Financial Services

This tag is associated with 16 posts

Sec.163 – A , sec. 140 of M.V. Act – due to conflicte judgment over scope of sec. 163 -A in United India Insurance Company Ltd. v. Shila Datta and others [(2011) 10 SCC 509], and National Insurance Co. Ltd. v. Nicolletta Rohtagi [(2002) 7 SCC 456]. , it was referred to larger bench = United India Insurance Company Ltd. … Appellant Versus Sunil Kumar & Anr. … Respondents – Reported in http://judis.nic.in/supremecourt/filename=40914

Sec.163 – A , sec. 140 of M.V. Act – due to conflicte judgment over scope of sec. 163 -A in United India Insurance Company Ltd. v. Shila Datta  and  others  [(2011)  10 SCC 509],  and National Insurance Co. Ltd. v. Nicolletta Rohtagi  [(2002)  7  SCC  456]. , it was referred to larger bench   =    We are, therefore, of the … Continue reading

SALE OF PLEDGED SECURITES WITH OUT NOTICE UNDER SEC.176 OF CONTRACT ACT NOT VALID AND LIABLE TO PAY COMPENSATION = M/s.Green Gardens Private Limited entered into Facility Agreement dated 26.06.2008 with M/s.Indiabulls Housing Finance Limited to avail loan of Rs.240 Crores. The loan was secured by pledge of shares equivalent to 200% of the loan amount. M/s.Indiabulls Housing Finance Limited disbursed the loan of Rs.227.5 Crores against sanctioned loan of Rs.240 Crores. 3. Mrs.A.Indira Anand and Mrs.K.Bharathi executed Pledge Agreement in favour of M/s.Indiabulls Housing Finance Limited to pledge their shares as security for the loan advanced to M/s.Green Gardens Pvt. Ltd. Mr.A.Ravishankar Prasad and Mr.A.Manohar Prasad gave personal guarantee to secure the loan. Along with the Pledge Agreement, Mrs.A.Indira Anand and Mrs.K.Bharathi also executed irrevocable power of attorney in favour of M/s.Indiabulls Housing Finance Limited. Taking note of pledge creation forms executed by Mrs.A.Indira Anand and Mrs.K.Bharathi, M/s.Indiabulls Securities Limited recorded pledge of share in their record. 4. 11.07.2008, Mrs.Gemini Arts Pvt. Ltd., and M/s.Gemini Foundation Pvt. Ltd., also became co-borrowers along with M/s.Green Gardens Pvt. Ltd. On 30.09.2008, M/s.Indiabulls Housing Finance Limited issued a recall notice to the borrowers as well as to Mrs.A.Indira Anand and Mrs.K.Bharathi. 5. In response to the notice, M/s.Green Gardens Pvt. Ltd., repaid a sum of Rs.5,00,00,000/- (Rupees Five Crores only). However, on 12.11.2008, notice was issued to the borrowers informing that the cheques issued for Rs.2 Crores and Rs.3 Crores were returned unpaid. M/s.Indiabulls Housing Finance Limited invoked the pledge on 12.11.2008 and accordingly, pledged shares were transferred to the account of M/s.Indiabulls Housing Finance Limited in terms of Regulation 58(8) of SEBI Regulations, 1996. 6. On 18.11.2008, margin call notice was issued and on 02.12.2008, M/s.Indiabulls Securities Ltd., sold a part of the shares pledged on instruction of M/s.Indiabulls Housing Finance Limited. Being aggrieved by the action of M/s.Indiabulls Housing Finance Limited in invoking the pledge and sale of shares by M/s.Indisbulls Securities Ltd., Mrs.A.Indira Anand filed C.S.No.1172 of 2008 in this Court.= On a plain reading of Section 176 of the Contract Act, it is clear that before exercising the power of sale the pawner should give to the pledger reasonable notice of the sale (of the pledged thing) Section 176 is mandatory and even if there is a term in the contract of pledge to waive notice, still, the pledge is not relieved of his obligation to give notice before the sale of pledged articles.”= Section 176 of the Contract Act provides that if the pawner makes a default in payment of the debt in respect of which the goods were pledged, the pawner may bring a suit against the pawner upon the debt, or he may sell the thing pledged on giving the pawner reasonable notice or the same. The contention that notice of the contemplated sale to the pawner should be inferred from his letter dated 13-8-1948, cannot hold water inasmuch as the said letter does not disclose that a reasonable notice had been given by the pawnee to the pawner to sell the securities. A notice of the character contemplated by Section 176 cannot be implied. Such notice has to be clear and specific in language indicating the intention of the pawnee to dispose of the security. No such intention was disclosed by the Bank in any letter to the respondent.- I am, therefore, clearly of the opinion that the sale of the securities by the appellant Bank without reasonable notice to the respondent was bad and was not binding on hint. What is contemplated by Section 176 is not merely a notice but a ‘reasonable’ notice, meaning thereby a notice of intended sale of the security by the creditor within a certain date so as to afford an opportunity to the debtor to pay up the amount within the time mentioned in the notice. No such notice was ever given by the appellant to the respondent. There can thus he no escape from the conclusion that the sale of the securities by the appellant was against law and not binding on the respondent. The conclusion reached by the lower appellate court was, therefore, legally sound.”=the arbitral award can be set aside if it is contrary to (a) fundamental policy of Indian Law, (b) the interests of India; or (c) justice or morality. A narrower meaning to the expression ‘public policy’ was given therein by confining judicial review of the arbitral award only on the aforementioned three grounds REPORTED IN / PUBLISHED IN judis.nic.in/judis_chennai/filename=41781

