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A single judge bench of Justice Shekhar B Saraf of Calcutta High Court held that the court has an inherit duty to protect honest businessmen from those who use unscrupulous means to cheat. It was observed that the courts have the duty to use their inherit powers in appropriate cases to achieve justice, equity and good conscience.
The present case was filed by a company named Tata Paras dealing in chemicals. The petitioner alleged that their distributers collaborated with their former employee to avail excess “credit note”through which they had been given discounts and rebates. The company asked for recovery of money from the distributers. An interim injunction under Order 39 Rule 1(b) was sought by the petitioner company to prevent the distributers from alienating their property during the pendency of the trail.
The court allowed the interim injunction and noted that a prima facie case of fraud has been established by the petitioner. Therefore the court observed that in cases of prima facie fraud, the threshold would be reduced for proving that the defendant is likely to dispose of property to defraud creditors in accordance with Order 39 Rule 1(b).
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