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CS Professional · Insolvency and Bankruptcy - Law and Practice · Winding-Up by Tribunal

Kaveri Pumps Ltd transferred a plot of land to its promoter's relative for a nominal sum eight months before a winding-up petition was presented against it. The transfer was not in the ordinary course of business and the relative did not act in good faith for valuable consideration. Against whom and in what manner is the transfer void?

The transfer is void against the Company Liquidator. Section 329 voids transfers of property made within one year before presentation of the winding-up petition, unless made in the ordinary course of business or to a good-faith purchaser for valuable consideration. Neither exception applies here.

  1. AVoid against the Company Liquidator, as it was within one year before presentation of the petitionCorrect
  2. BVoid against the Registrar of Companies only
  3. CValid, because it was made before the petition was presented
  4. DVoid only if the Tribunal had already passed the winding-up order

Explanation

Under section 329, a transfer of property not in the ordinary course of business or in favour of a good-faith purchaser for valuable consideration, made within one year before presentation of the petition, is void against the Company Liquidator. Eight months is within one year and the exceptions are not met. The option calling it valid ignores the look-back period.

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