IN THE HIGH COURT OF JUDICATURE AT MADRAS     Dated: 30.04.2013 THE HONBLE MR. JUSTICE VINOD K.SHARMA O.P.Nos.228, 229, 258 and 272 of 2012   1. M/s.Indiabulls Housing Finance Limited *(previously known as Indiabulls Financial Services Limited) having its Registered Office at F-60, II Floor, Connaught Place, New Delhi-110 001. Rep. By its Authorized … Continue reading

SARFAESI Act, verses Official liquidator under companies Act = any sale conducted defraud other secured creditor within one year after the commencement of company petition is void = There cannot be any doubt of the fact from the dates given earlier that the transfer was within a period of six months from the date of presentation of the liquidation proceedings and consequently it is statutorily invalid and the law does not recognize it. In fact, an attempt was sought to be made that there is no reference to sale in either of the Sections and it only refers to transfer and consequently these provisions can have no application. It has to be held that the transfer of interest in immovable property is in consequence of a sale and therefore the word transfer takes in its fold the very act of sale. Therefore, by applying Section 531 it is quite clear that the transfer shall be deemed to be invalid. 12. Even under Section 531-A it is quite clear if the sale was within a period of one year from the date of presentation of the liquidation proceedings as against the Official Receiver who represents the body of the creditors on his appointment after the winding up proceedings, the sale is void. Therefore, by applying Section 531 or 531-A it is quite clear from any angle the sale in this case is hit by the above provisions and when the sale is statutorily invalid or void there is no need for a relief to be asked by the Official Receiver to set aside the sale or approach the Debt Recovery Tribunal, since these two provisions are to be exclusively dealt by the Company Court alone, which is rightly contended by the Official Liquidator. I hold that this Court alone can decide the binding nature of the transactions under Section 531 or 531(A) of the Companies Act. It is to be noted that the powers conferred under the SARFAESI Act for the Bank or the Authorized Officer is only in order to avoid the delay of legal proceedings and it does not give any right or advantage to misuse the power of quasi judicial nature in order to convert a Non Performing Asset and realize the money by adopting improper mode. Therefore, for all the above reasons, I hold that the sale as held by the Authorized Officer on behalf of the Creditor Bank is void and the right of the Official Receiver in the liquidation proceedings cannot be defeated and as the sale is void, it goes to the root of the obligations between the auction purchaser and the Authorized Officer and when once the sale is set aside as void, it is needless to say that the Creditor Bank cannot take advantage of the void sale and the auction purchaser shall be restored to the same position prior to the sale and any amount realized by the Creditor Bank cannot be retained by it. Accordingly, W.P.No.19297 of 2012 is allowed granting the reliefs claimed thereunder. W.P.No.33655 of 2011 and Company Application No.1972 of 2011 are dismissed. Consequent on the orders holding that the sale as void as it comes within the purview of this Court, Company Application No.421 of 2013 is also allowed as a consequence of the sale being held as void under Section 531 and 531 (A) of the Companies Act. No costs.

HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO WRIT PETITION Nos.19297 of 2012 & 33655 of 2011 & COMP.A.Nos.1972 of 2011 & 421 of 2013 in C.P.No.215 of 2010 22.04.2013. M/s. United Steel Allied Industries Private Limited ….Petitioner M/s. Indian Bank, Corporate Office, and others …Respondents Counsel for the Petitioner: Counsel for the Respondents: <Gist : >Head … Continue reading

Recovery of Debts Due to Banks and Financial Institutions Act, 1993-Sections 17, 18, 19 and 31. Suit by borrower against bank-Held-Jurisdiction of civil courts is barred only in regard to applications by bank/financial institution for recovery of its debts-It is not barred in regard to any suit filed by a borrower or other person against a Bank-On facts, jurisdiction of civil court held not be barred in a borrower’s suit for damages against bank for non-disbursement of a sanctioned loan-The suit found not be a counter claim to an earlier Original Application (O.A.) of Bank before D.R.T. for recovery of an amount advanced to the borrower under another loan-Subject matter of O.A and suit were not connected and decision in one did not depend on other-Such a suit was not required to be transferred to D.R.T.-It was more so as the suit was filed after establishment of latter and the provisions of the Act did not support transfer of such suit. Counter claim by borrower/defendant in Bank’s Original Application before D.R.T.-Forum for-Held-Counter claim is not the only remedy, but an option available to borrower/defendant-If they have an independent claim against Bank, they cannot be compelled to make their claim against Bank only by counter-claim before D.R.T.-Such a claim made by them by an independent suit in a court having jurisdiction cannot be transferred to D.R.T. against their wishes. Constitution of India, 1950-Article 142-After declaration of law, Supreme Court in operative part of judgment relaxing application of that law under Article 142-In such a case, the precedent value is that of ratio decidendi, and not the relaxation given on special facts-One solution to avoid a situation where relaxation itself comes to be treated as law, is for the Supreme Court to clarify that it was given in exercise of power under Article 142. Appellant-bank sanctioned ad hoc packing credit facilities to the respondent company. According to appellant, respondent utilised the said credit facilities but committed default in repaying the amounts advanced. Therefore, they filed an Original Application (O.A.) before the Debt Recovery Tribunal (D.R.T.) under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 seeking a certificate of recovery thereof with interest. During pendency of the O.A. wherein trial was yet to commence, appellant sanctioned another loan and credit facilities to the respondent, but the sanctioned amounts were not released. For this, respondent filed a suit against the appellant in High Court for recovery of damages with interest. Recording of evidence in the suit had been completed and it was ripe for arguments. At this stage, appellant pleaded that the suit could not be tried by the High Court and it should be transferred to the D.R.T. on the ground that it was broadly in the nature of a counter-claim to appellant’s O.A and was integrally connected with it. For this they relied on Sections 19(6) to (11) of the Act. High Court rejected these claims of appellant. Hence the present appeals. On the contentions of the parties, following questions arose for consideration of the Court: (a) Whether the subject-matter of the borrower’s suit before the High Court and Bank’s O.A. before D.R.T. were inextricably linked? (b) Whether the provisions of the Act require the transfer of an independent suit filed by a borrower against a Bank before a civil court to D.R.T. in the event of the Bank filing a recovery application against the borrower before D.R.T. to be tried as a counter-claim in the Bank’s O.A.? Dismissing the appeal, the Court HELD: 1. It is evident from Sections 17 and 18 of the Debts Recovery Act that civil court’s jurisdiction is barred only in regard to applications by a bank or a financial institution for recovery of its debts. The jurisdiction of civil courts is not barred in regard to any suit filed by a borrower or any other person against a bank for any relief. [68-f] 1.2. The Debts Recovery Act, as it orginally stood, did not contain any provision enabling a defendant in application filed by the bank/financial institution to claim any set off or make any counter claim against bank/financial institution. The Act was amended by Act 1 of 2000 to remove the lacuna by providing for set off and counter-claims by defendants in the applications filed by Banks/financial institution before the Tribunal. What is significant is that Sections 17 and 18 have not been amended. Jurisdiction has not been conferred on the Tribunal, even after the amendment, to try independent suits or proceedings initiated by borrowers or others against banks/financial institutions, nor the jurisdiction of civil courts barred in regard to such suits or proceedings. [64-b, c, d, f, g] Union of India v. Delhi High Court Bar Association, [2002] 4 SCC 5, relied on. Delhi High Court Bar Association v. Union of India, AIR (1995) Delhi 323 approved. 