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Loan from firm whose partners are relative of private ltd co

22 September 2011

A Pvt Ltd Co has taken Unsecured loan from a Partnership Firm.There are two partners.One is HUF and other is Individual.The karta of HUF and Individual are the relatives of Director of the Private Limited Co.Can this loan be treated as deposit for 58A.?

An urgent reply will help me a lot.

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5 Replies

AMIT MISHRA (Legal Professional) (393 Points)
Replied 22 September 2011

Hi Umesh,

Certainly yes the following is to be treated as a deposit. A PVT LTD COMPANY CAN ACCEPT LOAN ONLY FROM ITS MEMBERS OR DIRECTORS AND IS A VIOLATION OF SECTION 3 (1)(iii) of Companies Act 1956.

Thanks & Regards

Amit Mishra

BSamrish & Co

New Delhi

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Preet Kanwar Singh (Company Secretary) (161 Points)
Replied 22 September 2011

But sir as per definition de pvt co can accept deposit from its members, directors and their relatives and relative includes member of huf.. Plz clr dis point Sir, I also hv a doubt wat wl b de position if both the partners of firm r directors of pvt co.? Plz elaborate.,.

UMESH MAHESHWARI (PRACTICE) (59 Points)
Replied 22 September 2011

Thanks for the reply but I am stil confused regarding relative of Director.Whether Partnership Firm is excluded from the definition of relative irrespective of either one or all the partners are relative of Director of the Pvt Ltd Co.I think it is important to know whether a Partnership Firm can be a relative to any person.

Please comment.

Preet Kanwar Singh (Company Secretary) (161 Points)
Replied 24 September 2011

Dear sir.. Partnrshp firm is excluded frm def. of relative but as the firm has no legal entity nd partners make it so dats y dey r considrd related to directors. So i think 58a is not applicable..., Other views plz...,

CA.SKR (CA; CS-Final (One Group); DISA (ICAI); Insolvency Professional) (442 Points)
Replied 02 October 2011

Partnership firm is a seperate entity than partners even under Income Tax Act. Partnership firm has to obtain seperate PAN. Proprietory firm and proprietor are one and the same. Hence in my opinion, even if both the partners are relatives of directors, Sec-58A will be applicable in your case.