16/12/2021

The writs of Certiorari, Prohibition, Mandamus, Habeas Corpus, Quo Warranto should not be issued on mere asking – Prashant Shashi Ruia Vs. State Bank of India – Gujarat High Court

The Hon’ble High Court held that the writs of mandamus, certiorari and prohibition, and for the matter of that, all high prerogative writs, are ordinarily not issued where there exists an alternative remedy equally efficient and adequate. In the following cases it has been held that a writ of prohibition will be issued notwithstanding an alternative remedy, whether under a statutory provision or otherwise:- (i) Where an inferior tribunal assumes jurisdiction and the want of jurisdiction is patent on the face of it; (ii) where the proceedings complained of are against the principles of natural justice; and (iii) where the alternative remedy is too costly or ineffective or entails such delay that the applicant would be irreparably prejudiced or the remedy might prove valueless. The Court also held that any scheme or plan that is approved by a court or Tribunal becomes a statutory scheme and is, therefore, an act of operation of law. Under the IBC, the Corporate Debtor is discharged by the operation of law.

The writs of Certiorari, Prohibition, Mandamus, Habeas Corpus, Quo Warranto should not be issued on mere asking – Prashant Shashi Ruia Vs. State Bank of India – Gujarat High Court Read Post »

Whether Share Application Money in the event of non-allotment of shares, be treated as Loan/Debt and whether such an amount falls under the definition of Financial Debt as defined under Section 5(8) of the Code – Mr. Kushan Mitra Vs. Mr. Amit Goel – NCLAT New Delhi

In the instant case, allotment of equity shares on preferential basis by Private Placement Offer was done and subsequently revoked. NCLAT held that the money given by the First Respondent indeed falls within the definition of Share Application Money. On issues of Financial Debt under IBC, NCLAT held that if the Shares are not allotted within 60 days of receiving the Share Application Money, and if the refund does not take place within 15 days form the expiry of 60 days time limit, then this amount will be treated as a Deposit, advanced to the Company, which has to be returned by the Company at the rate of 12 percent per annum from the expiry of the 60th day. Thus the concerned person would get compensation for the time value of money given by him to the Company which changes the nature and character of the money so given. Although the amount was initially paid towards Shares, since the allotment was revoked, the equity did not materialise. Thereafter, by operation of law, Section 42(6) of the Companies Act, 2013, the amount has statutorily been given the character of loan with interest. Same is the case of amounts paid as optionally convertible debentures. It held that share Application Money in the event of non-allotment of shares, attracts interest under Section 42(6) of the Companies Act, 2013 and therefore falls within the ambit of definition of Financial Debt as defined under Section 5(8) of the Code.

Whether Share Application Money in the event of non-allotment of shares, be treated as Loan/Debt and whether such an amount falls under the definition of Financial Debt as defined under Section 5(8) of the Code – Mr. Kushan Mitra Vs. Mr. Amit Goel – NCLAT New Delhi Read Post »

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