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2021 (6) TMI 587 - HC - Companies LawEnforceability and validity of Oral Agreement - oral agreement for lifting water, exists or not - time limitation - Section 297 of Companies Act - HELD THAT:- Section 46 of the Act must be read along with Section 297 of the Companies Act. It has been established in evidence that the defendant company was having paid-up capital of not less than one crore. Therefore, the prior approval of the central government was required for entering into a contract, in which, the director of the company or his relative is having an interest. The suit well belongs to the appellant Subahani and her brother Mohammed Thasthakir was the managing director of the defendant company. Therefore, two conditions will have to be fulfilled - The first Appellate Court rightly came to the conclusion that there has been a breach of Section 297 of the Companies Act. Since I have held that a oral contract of this nature cannot bind the defendant, the question of avoiding such a contract also does not arise. Time Limitation - HELD THAT:- Filing of the suits by the defendant cannot operate as stay or suspension of the operation of the period of limitation for the claim of the plaintiff regarding the arrears of rent for lifting of water on the basis of oral contract. So, the allegation in the plaint that the earlier suits filed by the defendant operate as stay or suspension of right of claim of arrears cannot be sustainable and is liable to be rejected. This suit has been filed for the recovery of rent arrears for lifting of water on the basis of oral agreement entered into between the plaintiff and defendant company only in the year 1999 after the expiry of three years from the date on which the arrears of rent become due from the defendant company and as such the suit barred by limitation under Article 52 of Limitation Act. The suit agreement was clearly not binding on the respondent herein - substantial questions of law are answered against the appellant - Appeal dismissed.
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