Contracts in which directors are interested ‑ Whether proviso to the sub‑section, requiring approval of Central Government - Companies Law - Circular : No. 18/76

Circular : No. 18/76 [2/103/75 ‑ CL ‑ XIV and 1/1/76 ‑ CL ‑ V], dated 29 ‑ 6 ‑ 1976. Subject:- Contracts in which directors are interested ‑ Whether proviso to the sub ‑ section, requiring approval of 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 Instances have come to notice in which applications were made simultaneously for seeking approval of the Central Government under the proviso to section 297(1) as well as under other provisions, viz., section 269 or section 294AA or section 314(1B) in respect of same contracts/transactions. The need for according approval under both the sections of the Act has been examined in the Department. It is felt that the provisions of section 297 are of general nature and those of sections 269, 294AA and section 314(1B) are of special nature. In view of this, it has been decided in the interest of administrative convenience and also to avoid multiplicity of applications that where facts and circumstances of a case require approval of the Central Government under section 269 or section 314(1B) or section 294AA and also under section 297, approval under section 269, section 314(1B) or section 294AA would be enough and no separate approval under section 297 is necessary.