Bona fide transfer in winding-up proceedings failed where undervalue and surrounding circumstances showed lack of good faith.

A transfer of a company's property was examined for bona fide purchase, fair market value and protection against challenge in winding-up proceedings. The court considered the apparent undervalue, the hurried execution, the payment of substantial additional stamp duty, doubtful delivery of possession, and the lack of convincing evidence that the sale was made in the ordinary course or for the genuine benefit of the company and its creditors. Permission from income-tax authorities was treated as non-conclusive on market value or good faith. The transaction was found not to bear the indicia of a bona fide transfer for value in good faith, so the appellant could not sustain the transfer against the winding-up challenge.

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Issues: Whether the sale of the company's property in favour of the appellant was bona fide, for fair market value, and binding so as to withstand challenge in the winding-up proceedings.

Analysis: The sale was scrutinised against the surrounding circumstances, including the disparity between the stated consideration and the material indicating a much higher value, the hurried completion of the transaction, the payment of substantial additional stamp duty, the doubtful delivery of possession, and the absence of convincing material showing that the transaction was carried out in the ordinary course or for the genuine benefit of the company and its creditors. Permission obtained from the income-tax authorities was treated as not conclusive of market value or good faith. The Court found that the transaction did not bear the indicia of a bona fide purchase for value in good faith and that the appellant had not established entitlement to protect the transfer against the winding-up challenge.

Conclusion: The transaction was not upheld as a bona fide and binding transfer immune from challenge in the winding-up proceedings, and the claim of the appellant failed.

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