- (1.) THESE seven company petitions bearing Nos. 82, 84, 107, 109, 129, 138 and 140 of 1978 filed by the official liquidator and Maruti Udyog Ltd. can be conveniently disposed of by one order as the questions of law involved in them are common though some facts, as would be noticed in the later part of the judgment, are different. The primary question which arises for consideration in these proceedings is whether the impugned transactions of transferring goods by Maruti Ltd. , Gurgaon, to different parties which have been arrayed as respondent No. 1 in these petitions are void ab initio or liable to be annulled by this court under the provisions of Sections 531 and 531a of the Companies Act, 1956 (for short, "the Act" ).
(2.) BEFORE examining the merits of each case, I shall first refer to the scope of the provisions of Sections 531 and 531a of the Act under which the transfers made are sought to be challenged. These provisions are reproduced hereunder for facility of reference : "531. (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 petition for winding up in the case of a winding up by or subject to the supervision of the court, and the passing of a resolution for winding up in the case of a voluntary winding up, shall be deemed to correspond to an act of insolvency in the case of an individual. 531a. Any transfer of property, movable or immovable, or any delivery of goods, made by a company, not being a transfer or delivery made in the ordinary course of its business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration, if made within a period of one year before the presentation of a petition for winding up by or subject to the supervision of the court or the passing of a resolution for voluntary winding up of the company, shall be void against the liquidator. "
(3.) IN order to avoid a transfer of property by a debtor in favour of a creditor oh the ground of its being a fraudulent preference it has to be shown that the debtor has transferred the property with intent to prefer the creditor and that his act is free and volitional. It is, indeed, the state of mind of the debtor that has to be seen to determine whether he acted in a manner solely with a view to prefer the creditor to the exclusion of others. If the transfer takes place not with a view to prefer one of the creditors but to save the debtor's own skin either because of a threat of prosecution or to avoid prosecution or because of any other threat, actual or threatened, by the creditor concerned, the transfer or payment in such circumstances cannot be termed as a fraudulent preference. Fraudulent preference would mean preferring one creditor to another and that too fraudulently. To set aside a transaction under Section 531 of the Act fraud must be clearly alleged, proved and established and mere general allegations using statutory words or language but lacking in material particulars would not suffice. If the transaction of transfer amounts to a fraudulent preference under the bankruptcy law or insolvency law and is entered into within a period of six months prior to the commencement of the winding up then alone the transaction in question can be treated as void under Section 531 (1) of the Act and not otherwise. It cannot be said that every transaction of transfer of property effected within six months before the commencement of the winding up of the company without anything more must be treated as a fraudulent preference within the meaning of this section and nothing more need be enquired into. In other words, law does not presume a transaction to be a fraudulent preference merely because it was entered into within a period of six months prior to the commencement of winding up.;