2010 (1) TMI 1245 - HC - Companies Law

Summary

Issues involved: Interpretation of priority of dues in a liquidation process, validity of entries in revenue records post winding up order.

Summary:
The Applicant, the successful purchaser of properties from a company in liquidation, sought direction to remove entries of sales tax and Gram Panchayat tax as arrears of land revenue from the property's 7/12 extract. The Applicant relied on previous judgments emphasizing that post-winding up, claims by the State do not hold priority as crown debts. The Official Liquidator did not dispute this legal position. The Assistant Government Pleader argued that the State's dues are crown debts and must be paid before Secured Creditors, citing assessment from 1998-99 under the Gujarat Sales Tax Act. However, the Court held that any demand post-winding up does not take priority under the Companies Act, and the State must lodge its claim with the Official Liquidator like other Unsecured Creditors.

The Court ruled that entries made after the winding up order, such as the sales tax and Gram Panchayat tax charges, were not justified and should be canceled. This action was necessary to ensure the Applicant's clear title to the purchased property. The Application was allowed, directing the respondent authorities to remove the entries, and the matter was disposed of with no costs.