Post-winding-up transfer validation failed where lack of authority, collusion, and absent registration defeated good faith protection.

A post-winding-up transfer of a flat made after appointment of the provisional liquidator was invalid because the ex-management lacked authority to deal with company assets. Section 536(2) of the Companies Act, 1956 permits validation only where the transaction was entered into in good faith, under compulsion of circumstances, in the ordinary course of trade, and for the company's benefit or preservation as a going concern; that test was not met here. The surrounding documents, delayed stamp duty, absence of registration, and other circumstances indicated collusion and an attempt to defeat creditors and the official liquidator. The agreement also failed the compulsory registration requirement relevant to part performance under Section 53A of the Transfer of Property Act, 1882.

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Issues: Whether the transfer of the flat after the winding-up order could be validated under Section 536(2) of the Companies Act, 1956 as a bona fide transaction in good faith and for the benefit of the company, or was void for want of authority, registration and bona fides.

Analysis: The transfer was effected after the order of winding up and after the appointment of the provisional liquidator, when the company's ex-management had no authority to deal with its assets. Section 531A of the Companies Act, 1956 had no application, while Section 536(2) made post-commencement transfers void unless the Court otherwise ordered. The accepted test for validating such a transaction is whether it was entered into under compulsion of circumstances, in good faith, in the ordinary course of trade, and for the benefit of the company or to preserve it as a going concern. On the facts, the transfer was not shown to satisfy that test; instead, the documents, timing of stamp duty, absence of registration, and surrounding circumstances pointed to collusion and an attempt to defeat the claims of the general body of creditors and the official liquidator. The agreement also offended the requirement of compulsory registration for a contract intended to operate as part performance under Section 53A of the Transfer of Property Act, 1882.

Conclusion: The transfer could not be validated under Section 536(2) and was rightly treated as void and not bona fide.

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