Query on Section 293(1)(a)

Any responses for this query, please.

According to me it would not depend on the value of the asset being disposed off.  It would depend on the effect it had on its normal  earning capacity.

Further creating equitable mortgage would not be covered under section 293(1)(a) but would be covered under Section 372A.

Other experts please give your opinion.

Other views also solicited on the first part of the query.

Hi

I partly agree with Jayashree. For part I, i understand value of asset equally matters as earning capacity matters. Both factors need to be attened while deciding the same.

For part two, when company borrows money for its own purposes by mortgage / creats charge on its property, , resolution under 293(1) (a) and (d), if borrowings exceeds the specified limites, are required to be passed. Resolution u/s 293(1) (a) becomes applicable as soon as company creates charge / mortgage its assets as creating charge / mortgage also comes under this purview. Does not it also applicable when company mortgage for providing security for other group company??.  I agree on the applicability of section 372A as stated by jayashree.

please opine

Regards- Sudhir

The meaning of 'substantially the whole of the undertaking' is still not fully clear to me. Please discuss.

Creating equitable mortgage would not be covered under section 293(1)(a).

Just read the following case in respect to requirement of 293 1 a:

Sree Yellamma Cotton, Woollen And ... vs Official Liquidator, High Court ... on 30 August, 1968 (https://indiankanoon.org/doc/584284/)

The verdict was that it is not required for creation of mortgage or for hypothecation and the bank can sell off land and buildings and movable fixed assets without resolution under 293 (1) a.

Kindly suggest.