Bona fide pre-winding-up sale upheld, while ex-directors faced liability for concealing and suppressing sale proceeds.

A bona fide pre-winding-up transfer to subsequent purchasers was not disturbed because the property had been sold before the winding-up process materially advanced and no collusion was shown. The purchasers' title was therefore left intact. By contrast, the ex-directors were found accountable for concealing and not disclosing the sale proceeds to the Official Liquidator, with incomplete company and bank records supporting fraudulent non-disclosure. They were held jointly and severally liable to pay the sale consideration with penal interest, and non-compliance would expose them to prosecution.

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Issues: (i) Whether the sale of the company property in favour of the subsequent purchasers could be set aside under the winding-up provisions; (ii) Whether the ex-directors were liable under the penal provision for concealment and non-disclosure of the sale proceeds.

Issue (i): Whether the sale of the company property in favour of the subsequent purchasers could be set aside under the winding-up provisions.

Analysis: The property had been sold before the winding-up process materially advanced, and third-party rights had already come into existence. No material was found to show collusion between the ex-directors and the purchasers. The purchasers were treated as having acquired the property bona fide, and the record did not support setting aside their title.

Conclusion: The sale was not interfered with and no relief was granted against the bona fide purchasers.

Issue (ii): Whether the ex-directors were liable under the penal provision for concealment and non-disclosure of the sale proceeds.

Analysis: The sale consideration was not disclosed to the Official Liquidator during the winding-up proceedings, and the company records and bank disclosures were found to be incomplete. The Court held the ex-directors accountable for fraudulent concealment of the transaction and misappropriation of the sale proceeds, which prevented availability of the funds for creditors.

Conclusion: The ex-directors were held liable to pay the sale consideration of Rs. 3,60,000/- with penal interest at 12% per annum from the date of sale, jointly and severally, and failure to comply would expose them to prosecution.

Final Conclusion: The winding-up applications were disposed of by declining relief against the purchasers but granting monetary and penal relief against the ex-directors for concealment of company assets and sale proceeds.

Ratio Decidendi: In winding-up proceedings, a bona fide pre-winding-up transfer to third parties will not be set aside absent collusion, but ex-directors who suppress or conceal sale proceeds of company assets may be made jointly and severally liable and exposed to prosecution under the penal provisions governing liquidation.

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