1. Where a company has given preference to a person who is one of the creditors of the company or a surety or guarantor for any of the debts or other liabilities of the company, and the company does anything or suffers anything done which has the effect of putting that person into a position which, in the event of the company going into liquidation, will be better than the position he would have been in if that thing had not been done prior to six months of making winding up application, the Tribunal, if satisfied that, such transaction is a fraudulent preference may order as it may think fit for restoring the position to what it would have been if the company had not given that preference.
2. If the Tribunal is satisfied that there is a preference transfer of property, movable or immovable, or any delivery of goods, payment, execution made, taken or done by or against a company within six months before making winding up application, the Tribunal may order as it may think fit and may declare such transaction invalid and restore the position.
Legal Commentary & Landmark Judgments: Section 328
Section 328 of the Companies Act, 2013 empowers the Tribunal to invalidate any transfer of property, delivery of goods, payment, or execution made within six months prior to the presentation of a winding up petition if made with the dominant intent to confer an undue preference on a creditor, surety, or guarantor.
In an application under Section 328 to avoid a preferential transaction, plead specific facts showing company insolvency on the transaction date and the absence of bona fide commercial pressure. Attach bank statements and correspondence showing familial or corporate nexus between directors and the preferred creditor to establish dominant subjective intent.