2. The issues that arose in the Bank’s application was whether the borrower failed to repay the sums borrowed and whether the Bank was entitled to the amounts claimed. On the other hand, the issues that arose in the borrower’s suit were whether the Bank had promised/agreed to advance certain monies, whether the Bank committed breach in refusing to release such loans in terms of the sanction letter; whether the borrower failed to fulfill the terms and conditions of sanction and therefore the Bank’s refusal to advance, was justified; and even if there was breach, whether the borrower suffered any loss on account of such non-disbursement and if so whether the borrower was entitled to the amounts claimed. While the claim of the Bank was for an ascertained sum due from the borrower, the claim of the borrower was for damages which required firstly a determination by the court as to whether the Bank was liable to pay damages and thereafter assessment of quantum of such damages. Thus there is absolutely no connection between the subject matter of the two suits and they are no way connected. A decision in one does not depend on the other. Nor could there be any apprehension of different and inconsistent results if the suit and the application are tried and decided separately by different forums. In the circumstances, it cannot be said that the borrower’s suit and Bank’s application were inextricably connected. [61-c, f] 3. It is not disputed that the Calcutta High Court had the jurisdiction to entertain and dispose of suit filed by borrower when it was filed and continues to have jurisdiction to entertain and dispose of the said suit. There is no provision in the Act for transfer of suits and proceedings, except section 31 which relates to suit/proceeding by a Bank or financial institution for recovery of a debt. It is evidence from Section 31 that only those cases and proceedings (for recovery of debts due to bank and financial institutions) which were pending before any Court immediately before the date of establishment of a tribunal under the Debts Recovery Act stood transferred, to the Tribunal. In this case, there is no dispute that the Debts Recovery Tribunal, Calcutta, was established long prior to the company filing suit against the bank. The said suit having been filed long after the date when the tribunal was established and not being a suit or proceeding instituted by a bank or financial institution for recovery of a debt, did not attract section 31. [63-g, h; 64-a] 4. Making counter claim in the Bank’s application before the Tribunal is not the only remedy, but an option available to the borrower/defendant. He can also file a separate suit or proceeding before a civil court or other appropriate forum in respect of his claim against the Bank and pursue the same. Even the Bank, in whose application, the counter-claim is made has the option to apply to the Tribunal to exclude the counter-claim of the defendant while considering its application. When such application is made by the Bank, the Tribunal may either refuse to exclude the counter claim and proceed to consider the Bank’s application and the counter-claim and together or exclude the counter claim as prayed and proceed only with the Bank’s application, in which event the counter claim would become an independent claim against a bank/financial institution. The defendant will then have to approach the civil court in respect of such excluded counter claim as the Tribunal does not have jurisdiction to try and independent claim against a bank/financial institution. A defendant in an application, having an independent claim against the Bank, cannot be compelled to make his claim against the Bank only by way of counter-claim. Nor can his claim by way of independent suit in a court having jurisdiction, be transferred to a Tribunal against his wishes. In this case, the first respondent does not wish his case to be transferred to the Tribunal. [65-a-e] United Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd., [2000] 7 SCC distinguished. 5. Many a time, after declaring the law, this court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete injustice. While doing so, normally it is not stated such determination/order is in exercise of power under Article 142. It is not uncommon to find that courts have followed not the law declared, but the exemption/relaxation made while moulding the relief in exercise of power under Article 142. When the High Courts repeatedly follow a direction issued under Article 142, treating it as the law declared by this court, incongruously the exemption/relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court. The Courts should therefore be careful to ascertain and follow the ratio decidendi, and not the relief given on the special facts, exercising power under Article 142. One solution to avoid such a situation is for this Court to clarify that a particular direction or portion of the order is in exercise of power under Article 142. [70-d, e, f] L.N. Rao, Himanshu Munshi and Rajesh Kumar Chaurasia, for the Appellant. Jaideep Gupta, Rana Mukherjee, Siddharth Gautam and Goodwill Indeevar, for the Respondent.2006 AIR 1899, 2006(1 )Suppl.SCR52 , 2006(5 )SCC72 , 2006(4 )SCALE423 , 2006(5 )JT281

