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POWERS
Companies
Act
BORROWING:
Borrow is to receive with an implied
or expressed intention of returning
the same.
Borrowing implies repayment in
some time and under some
circumstances.
(b). Subrogation: where the money of an ultra vires borrowing has been
used to pay off lawful debts of the company, the lender is entitled to the
creditor
(c). Suit against director: the lender may be able to sue the director
for breach of warranty of authority.
CASE II
Krishan Kumar & others Vs. State Bank of India & others
The company borrowed an amount of Rs. 5 Lakhs from
the bank under a promissory note.
In the suit for recovery the company contended the Pro.
Note was the executed by the chairman without the
resolution of the board of directors as required under
{sec292(1)(c)} of the 1956 Act.
Rejecting this contention the PATNA High Court held
that where the directors borrow funds without their
authorization but the money is used for companys
benefit, the company has liability to repay.
TYPES OF BORROWINGS
I. Long term borrowings:
II. Medium term borrowings:
III. Short term borrowings:
1.FIXED CHARGE
2.FLOATING CHARGE
Borrowing on security:
i. Movable property
ii. Bonds
iii. Promissory notes
iv. Bills of exchange
v. Debentures
vi. Specific part of property
vii.A mortgage of goods
viii.Security of book debts
ix. Charge on calls but not paid. Etc