec.188(3) - Ratification is possible within 3 months.
b) Contracts to be entered into: Ref.Sec.188(1): When prior approval is sought.
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