Companies Act-Supreme Court

Should Special Court first issue a summon even in a warrant case, irrespective of the gravity or seriousness of the offence? | Is an accused in serious fraud cases (SFIO) under the Companies Act, 2013 entitled to invoke extraordinary power of court to grant anticipatory bail when a warrant of arrest is issued or proclamation proceedings are initiated? – Serious Fraud Investigation Office (SFIO) Vs. Aditya Sarda – Supreme Court

This judgment covers:
A. Economic offences
B. Non-bailable warrant and anticipatory bail under Serious Fraud Cases
C. Should the Special Court have issued a summons only to the respondents-accused and not a warrant, if the respondents were not arrested by the SFIO during the course of investigation till the filing of the complaint?
D. Present Case
E. Disposed Of

Should Special Court first issue a summon even in a warrant case, irrespective of the gravity or seriousness of the offence? | Is an accused in serious fraud cases (SFIO) under the Companies Act, 2013 entitled to invoke extraordinary power of court to grant anticipatory bail when a warrant of arrest is issued or proclamation proceedings are initiated? – Serious Fraud Investigation Office (SFIO) Vs. Aditya Sarda – Supreme Court Read Post »

If cause of action under Section 138 of the NI Act arises after the imposition of moratorium under Section 14 of the IBC, proceedings u/s 138 cannot be initiated against director/ natural person, even if the cheque was dishonored before the moratorium was imposed – Vishnoo Mittal Vs. Shakti Trading Company – Supreme Court

This judgment covers:
A. Exceptional of P. Mohan Raj judgment
B. Cause of action under Section 138 NI Act
C. Cheques dishonoured after imposition of moratorium under Section 17 of IBC
D. Conclusion

If cause of action under Section 138 of the NI Act arises after the imposition of moratorium under Section 14 of the IBC, proceedings u/s 138 cannot be initiated against director/ natural person, even if the cheque was dishonored before the moratorium was imposed – Vishnoo Mittal Vs. Shakti Trading Company – Supreme Court Read Post »

The mere fact that Directors attended board meetings does not suffice to impose financial liability for bounced cheques, as such attendance does not automatically translate into control over financial operations – K. S. Mehta Vs. Morgan Securities and Credits Pvt. Ltd. – Supreme Court

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The mere fact that Directors attended board meetings does not suffice to impose financial liability for bounced cheques, as such attendance does not automatically translate into control over financial operations – K. S. Mehta Vs. Morgan Securities and Credits Pvt. Ltd. – Supreme Court Read Post »

Can Section 14 of the Limitation Act, 1963 be applied for excluding the period spent for prosecuting the review petition? – Bajaj Promoters Pvt. Ltd. Vs. The Registrar of Companies, Chennai – Supreme Court

In this case, Hon’ble NCLAT held that Section 14 of the Limitation Act, 1963 cannot be applied for excluding the period spent for prosecuting the review petition. The appellant submitted, in fact, while rejecting the review petition, the NCLT held that the review petition was not maintainable and, hence, the NCLT did not have the jurisdiction to entertain the review petition.
Hon’ble Supreme Court held that to the above extent, the learned counsel appearing for the appellant is right in the sense that in view of the findings recorded by the NCLT on the review petition, the time consumed in prosecuting the review petition ought to have been excluded.

Can Section 14 of the Limitation Act, 1963 be applied for excluding the period spent for prosecuting the review petition? – Bajaj Promoters Pvt. Ltd. Vs. The Registrar of Companies, Chennai – Supreme Court Read Post »

Landmark judgment on Equitable Mortgage and Priority of Charge – The Cosmos Co. Operative Bank Ltd. Vs. Central Bank of India and Ors. – Supreme Court

This judgment covers:

A. A contract of sale/ an agreement of sale does not itself create any interest in or charge on any property
B. Concept of Legal Mortgage and Equitable Mortgage
B.1 Legal Mortgage
B.2 Equitable Mortgage
B.3 Distinction between a Legal Mortgage and an Equitable Mortgage
B.4 Nature of an Equitable Mortgage
C. Priority of First Charge/ Mortgage in case of multiple Equitable Mortgages are created
C.1 Any rights flowing from Equitable mortgages are only of personal character and only rights in personam
C.2 Equitable Mortgage being a right in personam will not be enforceable against successive mortgagees
C.3 Even if multiple equitable mortgages are created, the first charge will have priority
D. Section 78 of the Transfer of Property Act, 1882
E. Distinction between Mortgage by Deposit of Title Deeds under the English Law and under the Transfer of Property Act, 1882
E.1 A mortgage by deposit of title deeds is for all purposes a ‘legal mortgage’ and not an equitable mortgage
E.2 An equitable mortgage would be subservient to a legal mortgage
F. Concept of Mortgage by depositing of title deeds
G. Equitable Mortgages are very much recognized in India under the nomenclature of “charge” in terms of Section 100 of the Act, 1882
H. Recourses are available to the lenders/ Bank
I. A transaction evidenced by the prior unregistered document is valid in itself
J. Present case
K. Conclusion

Landmark judgment on Equitable Mortgage and Priority of Charge – The Cosmos Co. Operative Bank Ltd. Vs. Central Bank of India and Ors. – Supreme Court Read Post »

A mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (NI Act) – Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Pvt. Ltd. and Anr. – Supreme Court

The Hon’ble Supreme Court held that:

(i) A mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (NI Act). Liability is contingent upon specific allegations demonstrating the director’s active involvement in the company’s affairs at the relevant time.
(ii) Mere directorship does not create automatic liability under the Act.
(iii) Non-executive directors cannot be held liable under section 138 NI Act unless specific evidence proves their active involvement.

A mere designation as a director does not conclusively establish liability under section 138 read with section 141 of the Negotiable Instruments Act, 1881 (NI Act) – Kamalkishor Shrigopal Taparia Vs. India Ener-Gen Pvt. Ltd. and Anr. – Supreme Court Read Post »

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