Discuss the validity of the arguments of the Director in the following cases:

(i) In the General Meeting of X Ltd., held on 2.5.2000, Mr. A was appointed as a Director. On that day, he was not holding any equity shares in X Ltd. As per

the Articles of Association of X Ltd. the share qualification is the holding of 500 equity shares. On 15.6.2000 Mr. A applied for 1,000 equity shares in X Ltd.

and the shares were allotted on 10.7.2000. Mr. A claims that he was holding the qualification shares within the time specified in the Companies Act.

(ii) X Ltd. entered into a contract with M & Co. Ltd. for the purchase of raw materials for Rs. 2,50,000, at the prevailing market rate. Mr. B, the Director, of X

Ltd. was holding shares of the values of 1 per cent of the paid up capital of M & Co. Ltd. Another Director, of X Ltd., Mr. C was holding shares of the value

of 1.5 per cent of the paid up capital of M & Co. Ltd. Mr. B., at the beginning of the year, gave a general notice to X Ltd., that he was interested in M & Co.

Ltd., but did not disclose the nature of interest. Mr. B claims that he had given notice to X Ltd., as required under the Companies Act and that his holding

being only 1 per cent is within the limit prescribed under

the Companies Act. [November, 2000]