TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether the charge created in favour of the bank after commencement of winding up could be validated under section 227(2) of the Companies Act.
Analysis: Section 227(2) renders dispositions of company property made after commencement of winding up void unless the court otherwise orders. The discretion to validate is exercised where the transaction is bona fide and entered into in the ordinary course of the company's current trade, or where it is necessary to preserve the business as a going concern. The court found that the company had already accepted the inevitability of winding up, that the advances were made after appointment of the provisional liquidator, and that the evidence did not show the loans were required for ordinary trading or for genuine salvage of the business. The bank's bona fides alone were insufficient to displace the principle of pari passu distribution among creditors.
Conclusion: The charge was not validated and the application was rejected.
Ratio Decidendi: A post-commencement disposition of company assets will be validated only when it is shown to be a bona fide transaction in the ordinary course of business or necessary to preserve the company as a going concern; mere absence of fraud or knowledge of the petition is not enough to override pari passu distribution.
TaxTMI 
TaxTMI 
