https://www.taxtmi.com/caselaws?id=354487 Section 536(2) of the Companies Act, 1956 permits validation of post-commencement dispositions only where the transaction is honest, bona fide, in the ordinary course of business, and beneficial to the company and its creditors. The Court also treated creditor equality as a central consideration and looked for commercial necessity to keep the company operational. On the stated facts, the later mortgage and sale documents were inconsistent and undervalued, no security had been created when earlier loans were advanced, and the arrangements appeared to confer a preferential charge in favour of one creditor after winding up had materially advanced. Validation was therefore refused. en-us Fri, 22 Dec 2017 00:00:00 +0530 Tue, 30 Jan 2018 11:07:47 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=354487 Section 536(2) of the Companies Act, 1956 permits validation of post-commencement dispositions only where the transaction is honest, bona fide, in the ordinary course of business, and beneficial to the company and its creditors. The Court also treated creditor equality as a central consideration and looked for commercial necessity to keep the company operational. On the stated facts, the later mortgage and sale documents were inconsistent and undervalued, no security had been created when earlier loans were advanced, and the arrangements appeared to confer a preferential charge in favour of one creditor after winding up had materially advanced. Validation was therefore refused. Case-Laws Companies Law Fri, 22 Dec 2017 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=354487