Slump sale and asset transfer scrutinised as preferential and undervalued where no registered conveyance passed title.

A slump sale agreement was treated as incapable of transferring completed title in immovable property where no registered conveyance deed had been executed, especially because the agreement itself contemplated registration for transfer. The absence of documentary support for the alleged unsecured loan forming part of the consideration further undermined the transaction. On the stated facts, the arrangement was regarded as preferential and undervalued, with indications of an attempt to defeat creditors, and the analysis also referred to wrongful trading. The challenge to the order failed, and the setting aside of the agreement together with return of the assets was upheld.

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Issues: Whether the slump sale agreement and the alleged transfer of the corporate debtor's assets were liable to be set aside as a preferential and undervalued transaction, and whether title in immovable property could pass in the absence of a registered conveyance deed.

Analysis: The agreement was not supported by documentary evidence establishing the alleged unsecured loan said to form part of the consideration. No registered sale or conveyance deed had been executed, though the agreement itself contemplated registration of the conveyance for transfer of the immovable property. In the circumstances, the arrangement was treated as doubtful and incapable of conferring completed title merely on the basis of an agreement to sell. The transaction was also found to be preferential and undervalued, with the facts indicating an attempt to defeat creditors, and the reasoning further referred to wrongful trading.

Conclusion: The challenge to the impugned order failed. The setting aside of the slump sale agreement and the direction for return of the assets were upheld.

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