https://www.taxtmi.com/caselaws?id=96866 Post-commencement conversion of an ordinary deposit into a security deposit is prima facie void under section 227(2) because it alters an unsecured creditor's position and creates preferential rights over company property. Validation depends on whether exceptional necessity, business preservation, or another justification would have warranted prior court approval, while protecting pari passu distribution among creditors. Knowledge of a pending winding-up petition and the resulting undue advantage weigh against validation. Absence of conscious fraud or fraudulent preference does not itself justify sustaining the disposition. The transaction was not validated, and the appellant's claim failed. en-us Fri, 26 Sep 1941 00:00:00 +0530 Wed, 11 Jan 2012 16:52:08 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=96866 Post-commencement conversion of an ordinary deposit into a security deposit is prima facie void under section 227(2) because it alters an unsecured creditor's position and creates preferential rights over company property. Validation depends on whether exceptional necessity, business preservation, or another justification would have warranted prior court approval, while protecting pari passu distribution among creditors. Knowledge of a pending winding-up petition and the resulting undue advantage weigh against validation. Absence of conscious fraud or fraudulent preference does not itself justify sustaining the disposition. The transaction was not validated, and the appellant's claim failed. Case-Laws Companies Law Fri, 26 Sep 1941 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=96866