Post-petition auction sales in winding up are not automatically void where the court can validate the transfer.

A post-petition transfer in winding up is not automatically void ab initio under Section 536(2) of the Companies Act, 1956, because the Court retains power to validate the transaction. Where the auction sale of company property had already been challenged in writ proceedings and that sale had attained finality, the Official Liquidator could not reopen the concluded issue or seek cancellation again. The prior judicial determination and the application of sale proceeds toward company liabilities supported rejection of the later challenge.

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Issues: Whether the auction sale of the company's property, conducted after presentation of the winding up petition, was void under Section 536(2) of the Companies Act, 1956 and liable to be set aside at the instance of the Official Liquidator.

Analysis: Section 441(2) deems winding up to commence from the date of presentation of the petition, and Section 536(2) renders post-commencement dispositions void unless the Court otherwise orders. The sale in question had already been challenged by the company in writ proceedings and those challenges had failed, with the sale attaining finality. The provision in Section 536(2) does not make every post-petition transfer automatically void ab initio, because the Court retains power to validate the transaction. In the facts found, the earlier judicial determination and the utilisation of sale proceeds towards company liabilities meant that the Official Liquidator could not reopen the concluded issue.

Conclusion: The auction sale was not treated as void ab initio, and the Official Liquidator could not maintain the application to cancel it.

Final Conclusion: The challenge to the auction sale failed, and the application was rejected as meritless.

Ratio Decidendi: A post-petition transfer in winding up is not automatically void ab initio under Section 536(2) of the Companies Act, 1956, because the Court may validate it and a concluded judicial determination upholding the sale cannot be re-agitated by the Official Liquidator.

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