Transfers of property by a company within six months of the winding-up petition are void if they are fraudulent preferences, not made in the ordinary course of business, or not made in good faith for valuable consideration.

VS.K. Singhal, J.-This matter has come up on the application of the creditors that the transfers made by the company be declared as fraudulent under Sections 531 and 53 1A of the Companies Act.

2. The facts of the case are that Company Petition No. 4 of 1991 was filed on March 13, 1991, for winding up of Ashoka Oil Products Pvt. Ltd. It was alleged that the properties of the company were being transferred fraudulently to defraud the creditors. Notice was issued by this Court on March 15, 1991. The official liquidator was directed by the order dated April 12, 1991, to identify the property of the company which has not been transferred. On May 17, 1991, it was found that all the assets of the company had been sold under registered sale deeds before moving the application for winding up of the company. Notices were issued to 75 persons to whom the property was alleged to have been transferred. The report of the official liquidator was received and it was pointed out by learned Counsel for the petitioner on February 28, 1992, that the movable and immovable property has been transferred to defendants Nos. 4 to 76. The machinery of the company is likely to be transferred or sold. On September 18, 1992, Mr. Kuhad pleaded no instructions on behalf of respondents Nos. 4 to 76. No reply was filed and, therefore, it was directed that the properties be taken in possession by the provisional official liquidator so that they may not be transferred and sold hereinafter. Meena, official liquidator was authorised to take the possession of the factory, Ashoka Oil Products Pvt. Ltd., situated at Kherli District Alwar and seal the same. The Superintendent of Police was directed to provide sufficient police force and assistance to Meena to enable him to execute the order of this Court. The information regarding appointment of a provisional official liquidator was also given.

3. It has come on record that the sale deed was executed on December 3, 1990/December 5, 1990, which is alleged to be a mala fide act on the part of the directors.

4. It may be observed that Miss Gayatri Rathore sought time to file reply on February 28, 1992, but reply was not filed. C. P. Khemka was appointed as Commissioner on October 23, 1992, to verify the inventory of the movable/immovable properties of the company in liquidation. No goods were found in the premises. The almirah was found locked, but nobody could provide the keys to the commissioner. Power was filed on behalf of the respondents Nos. 4, 14 and 40 by Mr. Kuhad. For the rest of the respondents a prayer was made on May 14, 1993, to serve notice by publication in the newspapers. The directors of the company were directed to appear, Bailable warrants for producing documents were not executed. Notices which were issued by this Court from time to time were not complied with and, therefore, separate action for presence of the directors is being taken.

5. The controversy is with regard to transfer of movable/immovable properties of the company. The relevant provisions of Section 531/53 1A of the Companies Act read as under “531. Fraudulent preference.--(1) Any transfer of property, movable or immovable, delivery of goods, payment, execution or other act relating to property made, taken or done by or against a company within six months before the commencement of its winding up which, had it been made, taken or done by or against an ‘individual within three months before the presentation of an insolvency petition on which he is adjudged insolvent, would be deemed in his insolvency a fraudulent preference, shall in the event of the company being wound up, be deemed a fraudulent preference of its creditors and be invalid accordingly: Provided that, in relation to things made, taken or done before the commencement of this Act, this sub-section shall have effect with the substitution, for the reference to six months, of a reference to three months.

(2) For the purposes of Sub-section (1), the presentation of a p