Literal Meaning
On an equal footing.
Explanation
This maxim refers to “equal footing” that describes situations where two or more assets, securities, creditors, or obligations are equally managed without preference.
Origin
Latin
Illustration
Pari Passu occurs during bankruptcy proceedings: When the court reaches a verdict, the court regards all creditors equally, and the trustee will repay them the same fractional amount as other creditors at the same time.
Case References
N.D. Jayal And Anr vs Union Of India AIR 2004 SC 867
In this case court explained the term pari passu. The lexical meaning of the Latin word pari passu is – at an equal rate or pace, with simultaneous progress, proportionately etc. This term is generally used in the context of creditors who, in marshalling assets, are entitled to receive out of the some fund without any precedence over each other. Anyway, the required application of its meaning in the background of the present case is clear. The works, which are fixed up as conditions attached to the clearance, will have to be carried out simultaneously with the engineering works. So by the time the engineering works finishes, the conditions should also have been fulfilled.
International Coach Builders Ltd vs Karnataka State Financial Corpn, (2003) 10 SCC 482
Court mentioned in the judgement of this case that ‘Pari Passu’ means “with equal steps, equally, without preference”. The rights of the pari passu charge holders would run equally, temporally and potently, with the rights of the secured creditors. The Official Liquidator, as the representative of the workmen, to enforce such pari passu charge would have the right of representing the workmen equally with the rights of the secured creditors.
CIT v. Gold Mohore Investment Co. Ltd. [1969] 74 ITR 62
It held that in the case of a dealer in shares who values his stock at cost, where bonus shares issued in respect of ordinary shares held by him rank pari passu with the original shares, the correct method of valuing the cost to the dealer of the bonus shares is to take the cost of the original shares, spread it over the original shares and the bonus shares collectively and find out the average of all the shares.
Edited by Sree Ramya
Approved & Published – Sakshi Raje
