1989 (8) TMI 293

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....h petitioner who was an employee of the company and its wholetime director. It was agreed when the purchase was made that the seventh petitioner would have the option to purchase the flat during the course of his employment or within 12 months thereafter. On September 14, 1978, an agreement was entered into between the company and the seventh petitioner giving him such option on payment by him of Rs. 100. On November 29, 1978, the seventh petitioner exercised the option. He then paid to the company a sum of Rs. 92,000, being half of the purchase price and requested that he be allowed to pay the balance in three equal instalments. The company's board of directors, thereupon, passed a resolution. It approved the transfer of the flat to the se....

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....on 295 had not been taken by the company, the giving and taking of the loan amounted to an infringement of the provisions of section 295(1) of the Act making the petitioners liable to be proceeded against under section 295(4). The petitioners, through their advocates, contended in reply that the financial accommodation that was given by the company to the seventh petitioner in the form of deferred payment of the balance purchase price did not amount to a loan and, therefore, the provisions of section 295 were not attracted. On December 10, 1982, the Registrar of Companies filed a prosecution against the petitioners in the court of the Addditional of Metropolitan Magistrate at Bombay. He stated that the seventh petitioner had paid the sum....

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....ing question is : What is a loan? A loan is defined by the Oxford English Dictionary as "a thing lent ; something the use of which is allowed for a time, on the understanding that it shall be returned or an equivalent given ; esp., a sum of money lent on these conditions and usually with interest." The concept of a loan has received judicial consideration in India. In Saradindu Sekhar v. Lalit Mohan Mazumdar, AIR 1941 Cal 538, purchase money was due to the plaintiff and the defendant had executed a bond in respect thereof. The defendant claimed relief under the Bengal Money Lenders Act. The court said, "leaving the purchase money unpaid is leaving a debt unpaid. Every loan is a debt but every debt is not a loan. The purchase money due to....