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As enacted
Contents

Part XV

417. Restrictions on setting aside a voidable preference, voidable encumbrance or alienation with intent

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

Subject to subsections (2), (3) and (4), the court may make an order under section 416 whether that order affects property of, or imposes an obligation upon any person, whether or not the person is a party to the voidable transaction or a beneficiary under the voidable transaction.

(2)

Where a person is a party to a voidable transaction or a beneficiary under the voidable transaction, the court shall not make an order under section 416 against the person where the person proves that –

(a)

the person acted in good faith;

(b)

at the time of the voidable transaction, a reasonable person in the person’s position would not have believed that the debtor was, or immediately after the voidable transaction would be, insolvent; and

(c)

either –

(i)

the person gave substantial value under the voidable transaction; or

(ii)

the person did not believe that the conditions for setting aside the voidable transaction (other than the condition in this paragraph) would be met, and it was reasonable for the person not to have such a belief.

(3)

Where a person is neither a party to a voidable transaction nor a beneficiary under the voidable transaction, the court shall not make an order that affects an interest of the person in property that the person has acquired –

Rescue, Rehabilitation and Insolvency

(a)

in good faith; and

(b)

for valuable consideration.

(4)

Where a person referred to in subsection (3) is a connected party of the debtor, it shall be presumed, unless the contrary is proved, that the person acquired the property otherwise than in good faith.

Read on from s 418

Part XVI

Read on from Part XVI

Part XVII

Read on from Part XVII

Schedules