Section 331 — Liabilities and rights of certain persons fraudulently preferred

(1) Where a company is
being wound up and anything made, taken or done after the commencement of this Act is invalid under
section 328 as a fraudulent preference of a person interested in property mortgaged or charged to secure the
company’s debt, then, without prejudice to any rights or liabilities arising, apart from this provision, the
person preferred shall be subject to the same liabilities, and shall have the same rights, as if he had
undertaken to be personally liable as a surety for the debt, to the extent of the mortgage or charge on the
property or the value of his interest, whichever is less.
(2) The value of the interest of the person preferred under sub-section (1) shall be determined as at the
date of the transaction constituting the fraudulent preference, as if the interest were free of all encumbrances
other than those to which the mortgage or charge for the debt of the company was then subject.
(3) On an application made to the Tribunal with respect to any payment on the ground that the payment
was a fraudulent preference of a surety or guarantor, the Tribunal shall have jurisdiction to determine any
questions with respect to the payment arising between the person to whom the payment was made and the
surety or guarantor and to grant relief in respect thereof, notwithstanding that it is not necessary so to do

1. Ins. by Act 31 of 2016, s. 255 and the Eleventh Schedule (w.e.f. 15-11-2016).
2. Subs. by s. 255 and the Eleventh Schedule, ibid., for clause (c) (w.e.f. 15-11-2016).
3. Subs. by Act 31 of 2016, s. 255 and the Eleventh Schedule, for section 329 (w.e.f. 15-11-2016).

for the purposes of the winding up, and for that purpose, may give leave to bring in the surety or guarantor
as a third party as in the case of a suit for the recovery of the sum paid.
(4) The provisions of sub-section (3) shall apply mutatis mutandis in relation to transactions other than