TMI Blog2021 (6) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - S.A.(MD)No.1168 of 2008 - - - Dated:- 28-4-2021 - Honourable Mr.Justice G.R.Swami Nathan For the Appellant : Mr.K.N.Thampi For the Respondent : Mr.R.Sundar Srinivasan JUDGMENT The plaintiff in O.S.No.94 of 1999 on the file of the Sub Court, Devakottai is the appellant in this second appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the contract between the respondent and the appellant has not been legally avoided by the respondent, as per Section 297(5) of the Companies Act? 2.Whether the Judgment and decree of the lower Appellate Court dismissing the appellant's suit as barred by limitation are correct and sustainable, since the appellant's case is that the respondent owes to her the cost of the water lifter during the period from 11.03.1993 and 11.06.1999 minus ₹ 35,000/- already paid, and the suit was filed on 13.08.1999? 3.Whether the Judgment and decree of the lower appellate Court are correct and sustainable, since the suit claim is not for arrears of rent and hence, Article 52 of the Limitation Act is inapplicable to the case? 5.Heard the learned counsel on either side. 6.The learned counsel appearing for the appellant submitted that the First Appellate Court erred in reversing the well considered decision of the trial Court. The appellate Court ought not to have invoked Section 297 of the Companies Act for non suiting the appellant herein. The defendant in their written statements have not categorically stated as to when they notified the plaintiff about the voiding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y law be valid although made by parol only and not reduced into writing, may be made by parol on behalf of the company by any person acting under its authority, express or implied, and may in the same manner be varied or discharged. (2) A contract made according to this Section shall bind the company. 297.Board's sanction to be required for certain contracts in which particular directors are interested -(1) Except with the consent of the Board of Directors of a company, a director of the company or his relatives, a firm in which such a director or relative is a partner, any other partner in such a firm or a private company of which the director is a member or director, shall not enter into any contract with the company- (a) for the sale, purchase or supply of any goods, materials or services; (b) after the commencement of this Act, for underwriting the subscription of any shares in, or debentures of, the company; (provided that in the case of a company having a paid-up share capital of not less than rupees one crore, no such contract shall be entered into except with the previous approval of the Central Government) (2) Nothing contained in clause(a) of sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant 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. Firstly, the consent of the board of directors was required. Without such consent, the contract could not have been entered into. Secondly, the prior approval of the central government was also required. In this case, both the conditions had not been fulfilled. In view of the requirements set out in Section 297 of the Companies Act, 1956, the contract could have been only in writing and it could not have been oral. Only if the contract had been in writing and had also fulfilled the conditions set out in Section 297 of the Companies Act, the contract could have bound the company. In this case, Mohammed Thasthakir after entering into a oral contract with his sister in his capacity as managing director of the defendant company crossed over and filed the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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