Members of huf, whether relative as per companies act 2013

Madhu Mittal (Querist) 04 June 2020 This query is : Resolved
As per companies Act 2013 section (2) subsection (77):
(77) ‘‘relative’’, with reference to any person, means any one who is related to
another, if—
(i) they are members of a Hindu Undivided Family;
(ii) they are husband and wife; or
(iii) one person is related to the other in such manner as may be prescribed;

Mr. R had three sons, named Ka, Mo, Mu. Mr. R as well as his sons Ka, Mu are no more.
Huf of R never used in any type of activity whether business or income tax purpose.
Son of Ka has significant influence in the company.
Wife of Son of Ka is director of the company.
Grandsons of Ka are also directors in the company.
1.Whether grandson of Mu is relative of grandson/daughter in of Ka as per section 2(77) of companies Act 2013 ?
2.Whether wife of Mu is relative of grandson/daughter in law of Ka as per section 2(77) of companies Act 2013 ?
3.Whether the Huf of son of Mu (where all members of Huf is shareholder of the company) is relative of son of Ka or wife of son of Ka or grandson of Ka as per section 2(77) of companies Act 2013 or in any other act ?

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Raj Kumar Makkad (Expert) 04 June 2020
No is the reply to all of your 3 questions not only under section 2(77) of the Companies Act but also under Rule 4 of the Companies (Specifications of Definitions Details) Rules, 2014 wherein such relationship which you mentioned above cannot be described and moreover Rule 4 contains the details which relationship can be got defined. You may also visit the following link for more clarification:

https://www.corporate-cases.com/2012/01/relatives-under-the-companies-act.html

P. Venu (Expert) 05 June 2020
What is the nexus between the Company and the HUF?

Madhu Mittal (Querist) 05 June 2020
Respected Sir Makkarji,
Thanks for giving me a new link. With due respect to y, there are three clause u/s 2(77) and I think that under Rule 4 of companies rule 2014, is belongs to (iii) clause {(iii) one person is related to the other in such manner as may be prescribed;}. Because spouse is also not mentioned under Rule 4 of companies rule 2014, but still relative as per clause (ii). I am concerned about clause (i).
Please guide again.
Respected Sir P.venuji,
As per companies Act, if any amount/loan taken from the relative of director, it does not come under the definition of Public Deposit.
So if they come into the definition of Relative of a director, loan can be taken from them by the company.
Wife of Son of Ka is director of the company and that is myself.
Please guide,

Raj Kumar Makkad (Expert) 05 June 2020
As there has not been a HUF hence the case mentioned by you under clause i is not covered under section 2(77) of companies Act.

Rajendra K Goyal (Expert) 05 June 2020
Section 2(77) of the Act:

‘Relative” with reference to any person, means anyone who is related to another, if-
(i) They are member of Hindu Undivided Family (HUF);
(ii) They are husband and wife; or
(iii) One person is related to the other in such manner as may be prescribed.
Rule 4 of the Companies (Specification of Definitions Details) Rules 2014:

A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-
1. Father: Provided that the term ‘Father’ includes step-father.
2. Mother: Provided that the term ‘Mother’ includes step-mother.
3. Son: Provided that the term ‘Son’ includes step-son.
4. Son’s wife.
5. Daughter.
6. Daughter’s Husband
7. Brother: Provided that the term ‘Brother’ includes step-brother.
8. Sister: Provided that the term ‘Sister’ includes step-sister.
In view to above, relatives have been very well defined in the Act and comprehensive directories of the relatives are as follows:-

• Member of HUF
• Husband
• Wife
• Father
• Step Father
• Mother
• Step Mother
• Son
• Step Son
• Son’s Wife
• Daughter
• Daughter’s Husband
• Brother
• Step Brother
• Sister
• Step Sister

It is important to note that Step Father, Step Mother, Step Son, Step Brother and Step Sister are included in the list of relatives but Step Daughter is not under the preview of relative.

Rajendra K Goyal (Expert) 05 June 2020
From the above you can easily decide whether the said relations are within the definition of relatives as per provisions of Company Act. 2013.

If we compare with Companies Act, 1956, the list of relatives is drastically cut short. Please visit following article to find out the detail.

https://www.caclubindia.com/articles/relative-section-2-77-of-the-companies-act-2013-25503.asp

Raj Kumar Makkad (Expert) 06 June 2020
The list of the relatives is already given and the relations you asked do not fall within the ambit of section 2(77) of Companies Act hence there is no scope of their relation with each other.

Rajendra K Goyal (Expert) 06 June 2020
Relation given by you are not contained in the list of relations.

Raj Kumar Makkad (Expert) 07 June 2020
Yes, the relations are out of the purview of section 2(77) of Companies Act.

Rajendra K Goyal (Expert) 07 June 2020
Author may give specific problem so that more appropriate / to the point advice can be given.