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In the below question, isn't it with respect to contracts , so shouldn't the answers refer section 21 Why did they refer section 22 ?

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Swathi Krishna

Swathi Krishna

CA Inter

7K+

16-Jul-20 22:42

28

Answers (8)

Since the main point of discussion here is that Mr. Parag the director of the company signing on behalf of company. Section 22 is referred here.


Lavanya Chitturi

Lavanya Chitturi

Moderator

20-Jul-20 13:19

But section 22 is with respect to the matter of bills of exchange. It is clearly mentioned that it is contract of partnership with Mr. Firoz bhai. Then how can it be section 21 ?


Swathi Krishna

Swathi Krishna

CA Inter

7K+

20-Jul-20 13:38

Section 21 and 22 both can be discussed here. Here it is answer based on Section 22. Section 22(2): A company may, by writing 1[under its common seal,if any] authorize any person, either generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf in any place either in or outside India. [Provided that in case a company does not have a common seal, the authorization under this sub-section shall be made by two directors or by a director and the Company Secretary, wherever the company has appointed a Company Secretary]


Lavanya Chitturi

Lavanya Chitturi

Moderator

20-Jul-20 13:55

So if we refer section 21, the answer will that contract will valid and as he is a key managerial person and therefore the company cannot deny its obligation Then the answer will be opposite of what is given in the textbook. So will I get mark if I refer section 21


Swathi Krishna

Swathi Krishna

CA Inter

7K+

20-Jul-20 13:59

So if we refer section 21, the answer will that contract will valid and as he is a key managerial person and therefore the company cannot deny its obligation Then the answer will be opposite of what is given in the textbook. So will I get mark if I refer section 21

But such key personnel should be duly authorised by Board as per Sec 21. And Sec 22 provides the authorisation should be under common seal. Considering both Mr.Parag had no authority to sign and thus such agreement has no binding on the company


sudha reddy

sudha reddy

Moderator

21-Jul-20 23:30

But if the company does not have common seal, then any two directors can authorize it rite . Here it is not mentioned that the company has common seal or not ? Then how this contract is invalid


Swathi Krishna

Swathi Krishna

CA Inter

7K+

22-Jul-20 00:34

The answer also discussed the same in the conclusion given, that their should be a common seal affixed and it is not stated in the question Mr. Parag is not legally entitled to execute deeds on behalf of company and the company can deny its liability as partner.


Lavanya Chitturi

Lavanya Chitturi

Moderator

22-Jul-20 12:21

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