Dear Mr Sumit:
1. The meaning of term used in Sec.299(5) as per commentary by Ramaiya is: "As fiduciaries, directors must not place themselves in a position in which there is a conflict between their duties to the company and their personal interest or duties to others."
2. Section 297 is applicable for contracts entered into by a company with its director, as clearly mentioned therein, for supply of goods/services. Section 299 is still wider in scope and covers every director who is in any way, directly or indiretly, concerned or interested in a contract or arrangement. Hence by this logic also Section 299 should be applicable for loans taken by a company from a director.
3. Section 299 talks about a 'contract' and not a 'transaction' of a contract. Hence in case the company takes loan from a director on a regular basis and the number of transactions of taking loans is more, the company can consider entereing into a simple long term contract (say for 10 years) with the director which can provide that the company can take loan from the director from time to time as may be required, at a specified rate of interest, with the condition that the total outstanding at any point of time will not exceed specified limit. Such contract can be approved once by the Board. Against such contract, company can take loan on regular basis without the need of taking Board approval for each transaction.
Contrary views of members are welcome.
Thanks