CASE NO.: Appeal (civil) 10074-10075 of 2003 PETITIONER: Indian Bank RESPONDENT: ABS Marine Products Pvt. Ltd. DATE OF JUDGMENT: 18/04/2006 BENCH: Dr. AR. Lakshmanan & R. V. Raveendran JUDGMENT: J U D G M E N T RAVEENDRAN, J. These appeals by special leave are filed against the judgment dated 10.5.2002 of the Calcutta High … Continue reading

NATIONAL CONSUMER DISPUTES REDRESSAL commission= bank deposits =It also stands to reason that had there been any mala fide action on the part of any employee of the respondent bank in encashing the FDR in question, such a person could have easily encashedthe complainant’s remaining three FDRs also. Further, the action of the petitioner/complainant to claim payment of the four FDRs made in 1961 after nearly 39 years without any enquiry, etc., in the long intervening period is most unusual. 7. In conclusion, therefore, I do not find any jurisdictional error, legal infirmity or material irregularity in the impugned order of the State Commission to warrant action under section 21 (b) of the Consumer Protection Act, 1986. The revision petition is, therefore, dismissed, with the further observation that (as admitted before the Fora below) the Bank shall pay to the petitioner within six weeks the maturity amount of the remaining three FDRs along with interest thereon at the rates applicable from time to time. If the order is not complied with within the stipulated period, the entire amount including regular interest shall carry further interest @ 15% per annum from the date of this order.

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3073 OF 2007  (From the order dated 29.05.2007 of the Punjab Consumer Disputes Redressal Commission, Chandigarh in Appeal. no. 597 of 2002) Dr. Narinder Mohan Wadhera Son of Shri Ram Wadhera Resident of 189 Basant Avenue                                               Petitioner Amritsar versus 1. The State Bank of India Local Head Office, Sector 17, Chandigarh Through its Chief General Manager                                 Respondents 2.  State … Continue reading

