Greenfield Ltd. has borrowed from Trust Bank by way of Term Loan of ₹ 40 crore for its new hotel project with the consent of the Board. The paid up equity share capital and free reserves on the day of the borrowings were

Section 180 (1) (c) of the Companies Act, 2013 states that to borrow money, where the money to be borrowed together with the money already borrowed by the Company is in excess of aggregate of its paid-up share capital, free reserves and securities premium (excluding temporary loans obtained from the company's bankers in the ordinary course of business) then, such company shall obtain the approval of the members by way of Special Resolution in the General Meeting. In the present case, the aggregate of paid-up capital and free reserves is (₹10 crore +₹18 Crore = ₹28 Crore) and Greenfield has borrowed ₹40 Crore with the consent of the Board only. Thus, the contention of Mr. Dey is correct, as the Company has not obtained the approval of the Members in General Meeting by way of a Special Resolution for ₹40 Crore, which exceeds ₹28 Crore. In case the Company being a Private Company, then the Company has complied with the provisions of the Companies Act, 2013 as Section 180 shall not be applicable to Private Companies as per exemption notification of June 2015.