Contracts in which directors are interested Central Government in the case of companies having paid‑up capital of Rs. 1 crore or more, applies to contract of employment of director as managing director - Companies Law - Letter : No. 8/2/(Misc.) 75/CL‑V,

Letter : No. 8/2/(Misc.) 75/CL ‑ V, dated 6 ‑ 6 ‑ 1975. Subject:- Contracts in which directors are interested Central Government in the case of companies having paid ‑ up capital of Rs. 1 crore or more, applies to contract of employment of director as managing director Query : Whether contracts entered into for cash at the prevailing market prices are exempted from the purview of the section without any limit. If so, whether payment can be made in cash for purchases without any limit in view of the provisions of the Income‑tax Act which requires payments exceeding Rs. 2,500 to be made by cheque? Answer : A cheque may be treated as the equivalent of a cash payment for the purpose of this provision.