Limitation Act: Sections 18, 19 and 20–Acknowledgment of debt–When saves limitation. Muslim Personal Law–Liability to discharge debts de- volves on heirs proportionate to their respective Shares in the estate of the deceased. = One Vellappa Rawther, deceased, had incurred debt by means of two promissory notes for Rs.25,000 and Rs.50,000. In the suits filed on the basis of the promissory notes, the Trial Court granted a decree against the estate of Vellappa Rawther in the hands of defendants 2 to 10. The High Court on appeal modified the decree reducing it to one fourth of the decreed sum and focussed the liability on defendant-Respondent No. 2 absolving others of the re- maining liability on the bar of limitation. Such view was taken as the facts established that the liability to dis- charge debts of Vellappa Rawther after his death was indi- vidually on his heirs proportionate to the extent of their share in the estate devolving on them, and since the debt had become time barred, acknowledgment of the same by de- fendant-respondent No. 2 as well as partial payment of the debt by him rendered him alone liable to meet liability to the extent of one fourth related to the share of the estate which as a Muslim heir he received from the deceased. Before this Court, it was claimed on behalf of the appellant that under sections 18 and 19 of the Limitation Act the acknowledgment and partial payment saved limitation against all and thus the entire debt could be recovered from defendant-respondent No. 2, he being in possession of the estate lying joint. Dismissing the appeal, this Court, HELD: (1) The debt of the deceased gets divided in shares by operation of Muslim Personal Law amongst the heirs proportionate to their shares in the estate. The theory of sanctity of the integrity of the 434 debt is apparently foreign in the case of a deceased muslim leaving debt and some estate both being divisible amongst his heirs. [247G] Mohd. Abdul Qadeer v. Azamatullah Khan and 8 Others, [1974] 1 Andhra Weekly Reporter 98; Vasantam Sambasiva Rao v. Sri Krishna Cement and Concrete Works, Tenali 1977 Andhra Law Times Reports at 528; N.K. Mohammad Sulaiman v.N.C. Mohammad Ismail and Others, [1966] 1 SCR 935 at 940, re- ferred to. (2) It would be right to treat it settled that muslim heirs are independent owners of their specific shares simul- taneously in the estate and debts of the deceased, their liability fixed under the personal law proportionate to the extent of their shares. [248H] Jafri Begum v. Amir Muhammad Khan, [1885] Vol. 7 ILR Allahabad series, referred to. (3) The heirs of a muslim are by themselves independent debtors; the debt having been split by operation of law. Inter se, they have no jural relationship as co-debtors or joint debtors so as to fall within the shadow of contrac- tors, partners, executors or mortgagees or in a class akin to them. They succeed to the estate as tenants-in-common in specific shares. [250D] (4) Even a signed written acknowledgment by the princi- pal or through his agent would bind the principal and not anyone else standing in jural relationship with the princi- pal in accordance with section 20(2) of the Limitation Act. The Muslim heirs inter-se have no such relationship. [250E] (5) If the debt is one and indivisible, payment by one will interrupt limitation against all the debtors unless they come within the exception laid down in section 20(2). And if the debt is susceptible of division and though seem- ingly one consists really of several distinct debts each one of which is payable by one of the obligors separately and not by the rest, section 20 keeps alive his part of the debt which has got to be discharged by the person who has made payment of interest. It cannot affect separate shares of the other debtors unless on the principal of agency, express or implied, the payment can be said to be a payment on their behalf also. [250H; 251A] Abheswari Dasya and Another v. Baburali Shaikh and Others, AIR 1937 Cal. 191, referred to. 435 (6) The property of the co-heirs supposedly in posses- sion of defendant-respondent No. 2 cannot be touched direct- ly in his hand unless the co-heirs being parties to the suit are held liable to pay their share of the debt; the debt being recoverable. [251F] =1991 AIR 720, 1990( 1 )Suppl.SCR 433, 1990( 4 )SCC 672, 1990( 2 )SCALE481 , 1991( 5 )JT 420

PETITIONER: P.N. VEETI NARAYANI Vs. RESPONDENT: PATHUMMA BEEVI AND ANOTHER DATE OF JUDGMENT13/09/1990 BENCH: PUNCHHI, M.M. BENCH: PUNCHHI, M.M. AHMADI, A.M. (J) CITATION: 1991 AIR 720 1990 SCR Supl. (1) 433 1990 SCC (4) 672 JT 1991 (5) 420 1990 SCALE (2)481 ACT: Limitation Act: Sections 18, 19 and 20–Acknowledgment of debt–When saves limitation. Muslim … Continue reading

