Void assignment after commencement of winding up: transfers preferring one creditor over others are not protected as bona fide transactions.

Whether an assignment executed after commencement of winding up offends the statutory prohibition on post-commencement transfers was central. The court held that assignments that effectively transfer company assets to prefer one creditor over others are not protected as bona fide ordinary-course transactions and, absent prior sanction of the company court, fall within the mischief of the prohibition in section 227(2); accordingly the assignment was held void and the appeal dismissed.

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Issues: Whether an assignment of an agreement by a company made after the commencement of winding up proceedings is void under section 227(2) of the Indian Companies Act.

Analysis: The Court examined section 227(2) and the authorities relied upon, noting that while bona fide transactions carried out in the ordinary course of business may be excepted, an assignment which effects the transfer of a company asset to prefer one creditor over others cannot be treated as an ordinary-course bona fide transaction. The Court observed that the transaction could have been presented to and sanctioned by the company court but, in the absence of such sanction and given that winding up had commenced prior to the assignment, the assignment falls within the mischief of section 227(2).

Conclusion: The assignment is void under section 227(2) of the Indian Companies Act; the appeal is dismissed (decision in favour of the respondent).

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