Section 328 Fraudulent preference – Companies Act 2013

Amended and updated notes on section 328 of Companies Act 2013. Detail discussion on provisions and rules related to fraudulent preference.

Amended and updated notes on section 328 of Companies Act 2013. Detail discussion on provisions and rules related to fraudulent preference.

Chapter XX (Section 270365) of the Companies Act, 2013 (CA 2013) deals with the provisions related to winding up. Section 328 of CA 2013 provides for fraudulent preference.

Recently, we have discussed in detail section 327 (Preferential payments) of CA 2013. Today, we learn the provisions of section 328 of the Companies Act 2013.

The provisions of section 328 are effective from 15th December, 2016. You may refer Notification No. S.O. 3677(E) issued dated 7-12-2016. In this article, you will learn detail of the provisions of section 328 the Companies Act 2013.

Name of ActThe Companies Act 2013
Enacted byParliament of India
Administered byMinistry of Corporate Affairs (MCA)
Number of Chapters29
Number of Sections484 (470-43+57)
Number of Schedules7
You are reading:
Chapter No.XX
Chapter NameWinding Up
Section No.328
Section NameFraudulent preference
Monthly Updated EditionCompany Law PDF

Section 328 of Companies Act 2013: Fraudulent preference

Section 328 shall come into force on 15th December, 2016 vide Notification No. S.O. 3677(E) dated 07.12.2016.

(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.


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