Provincial Insolvency Act, 1920: Ss. 28, 55 and its Proviso: Insolvency Petition by the debtor/transferor-Bonafide transferee for valuable consideration-Protection to-Held: When transfer of shares to the transferee was for valuable consideration without any notice as to the presentation of the Insolvency Petition by the debtor, requirements of Proviso to Section 55 satisfied-Hence, entitled to protection/claim. Section 218/Proviso to Section 55-Protection to creditor vis-a-vis- Protection to bona fide transferee-Interpretation of-Held, An order of adjudication in an Insolvency Petition relates back to the date of its presentation-No word or Provision of Law could be left redundant/ superfluous-Both must be given effect to by harmoniously construing-On construing so the bonafide transferee could be protected under the provisions when the conditions of Proviso to Section 55 are complied with. The question which arose for consideration and decision in the appeal was as to whether protection under Section 55 of the Provincial Insolvency Act is available to a bonafide transferee for valuable consideration after presentation of the Insolvency Petition by or against the debtor but without notice and before passing an order of adjudication. =Answering the question in the affirmative and allowing the appeal, the Court HELD: 1.1. The object of Section 28 of the Provincial Insolvency Act is to secure unrestricted right to dispose of insolvent’s property after an order of adjudication is made. On making an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a Receiver, as the case may be. When sub-section (1) is read along with subsection (7) of the Act, the effect would be an order of adjudication relates back to the date of presentation of Insolvency Petition and the order of adjudication takes effect from the date of the presentation of the Insolvency Petition. Consequently, vesting of property under sub-section (2) also relates back to the date of presentation of the Insolvency Petition. Combined reading of sub-sections (1), (2) and (7) makes the position clear that the interest of the creditors is safeguarded, parties are put on notice against attempt to transfer the property after the date of presentation of the Insolvency Petition by the petitioners or others relating to his property and also to warn the intending purchasers or transferees that they are taking the risk of purchasing or getting the property transferred in their names during the pendency of the insolvency proceedings from the date of presentation of the petition itself and even before passing of an order of adjudication. [936- D-G] 1.2. Sections 28 and 55 of the Act are to be read together. Where the transfer has been made by the insolvent after presentation of the Insolvency Petition, the transfer cannot be held as void ab initio but its validity or otherwise depends upon a consideration as to whether the conditions specified under Section 55 are or are not satisfied. [936-H; 937-A] 1.3. It is cardinal rule of construction that normally no word or provision should be considered redundant or superfluous in interpreting the provisions of a statute. The Courts always presume that the legislature inserted every part thereof with a purpose and the legislative intention is that every part of the statute should have effect. It may not be correct to say that a word or words used in a statute are either unnecessary or without any purpose to serve, unless there are compelling reasons to say so looking to the scheme of the statute and having regard to the object and purpose sought to be achieved by it. Once the requirements of Section 55 of the Act are satisfied, the appellant is entitled for the protection of the said Section as a bona fide transferee. A contrary view takes away the very protective umbrella specifically made available to a bona fide transferee covered by Section 55. Protection provided for bona fide transfer in Section 55 is in a way exception to Section 28(7) of the Act. Proviso to Section 55 of the Act protects bona fide transactions mentioned in clauses (a) to (d) of Section 55. [937-C, D, F, H] Jaipur Zila Sahakari Bhoomi Bank Ltd. Vikas v. Shri Ram Gopal Sharma and Ors., JT (2002) 1 SC 182, followed. 1.4. It is clear that the shares were transferred in favour of the appellant before the order of adjudication was made on the Insolvency Petition filed by the respondent and the appellant had no knowledge at the time of purchasing the shares as to the presentation of the Insolvency Petition, the transfer of shares was for valuable consideration and such transfer was bona fide. In this view, the appellants, did satisfy the requirements of proviso to Section 55 of the Act and hence they are entitled for the claim made by them. [938-B-D] 1.5. If the intention of the proviso to Section 55 of the Act was not to protect even a bona fide transferee for valuable consideration without notice of presentation of Insolvency Petition before an order of adjudication was made, the legislature could have simply said any transaction taking place after the date of presentation of any Insolvency Petition by or against the debtor instead of qualifying the transaction that takes place before the date of the order of adjudication. In this situation, the proviso which is intended to serve a definite purpose should be given full meaning and effect It is not possible to ignore a part of the provision, namely, “any such transaction takes place before the date of the order of adjudication”. It stands to reason as well, that a bona fide transferee for valuable consideration without the knowledge of the presentation of Insolvency Petition on the date of transfer of property is to be protected. [938-E-G] CIVIL APPELLATE JURISDICTION : Civil Appeal No. 176 of 1997.

CASE NO.: Appeal (civil) 176 of 1997 PETITIONER: Sankar Ram and Co. RESPONDENT: Vs. Kasi Naicker and others DATE OF JUDGMENT: 30/07/2003 BENCH: Shivaraj V. Patil &[D.M. Dharmadhikari. JUDGMENT: J U D G M E N T Shivaraj V. Patil,J. “Whether protection provided in the proviso to Section 55 of the Provincial Insolvency Act, 1920 … Continue reading

About two years after the dismissal of the insolvency petition, the petitioners herein filed I.A.No.883 of 2005 to release the bank guarantee. Through the impugned order, the Insolvency Court dismissed the same. The petitioners contend that the bank guarantee is liable to be released and that the impugned order is liable to be set aside. when the insolvency petition was dismissed and when the bank guarantee was expired earlier to it, the petitioner can be released from bank guarantee to continue their business.

