This is a new section. It is conequential on the abolition of the doctrine of relation back, which is one of the methods by which tansactions entered into by the bankrupt prior to adjudication could be set aside at the instance of the Official Assignee. As has been pointed out, the doctrine has been effectively abolished by section 44(2) which enacts that the title of the Official Assignee shall not commence at a date earlier than the date of adjudication. Briefly, by virtue of the doctrine, where adjudication is on a creditor's petition, the Official Assignee's title dates from the time of the act of bankruptcy on which the adjudication is based or, if the debtor is proved to have committed more acts of bankruptcy than one, then from the time of the first act of bankruptcy proved to have been committed, within six months of the petition. There is no relation back beyond the time of the contracting of the debt of the petitioning creditor.
Since the committee considered that the implementation of their recommendation to abolish "relation back" could lead to fraud they recommended that if after committing an act of bankruptcy and within three months of adjudication the bankrupt sold any of his property, which in the opinion of the court was substantially below its market value, or returned goods to a supplier to whom he was indebted, such transactions should be void as against the Official Assignee. Section 58 follows the committee's recommendation in substance by providing that sales at a substantial undervalue or any other transaction which would substantially reduce the sum available for distribution among creditors will be void as against the Official Assignee. The transactions must have been entered into after an act of bankruptcy has been committed and within three months of adjudication. Under the Bill, the period during which an act of bankruptcy can be availed of to ground a petition has been reduced from six to three months. Furthermore, there is a saver for bona fide purchasers and the transactions covered by sections 57(1) and 59 are excluded.
