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Violation of Section 295

Swagatam Khandelwal (Company Secretary) (107 Points)

06 January 2011

A Public Limited Company has given loan u/s 295 without taking prior approval of CG. What are the remedies available to the Company??Pls reply fast

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5 Replies

nidhigoel89 (Company Secretary ) (594 Points)
Replied 06 January 2011

Hello!

In that case that director is liable for the vacation of the office of director u/s 283(1) (h). and penalty as mentioned u/s 295 will also be imposed. However its a compoundable offence u/s 621A. So u can file a application for compounding.

Any further suggestions....

Regards

Nidhi

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Jayashree S Iyer (Company Secretary) (3224 Points)
Replied 07 January 2011

Go in for compounding.

Mayuri Lal (officer CS) (748 Points)
Replied 08 April 2011

hi,

I have posted the same query. If we go for compounding of an offence still the director will have to vacate the Office under section 283 ???

CA Sandeep Kumar (Audit Assistant) (804 Points)
Replied 08 April 2011

YES, compounding of sffence is separately dealt with. The moment there is contravention of section 295, director is hit by section 283. To avoid imprisonment compounding is allowed, that does not mean, director can escape u/s 283 also.

Mayuri Lal (officer CS) (748 Points)
Replied 08 April 2011

I think it should be a violation which is in existance if the loans have been repaid in full he need not vacate the office.

Also pl tell me that as per your view even if he vacates the office , immediately thereafter he can be appointed . Then there is no point in this provision to vacate the office even if the loans have been repaid.