                        IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD                         (Special Original Jurisdiction) PRESENT THE HON’BLE SRI JUSTICE K.G.SHANKAR C.R.P.NO.5131 OF 2006   20-12-2010 Between:- R.Srinivas and others .. Petitioners And Pulamati Bai and others ..Respondents ORDER:- The learned III Additional District Judge, Warangal, … Continue reading

specific performance case, arbitration case , company petition -M/s.Merbanc Financial Services Limited (hereinafter referred to as "the company") is absolute owner of 1853.80 square yards in Plot No.7, Sector 1, HUDA Techno Enclave in Sy. No.64 of Madhapur village, Sherilingampally, Ranga Reddy District. The applicant approached the company for development of the said plot into a multi-storied building complex. They entered into a development agreement-cum-General Power of Attorney on 6.1.1999 (for brevity, "agreement"). Under the said agreement, the applicant was authorized to construct a multi- storied building complex on the said plot. The company has to secure exemption under the provisions of Urban Land (Ceiling and Regulation) Act, 1976. As per Clause 3 of the agreement, the applicant shall invest his capital and construct the building complex as per mutually agreed plan and building specifications ensuring that the design and construction shall be sound and that it should confirm to statistical engineering practices. The applicant has to deposit security amount of Rs.20.00 lakhs. He paid a sum of Rs.5 lakhs towards security deposit at the time of the execution of the agreement. The balance security deposit of Rs.15 lakhs is payable within a fortnight from the intimation of fact of obtaining exemption order from the Urban Land Ceiling Authority by the company. As per Clause (14) of the agreement, the company has to liquidate its liability to Andhra Pradesh Industrial Development Corporation ("APIDC") and obtain original documents of title within five months from the date of the agreement. Some delay occurred in getting clearance from the Urban Land Ceiling Authority by the company. The applicant claims to have spent considerable amount in carrying out the developmental activity pursuant to the said agreement. The company took the stand that the applicant failed to pay balance security deposit amount of Rs.15 lakhs as per Clause 3(d) of the agreement and thereby, it issued letter dated 18.4.2000 terminating the agreement.The Supreme Court after taking into consideration the economic reforms in the country reduced the rate of interest awarded by the arbitrators from 18% to 9%, vide decision of the Supreme Court in=compensation not to be given for any remote or indirect loss or damage sustained by reason of breach of contract. Awarding of damages by Arbitrator on the claim made by contractor that he would have earned more profit if money due to him is paid in time is unsustainable as it is too remote a claim to be allowed.

THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY C.A.No.480 of 2007 In C.P.No.113 of 2002 12-07-2010 A.Sridhar Lakshman M/s.Merbanc Financial Services Ltd. Rep. by Official Liquidator and others !Counsel for the Applicants: Sri P.Vinayaka Swamy Counsel for the Respondents: Sri M.Anil Kumar for Official Liquidator Sri S.Sriram Reddy for respondent No.5 :ORDER: This application under Section 34 … Continue reading

Estate Duty Act 34 of 1953—Section 10–Gift of fixed deposit receipts –Donor retaining important benefits–If donee can be said to assume immediately bona fide possession and enjoyment within meaning of s. 10.

PETITIONER: SATYANARAYANA MODI Vs. RESPONDENT: THE CONTROLLER OF ESTATE DUTY, DELHI AND RAJASTHAN,NEW DATE OF JUDGMENT: 31/07/1969 BENCH: SHAH, J.C. (CJ) BENCH: SHAH, J.C. (CJ) RAMASWAMI, V. GROVER, A.N. CITATION: 1970 AIR 322 1970 SCR (1) 712 1969 SCC (2) 380 ACT: Estate Duty Act 34 of 1953—Section 10–Gift of fixed deposit receipts –Donor retaining … Continue reading

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