Bona fide pre-winding-up transfer protected where later winding-up petitions were barred by BIFR proceedings.

Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred later winding-up petitions once the BIFR reference had been registered and rehabilitation proceedings had begun, so those petitions could not be treated as the relevant commencement of winding up under the Companies Act, 1956. On the facts, the applicant's purchase of the Free Press House premises was completed before any valid commencement date, and there was no injunction, fraud, collusion, or undervaluation. The transfers were therefore treated as bona fide dispositions protected by the Court's discretion under Section 536(2) and were not void.

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Issues: (i) Whether the winding-up petitions filed after the registered BIFR reference were maintainable and could support commencement of winding up for the purposes of the Companies Act, 1956. (ii) Whether the transfers of the Free Press House premises in favour of the applicant were hit by Section 536(2) of the Companies Act, 1956 or could be protected in the exercise of the Court's discretion.

Issue (i): Whether the winding-up petitions filed after the registered BIFR reference were maintainable and could support commencement of winding up for the purposes of the Companies Act, 1956.

Analysis: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred proceedings for winding up from lying or being proceeded with once the reference had been registered and was under consideration. The later winding-up petitions were filed after the reference had been registered and after rehabilitation steps had commenced. They were therefore not maintainable. The valid winding-up date for Section 441 purposes could not be taken from those petitions. The only effective petition for commencement purposes was the later BIFR-recommended petition, by which time the applicant's purchase had already been completed.

Conclusion: The later winding-up petitions did not lie and could not determine commencement of winding up against the applicant.

Issue (ii): Whether the transfers of the Free Press House premises in favour of the applicant were hit by Section 536(2) of the Companies Act, 1956 or could be protected in the exercise of the Court's discretion.

Analysis: Section 536(2) operates in relation to dispositions made after commencement of winding up, read with Section 441 of the Companies Act, 1956. On the facts, the applicant's purchase was completed before any valid commencement date relevant to the case. There was no injunction from the BIFR, no proved restraint that could invalidate the sale, and the transactions were found to be bona fide, at fair market value, and without fraud, collusion, or undervaluation. The Court also treated the discretionary words in Section 536(2), including the power to otherwise order, as requiring protection of honest transactions.

Conclusion: The transfers in favour of the applicant were upheld and were not declared void under Section 536(2) of the Companies Act, 1956.

Final Conclusion: The applicant's purchase was protected, the challenged transfers were declared valid, and the Official Liquidator was held to have no claim over the property.

Ratio Decidendi: A bona fide and completed transfer made before the valid commencement of winding up is not void under Section 536(2) of the Companies Act, 1956, and Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 prevents later winding-up petitions from being treated as maintainable for commencement purposes.

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