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10. Mr. Vardhan misusing his position as executive secretary, availed another loan of 9.90 lakhs from Trinity Bank on 16-2-99 against the security of FDs 446 & 447 belonging to sidur for 11 lakhs in the aggregate with the same bank. He signed the application as executive Secretary, Sidur, though he was not among the authorized signatories and every banking operation had to be signed by joint signatories. This loan was drawn in the name of Sidur but utilized by him personally to repay loans taken earlier or sent to Kathmandu Medical College. This loan was finally adjusted against Sidur's FDs 446 & 447 with Trinity Bank even though the loan was utilized by Mr. Vardhan personally. He has submitted to the bank a resolution purportedly signed by the President of the Society Sri B. Franklin. This matter does not appear in the minutes of the meeting, and appears to be fabricated. Even if it was indeed signed by the President, it has been done without verifying the purpose and use of the funds so raised.
Further, it was urged that the loans were not personal. This plea is totally baseless and has to be rejected for the elaborate reasons discussed above.
13. To conclude, Mr. Vardhan and Mrs. Nanda Vardhan being Executive Secretary and Secretary of the Society constitute interested persons Under Section 13(3) of the I.T.Act. There has been misapplication of funds as per Section 13(2)(a) of the I.T.Act as for a part of the year, funds of the society were lent to such interested persons without adequate security or interest. These persons have been regularly misusing their position in the Society, signing loan applications against the procedure laid down in the Memorandum, implicating Sidur's name and assets in their personal liabilities. As per Section 13(1)(c) if any income or property are used or applied for the benefit of an interested person for any part of the year, the institution shall be denied exemption Under Section 11. The Society shall accordingly be denied exemption and its receipts taxed."