1. Cash Payment — Written agreement of sale fixing a specific amount as price. A mere suspicion on the builders that they accepted sale amount in cash could not be accepted.

When the terms of transaction were reduced to writing, it was impossible to lead evidence to contradict terms thereof in view of section 91 of the Evidence Act. Further there was no evidence nor any document to show that any payment over and above the consideration mentioned in the registered document was received.

A mere suspicion that builders in the country were prone to take a part of the sale amount in cash was no ground to accept the story of payment of cash.

Bhandari Construction Co. vs. Narayan Gopal Upadhye (2007) 3 SCC 163

2. Crowns Debts — Banks been secured creditor have precedence over Central Excise claim as well as Customs claim

Generally, the debts to Government; i.e., tax, dues, etc. (crowns debts) get priority over ordinary debts. Only when there is a specific provision in the statute claiming ‘first charge’ over the property, the crowns debt is entitled to have priority over the claim of others. In the absence of such specific provision in the Central Excise Act as well as in Customs Act claim of secured creditor will prevail over Crown’s debts.

UTI Bank Ltd. vs. The Dy. Commissioner of Central Excise, Chennai & Anr. AIR 2007 Madras 118 (FB)

3. Banking Company — Co-operative banks transacting the business of banking do not fall within meaning of banking company

The Hon’ble Apex Court while deciding the issue under Recovery of Debts Due to Banks and Financial Institution Act, 1993 observed that Co-operative banks established under the Maharashtra Co-op. Societies Act, 1960 (MCS Act, 1960); the Andhra Pradesh Co-op. Societies Act. 1964 (APCS Act. 1964); and the Multi State Co-op. Societies Act, 2002 (MSCS Act, 2002) transacting the business of banking, do not fall within the meaning of ‘banking company’ as defined in S. 5(c) of the Banking Regulation Act, 1949 (BR Act). Therefore, the provisions of the Recovery of Debts Due to Banks and Financial Inst. Act, 1993 (RDB Act) by invoking the Doctrine of Incorporation are not applicable to the recovery of dues by the co-operative from their members. Even if the co-operative are involved in the activity of banking which involves lending and borrowing, this is purely incidental to their main co-operative activity which is a function in public domain.

Greater Bombay Co-op. Bank Ltd. vs. United Yarn Tex Pvt. Ltd. & Ors. AIR 2007 SC 1584

4. Hand Loan — Hand loan between relatives is not a commercial transaction

The plaintiff and the defendant were relatives of each other. The defendant in order to start his business took a loan from the plaintiff. There was no agreement entered into between the parties to pay interest. The plaintiff claimed interest rate @ 15% per annum on the basis that the transaction was a commercial transaction.

The Hon’ble Court held that the parties been relatives the taking of hand loan, for whatever purpose, cannot come within the definition of commercial transaction and therefore the rate of future interest must be restricted to 6% per annum.

Mangesh Rajkumar Kanhed vs. Ramesh Bhagwansa Walale AIR 2007 Bombay 86

5. Hindu Undivided Family — Alienation of joint family property by Karta: Hindu Law

A karta has power to alienate for value the joint family property either for necessity or for benefit of the estate. He can alienate with the consent of all the coparceners of the family. When he alienates for legal necessity he alienates an interest which is larger than his undividual interest. When the Karta, however, conveys by way of imprudent transaction, the alienation is voidable to the extent of the undivided share of the non consenting coparcener.

Subodhkumar & Ors. vs. Bhagwant Namdeorao Mehetre & Ors. AIR 2007 SC 1324

6. Director — Dishonour of cheque by company liability of Chairman or Director

The Hon’ble Apex Court held that a chairman of a company may or may not be aware of the
day-to-day affairs of the company. If in a given situation cheques are issued in the ordinary course of business, the Managing Director or a Dy. Managing Director would be deemed to be aware about the transaction in view of the decision of Apex Court in S.M.S. Pharmaceautical Ltd. vs. Neeta Bhalla (2005) 8 SCC 89. However, a Chairman or a Director of a company need not be.

Everest Advertising P. Ltd. vs. State Govt. of NCT of Delhi & Ors. (2007) 137 Comp. Cas 32 (SC)

7. Negotiable Instruments Act — Offence gets completed on the failure of the drawer of the cheque to comply with the notice of demand issued u/s. 138(b) of Negotiable Instruments Act 1881

The Hon’ble Bombay High Court held that no drawer of a cheque can be absolved of his liability under section 138 of the Act if he makes the payment after the notice but before the filing of the complaint and the offence gets completed on the failure of the drawer of the cheque to comply with the notice of the demand as contemplated by proviso (b) to sec. 138 of the Act. Any subsequent payment by the drawer of the cheque after failure to comply with the notice either before or after filing the complaint, could be taken only towards the mitigation of the sentence to be imposed upon the drawer of the cheque; i.e., the accused in a given case.

William Rosario Fernandes vs. M/s. Cabral & Co. Anr. 2007 (2) AIR BOM R 288