Section 329 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 329 is one sentence long. It says that a transfer of property, or a delivery of goods, made by a company within one year before the presentation of a petition for winding up by the Tribunal is void against the Company Liquidator, unless it was made in the ordinary course of business or in favour of a purchaser or encumbrancer in good faith and for valuable consideration.
Any transfer of property, movable or immovable, or any delivery of goods, made by a company within one year before the presentation of a petition for winding up by the Tribunal is void against the Company Liquidator. It is not caught if it was made in the ordinary course of the company's business, or in favour of a purchaser or encumbrancer in good faith and for valuable consideration.
Where section 329 sits
Section 329 is in Chapter XX (winding up), in the group of sections that deal with transactions that can be undone or disregarded. The neighbours are section 328 on fraudulent preference, sections 330 and 331 on void transfers and persons preferred, section 333 on disclaimer of onerous property and section 335 on attachments void in winding up.
This article reads the section as printed in the Companies Act, 2013 as amended up to 29 July 2022 (the consolidated text consulted). The section stands as substituted by section 255 of, and the Eleventh Schedule to, the Insolvency and Bankruptcy Code, 2016, with effect from 15 November 2016. Winding up on the ground of inability to pay debts and voluntary winding up are now under the Code; see our post on section 255 and the Eleventh Schedule. No later amendment was found in the texts consulted; later amendments should be checked on the official text.
A buyer, lender or auditor looking at a company that may be headed for winding up should read this section before relying on a recent transfer. Our legal due diligence work covers exactly that kind of look-back.
The sentence, element by element
What is caught: "any transfer of property, movable or immovable, or any delivery of goods". Two kinds of act: transfer of property of either kind, and delivery of goods. Immovable property, movable property and stock in trade are all within the words.
By whom: "made by a company". The section looks at what the company did. It is the company's transfer or delivery that is tested.
When: "within a period of one year before the presentation of a petition for winding up by the Tribunal under this Act". The reference date is the presentation of the petition, and the look-back is one year. The section does not say the winding up order must follow, or when the winding up is deemed to commence; read the Chapter's other sections for that.
The exceptions. The section does not apply to a transfer or delivery that is:
- made in the ordinary course of the company's business; or
- made in favour of a purchaser or encumbrancer in good faith and for valuable consideration.
Read the exceptions as printed. They set up two separate protections: transactions in the ordinary course, and transactions in favour of a purchaser or encumbrancer who acted in good faith and gave valuable consideration.
The effect: "void against the Company Liquidator". The transfer or delivery is void against the Company Liquidator. The section says nothing about who else it binds or how the Liquidator recovers property. This article does not add to the text.
How it compares with the neighbouring sections
| Section | What it covers (by the title of the live post) | Period or trigger | How it differs from section 329 |
|---|---|---|---|
| 328 | Fraudulent preference | As printed in section 328 | Looks at preferences; section 329 looks at transfers and deliveries not in good faith or ordinary course |
| 329 | Transfers not in good faith | One year before presentation of the petition | Transfer or delivery by the company, void against the Company Liquidator |
| 330 and 331 | Void transfers and persons preferred | As printed in those sections | Deal with certain transfers and the persons preferred |
| 334 | Transfers after commencement of winding up | After the commencement of the winding up | Looks forward from commencement, where section 329 looks back from the petition |
| 335 | Attachments void in winding up | As printed in section 335 | Deals with attachments, executions and similar steps |
Check the live posts on each neighbour for their periods and effects; this article takes only the one year of section 329.
Worked example
Crescent Plastics Limited runs into trouble, and a creditor presents a petition for winding up before the Tribunal on 10 March. Within the year before that date, Crescent made three transfers.
First, it sold finished goods from its stock to a regular dealer on its normal terms; that is in the ordinary course of its business. Second, it sold a vacant plot to an unrelated buyer, Mr Pillai, who paid a price and had no reason to doubt the title; he is a purchaser in good faith and for valuable consideration. Third, it transferred a warehouse to a company controlled by its managing director for no consideration.
The first two fall within the exceptions. The third does not: it is a transfer of immovable property made by the company within one year before the presentation of the petition, and it is neither in the ordinary course nor in favour of a purchaser in good faith for valuable consideration. It is void against the Company Liquidator. A buyer's due diligence on Crescent would have flagged all three transfers for exactly this reason.
Common mistakes
- Counting the year from the wrong date. The year runs back from the presentation of the petition, not from the winding up order.
- Assuming only land is caught. The section covers movable and immovable property and the delivery of goods.
- Ignoring the exceptions. Ordinary course transactions and transactions with a good-faith purchaser or encumbrancer for valuable consideration are outside the sentence.
- Dropping "valuable consideration". The good-faith limb is tied to valuable consideration in the same breath.
- Mixing it up with section 334. Section 334 deals with dispositions after commencement of the winding up; section 329 looks back from the petition.
- Skipping the Code. Winding up on the ground of inability to pay debts and voluntary winding up are now under the Code.
Need help checking recent transfers?
If you are buying assets from, lending to or auditing a company with signs of distress, we can map every transfer and delivery in the last year against section 329 and its neighbours, and tell you where a Company Liquidator could challenge it. See our legal due diligence service.
Key takeaways
- Section 329 makes a transfer of property or delivery of goods by a company void against the Company Liquidator if made within one year before the presentation of a winding up petition.
- It covers movable and immovable property and goods.
- Ordinary course transactions and transactions in favour of a purchaser or encumbrancer in good faith and for valuable consideration are not caught.
- The section stands as substituted by the Code with effect from 15 November 2016.
- It is one sentence, so it must be read element by element and alongside sections 328, 330 to 331, 334 and 335.
Read next
- Section 328: fraudulent preference
- Sections 330 and 331: void transfers and persons preferred
- Section 334: transfers after commencement of winding up void
- Section 326: overriding preferential payments and workmen's dues
Disclaimer: Based on the Companies Act, 2013 as amended up to 29 July 2022 (the consolidated text consulted on 4 October 2026). Later amendments to the Act, the rules made under it and the Insolvency and Bankruptcy Code, 2016 should be checked. This article is general information, not legal advice; check the official text before acting.