CS Sourabh Sharma (Company Secretary MBA (Finance) LL.B) (31 Points)
23 April 2014Dear All,
My query is what is the current status of Section 185 as Section 186 has been applicable from 1st April, 2014. Can now a Pvt. Ltd. Company give loans to its Directors under Section 186?
Sagar
(AM)
(123 Points)
Replied 23 April 2014
No, its not allowed. Section 186 can't make section 185 redundant.
CS Sourabh Sharma
(Company Secretary MBA (Finance) LL.B)
(31 Points)
Replied 23 April 2014
Why not? Section 186 permits us to give loan to any person. Does anything in this Act restrain us by doing this?
Views of all experts are solicited.
P C Agrawal
(Registered independent director Past Chairman of Aurangabad Chapter of ICSI Practicing Company Secretary at Aurangabad)
(8229 Points)
Replied 23 April 2014
Sec.185 deals with loans to specific related parties where conflict of interest exists. Sec.186 is a general provision and covers loans to all parties whether related or not. As a general rule of interpretation, specific & stricter provision always prevails over general provision. Hence Sec.185 will prevail over Sec.186.
CS Sourabh Sharma
(Company Secretary MBA (Finance) LL.B)
(31 Points)
Replied 23 April 2014
Yes, you are absolutly right Sir, this is the general practice which we adopt during interpritation of the Acts. But Section 185 starts with the words "Save as otherwise provided in this Act". That means if anything written in this act which contravene Section 185 that will be prevailled.... Please correct me if I am wrong.
Views of all experts are solicited.
CAclubindia
