Contract law
Senguttuvan K
(Querist) 19 April 2012
This query is : Resolved
A, B & C are companies registered under companies Act 1956.
A lended to B for developing a parlour on revenue sharing basis.
B & C are related; major shares in both the companies are held by one person
But B decided to develop the parlour in the name of C using the money drawn from A
Hence, the revenue sharing agreement is required to be between A & C
Query:
A MoU / Declaration between all three where C accepting liability to A which is signed by all three is valid document or not?
Raj Kumar Makkad
(Expert) 19 April 2012
It is purely a valid document if the same is duly registered.
Shonee Kapoor
(Expert) 20 April 2012
Yes it is a valid document.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
Senguttuvan K
(Querist) 20 April 2012
Thanks Mr.Rajkumar & Mr.Shonee
MoU will establish that ultimately consideration was received by C. As advised, we will register the same along with other agreement.
Whether courts will hold MoU as unforceable want of consideration directly from A to C?
If no, can you please provide some case laws?
Thanks in advance
Senguttuvan
C. P. CHUGH
(Expert) 20 April 2012
If the querry is about validity of legal document, the tri-part agreement well drafted and duly registered shall have full force and legal value but if the querry is about taxation it could have many implications such as determination of arm length price in case of payments made to persons specified u/s 40(A)(2). It could attarach section 14 read with rule 8 in the case of B company. Come up with more details to answer specifically.
