Fraudulent preference and post-winding-up disposition rules invalidate preferential book-entry transfers, while estoppel does not bar the liquidator.

Transfer of a company's property by book entries can amount to a fraudulent preference where the surrounding circumstances show an intention to favour one creditor, and such a transaction is invalid in winding up. The note also explains that a disposition made after commencement of winding up is void unless the court otherwise orders, so book entries effected after presentation of the winding-up petition fall within that prohibition. It further states that estoppel will not prevent the official liquidator from challenging the transaction absent proof of detrimental change of position, and that a mere statutory admission of claim does not create an estoppel.

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Issues: (i) Whether the transfer effected by entries in the bank's books amounted to a fraudulent preference in favour of one creditor; (ii) Whether the transaction was void as a disposition of the company's property made after the commencement of winding up; (iii) Whether the official liquidator was estopped from challenging the transaction.

Issue (i): Whether the transfer effected by entries in the bank's books amounted to a fraudulent preference in favour of one creditor.

Analysis: Under section 231(1) of the Indian Companies Act, 1913, any act relating to the company's property which would constitute a fraudulent preference in insolvency is invalid in winding up. The evidence showed that the bank was insolvent, that both concerned parties were aware of its condition, that the transaction was not supported by genuine pressure, and that the benefit to the bank was illusory because the debtor was solvent. The surrounding circumstances pointed to a deliberate arrangement to favour one creditor over the others.

Conclusion: The transaction was a fraudulent preference and was invalid.

Issue (ii): Whether the transaction was void as a disposition of the company's property made after the commencement of winding up.

Analysis: Section 227(2) of the Indian Companies Act, 1913 renders void dispositions of company property made after the commencement of winding up unless the court otherwise orders. The evidence accepted by the Court established that the book entries were made after the winding up petition had been presented, so the transfer was effected after the commencement of winding up and fell within the statutory prohibition.

Conclusion: The transaction was void as a post-commencement disposition.

Issue (iii): Whether the official liquidator was estopped from challenging the transaction.

Analysis: The plea of estoppel failed because no alteration of position to the respondent's detriment was shown. The liquidator's conduct in admitting the claim only reflected the statutory scheme under section 43 of the Banking Companies Act and was expressly subject to the disputed preference.

Conclusion: The plea of estoppel was rejected.

Final Conclusion: The impugned book-entry transaction could not stand in winding up and was set aside, with the creditor paid only as an ordinary creditor and the respondent directed to make restitution with costs.

Ratio Decidendi: In a company winding up, a transaction that transfers the company's property to prefer one creditor over others, or that is effected after the commencement of winding up, is void and liable to be set aside; a bare admission of a claim under the statutory books does not create estoppel against the liquidator.

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