165. (1) The bankruptcy trustee may apply to the Adjudicating Authority
for an order under this section if a bankrupt has given a preference to any
person.
(2) The transaction giving preference to an associate of the bankrupt under
sub-section (1) should have been entered into by the bankrupt with the
associate during the period of two years ending on the date of the
application for bankruptcy.
(3) Any transaction giving preference not covered under sub-section (2)
should have been entered into by the bankrupt during the period of six
months ending on the date of the application for bankruptcy.
(4) The transaction giving preference under sub-section (2) or under
sub-section (3) should have caused the bankruptcy process to be triggered.
(5) On the application of the bankruptcy trustee under sub-section (1), the
Adjudicating Authority may-
(a) pass an order declaring a transaction giving preference void;
(b) pass an order requiring any property transferred in respect of a
transaction giving preference to be vested with the bankruptcy trustee as a
part of the estate of the bankrupt; and
(c) pass any other order it thinks fit for restoring the position to what it
would have been if the bankrupt had not entered into the transaction giving
preference.
(6) The Adjudicating Authority shall not pass an order under sub-section (5)
unless the bankrupt was influenced in his decision of giving preference to a
person by a desire to produce in relation to that person an effect under
clause (b) of sub-section (8).
(7) For the purpose of sub-section (6), if the person is an associate of the
bankrupt, (otherwise than by reason only of being his employee), at the time
when the preference was given, it shall be presumed that the bankrupt was
influenced in his decision under that subsection.
(8) For the purposes of this section, a bankrupt shall be deemed to have
entered into a transaction giving preference to any person if-
(a) the person is the creditor or surety or guarantor for any debt of the
bankrupt; and
(b) the bankrupt does anything or suffers anything to be done which has the
effect of putting that person into a position which, in the event of the
debtor becoming a bankrupt, will be better than the position he would have
been in, if that thing had not been done.