Gold Limited, an unlisted company, proposes to enter into contract with Radhika for procurement of raw materials of ₹ 5 crore during the financial year. Mohan is Non-Executive Director of the company. Radhika is wife of

Section 2(76) of the Companies Act, 2013 provides that Related Party, with reference to a company, means: a director or his relative; a key managerial personnel or his relative; a firm, in which a director, manager or his relative is a partner; a private company in which a director or manager or his relative is a member or director; a public company in which a director or manager is a director and holds along with his relatives, more than two per cent. of its paid-up share capital; any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager; any person on whose advice, directions or instructions a director or manager is accustomed to act. However, nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity; any company which is— a holding, subsidiary or an associate company of such company; or a subsidiary of a holding company to which it is also a subsidiary; an investing company or the venturer of the company. Further, Section 2(77) of the Companies Act, 2013 read with Rule 4 of the Companies (Specification of Definitions Details) Rules, 2014 elaborates the definition of Relative. A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:- they are members of a Hindu Undivided Family; they are husband and wife; or Father - including 'step father'. Mother - including 'step mother'. Son - including 'step son' Son's Wife Daughter Daughter's husband Brother - including 'step brother' Sister - including 'step sister' In view of the above provisions of the Companies Act, 2013 and the Rules made thereunder the provisions of Section 188 of the Companies Act, 2013 will be applicable in case of sale, purchase or supply of any goods or materials when the company is proposing to enter into contract or arrangement with a related party. However, in the definition of relatives given in Section 2(77) of the Companies Act, 2013 read with relevant Rule does not include Brother's Wife. Hence, it can be opined that as Radhika, Wife of Kamal, who is Brother of Mohan, Non-Executive Director of Gold Limited, is not included in the definition of the list of relatives, she is not a related party. Therefore, for the contract to be executed by Gold Limited with Radhika, provisions of Section 188 of the Act, will not be applicable.