The Supreme Court of India observed that the arrears of property tax and water tax until the date of confirmation of sale would qualify as the expenses for “preserving, realising or getting in” the assets of the company and thus, shall have to be paid in priority by the Official Liquidator.
The appellant, being the Official Liquidator of the company named IISCO Ujjain Pipe and Foundry Company Limited, has questioned the common judgment, whereby the Division Bench of the High Court at Calcutta dismissed the appeals, in allowing the company applications preferred by Ujjain Nagar Palika Nigam, claiming property tax and water tax from the appellant in relation to the company in liquidation, from the date of order of winding up and until the date of confirmation of sale of assets to the auction purchaser.
It was contended on of behalf the Official Liquidator that he was liable to pay only those taxes which accrued till the date of winding up and became payable within one year thereof and that in view of Section 529A of the Companies Act, 1956, workmen’s dues and the dues of secured creditors to the extent they were secured, were to be paid pari passu, and prioritised over all other debts.
The Official Liquidator also contended that he had not carried on any business of the company and consequently, did not in any way earn profit from the use of the assets of the company in liquidation; that the provisions of the Companies Act did not envisage payment of post-liquidation taxes on property and water and the assets were only custodia legis after the winding up order until the sale.
The respondent contended that the official liquidator would be liable to pay taxes to the Nigam out of sale proceeds, and apart from this, reiterated the submissions made before the Company Court.
A Two-Judge Bench comprising Justice Dinesh Maheshwari and Justice Aniruddha Bose observed that “the Company Court and then the Division Bench of the High Court have rightly underscored the faults on the part of the appellant OL and have rightly held that the liability on account of the property tax and water tax claimed by the respondent to the extent rejected by the official liquidator has been a post-liquidation liability, which the official liquidator was obliged to discharge.”
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