https://www.taxtmi.com/caselaws?id=97397 A company transaction under a court-sanctioned scheme is not automatically void merely because the repayment terms depart from the contemplated machinery; where the borrowing power existed, the advance matched the intended purpose, and only the mode of performance differed, the mortgage was not ultra vires, though it was defective in part. A lender cannot claim subrogation to an earlier mortgagee's rights if the underlying borrowing itself is invalid in law. Even so, equity may protect a lender who applied the advance to discharge the company's prior legitimate liabilities, allowing retention of possession where no innocent third-party interests are prejudiced. The challenge to the mortgage failed and the suit was dismissed with costs. en-us Tue, 02 Aug 1955 00:00:00 +0530 Mon, 16 Jan 2012 15:05:57 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=97397 A company transaction under a court-sanctioned scheme is not automatically void merely because the repayment terms depart from the contemplated machinery; where the borrowing power existed, the advance matched the intended purpose, and only the mode of performance differed, the mortgage was not ultra vires, though it was defective in part. A lender cannot claim subrogation to an earlier mortgagee's rights if the underlying borrowing itself is invalid in law. Even so, equity may protect a lender who applied the advance to discharge the company's prior legitimate liabilities, allowing retention of possession where no innocent third-party interests are prejudiced. The challenge to the mortgage failed and the suit was dismissed with costs. Case-Laws Companies Law Tue, 02 Aug 1955 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=97397