Basically there is difference between Lease and Hire purchase. It would have been apt if the nature of the transaction is exactly spelt out. Anyhow, section 297 deals with the purchase, supply or sale of goods or material or services. If the issue is lease of property by one company to another company where there is a common director too, the provisions of section 297 shall not apply to such lease transaction as the property leased is immovable property but not goods. If the transaction is sale, in the sense, if the hire purchase transaction is sale/purchase, it should obviously be hit by the provisions of section 297 of the Act and the requirement of prior central Government approval for such transaction/contract in view of the circumstances explained in the given case. The said section provides two exceptions form the rigor of the section to the transactions for sale , supply and purchase of goods or services between the entities in which the directors are interested, and they are, i) the transactions of sale, supply or purchase of goods and materials are at prevailing market prices for cash consideration and not on credit basis or , ii) the contacting parties regularly trade or carry on the business Provided that such contract or contracts do not relate to goods and materials the value of which, or services the cost of which, exceeds five thousand rupees in the aggregate in any year comprised in the period of the contract or contracts and if either of these conditions is complied with, no prior permission of the central government is required. If I am wrong, I may please be corrected.
Murali Krishna W
Advocate and Corporate Consultant.