Legal Question in Banking Law in India

Pari-Passu charge means what and how it works.
Main issue is once pari-passu is shared between two banks. one bank gets 80 % of receivables and other bank got only 20% in this case if the campany is bankrupt then the banks will have charge on the company's assets to there proportion percentage or banks need to share equally to the proportiate percentage even on earlier received receivables?

Asked on 7/02/09, 1:51 pm

4 Answers from Attorneys

Pranav Desai PD Legal & Associates

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Re: Pari-Passu charge means what and how it works.

already answered.

Answered on 7/07/09, 5:18 am

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J. Radhakrishnan independent Practice

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Re: Pari-Passu charge means what and how it works.

The principle behind pari passu charge is that the Banks to the agreement have charge on the security proportionate to their share in the advances/outstandings. As regards sharing of receipts, it depends upon interse agreement between the Banks. Pl. check the inter se agreement.If there is one,in case a Bank has received more than its share, it is possible for the bank which has received less than its share to compel the other bank to transfer the deficiency. If there is no such inter se agreement, it is not possible to ask the other bank which has received more than its share to pay to the bank which has received less than its share.

Answered on 7/02/09, 10:02 pm

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