Fraudulent preference requires proof of dominant fraudulent motive; a liquidator's unsanctioned order cannot conclusively defeat title.

A transfer made in discharge of a genuine debt was held not to be a fraudulent preference merely because it preferred one creditor, unless the impeaching party proved a dominant fraudulent motive. On the facts, the debt was genuinely due and the sale of the buses was treated as a bona fide arrangement to satisfy an existing liability, so the transfer was not liable to be set aside. The liquidator's order, made without court sanction, could not conclusively determine fraudulent preference in collateral proceedings or defeat the respondent's title. The buses-related appeal failed, while the connected appeal on the security amount succeeded.

---

---

Issues: (i) Whether the transfer of the buses to the respondent amounted to a fraudulent preference so as to be liable to be set aside; (ii) Whether the liquidator's order could be treated as conclusive and used to defeat the respondent's title in collateral proceedings.

Issue (i): Whether the transfer of the buses to the respondent amounted to a fraudulent preference so as to be liable to be set aside.

Analysis: A transfer made in discharge of a genuine debt is not impeachable merely because it prefers one creditor over another. The decisive question is the dominant motive behind the transfer, and the burden lies on the party impeaching the transaction to establish fraudulent preference. On the facts, the debt claimed by the respondent was found to be genuinely due, the company was under pressure from the pending suit and attachment proceedings, and the sale of the buses was treated as a bona fide arrangement made to satisfy an existing liability.

Conclusion: The transfer was not a fraudulent preference and could not be set aside on that ground.

Issue (ii): Whether the liquidator's order could be treated as conclusive and used to defeat the respondent's title in collateral proceedings.

Analysis: The statutory scheme placed the power to determine fraudulent preference with the Court, not the official liquidator. An order of the liquidator made without the sanction of the Court could not conclude the issue against the respondent in collateral proceedings, especially when the challenge before the Court was directed against the refusal to set aside the sale under the winding-up provisions. The liquidator's order therefore did not displace the respondent's possession or title.

Conclusion: The liquidator's order did not bar the respondent from resisting the appellant's claim in these proceedings.

Final Conclusion: The appeal concerning the buses failed, while the connected appeal relating to the security amount succeeded; the common judgment thus resulted in partial success for the appellant overall.

Ratio Decidendi: A transfer in favour of one creditor is not a fraudulent preference unless the impeaching party proves that the dominant motive was to prefer that creditor fraudulently, and an order of the official liquidator made without the Court's sanction cannot conclusively determine that issue in collateral proceedings.

---