Legal Reference Library

Applying the principles laid down by the Supreme Court in M/s Madhusudan Gordhandas & Co. vs Madhu Woollen Industries Pvt ltd, the division bench of Chief Justice Manjula Chellur and Justice MS Sonak has held that once the debt owed by a debtor company is established as undisputed then the court shall wind up the particular company. This was held while the bench was hearing an appeal against an order dated June 28, 2016 by the Company judge admitting the winding up petition against the appellant company and ordering the advertisement thereof in accordance with provisions of the Companies Act, 1956 and the Companies Court Rules, 1959. Although there is no dispute that the appellant company owes the respondent an amount of Rs.90.90 crores, the appellant company has contended that the respondents owe them Rs.152.57 crores in damages on “account of certain acts of omission and commission on part of the respondents.”  Zal Adhyarujina argued on behalf of the appellant c...

The Supreme Court in Axis bank vs. SBS Organics Private Limited has held that the partial deposit before the Debt Recovery Appellate Tribunal (DRAT) as a pre-condition for considering the appeal on merits in terms of Section 18 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), is neither a secured asset, nor a secured debt, and hence refundable to the appellant on disposal of appeal. Apex Court Bench comprising of Justices Kurian Joseph and R.F. Nariman made this observation while dismissing an appeal filed by Axis Bank against the Gujarat High Court Judgment wherein it was held that the deposit made before DRAT is refundable to the appellant therein. Section 18 of the SARFAESI Act states that, for the Tribunal to ‘entertain’ the appeal, the aggrieved person has to make a deposit of fifty per cent of the amount of debt due from him as claimed by the secured creditors or determined by the DRT, whichever is less. T...

The question whether cheques that bounced were issued in discharge of a debt/liability or it was only a security resurfaced in the Supreme Court in its judgment, Don Ayengia vs State of Assam. In this case, two parties agreed on building a multi-storied tower but later terminated the project. Don had given Rs 10 lakh to the other partner and he wanted it back. The partner issued a promissory note offering to pay the amount in a month. He also issued five cheques as 'security'. The payment was not made on time and the cheques were tendered to the bank, which rejected them due to 'insufficiency of funds'. Don prosecuted his partner and the trial court sentenced him to one year simple imprisonment and imposed compensation of Rs 12 lakh. On appeal, the district court changed the order to a fine of Rs 2,000 and payment of Rs 12 lakh. The Gauhati high court set aside all these orders maintaining that the payment was as security. Therefore, Don appealed to the Supreme Court. I...