2014 (1) TMI 529 - HC - Central Excise

Liquidation of Company - Payment to Central Excise department - Held that - Even though the Excise Authorities are preferred creditors, but they are covered by Section 530 of the Act and stand in queue after the claims of the creditors covered by Section 529A of the Act are paid. Since all the assets of the company in liquidation have been sold, no useful purpose would be served in receiving this application for further consideration - official liquidator directed to make payment of the admitted claim of the Excise Authorities if there is any money left after discharging the claims of the creditors of the company in liquidation covered by Section 529A of the Act - Decided in favour of appellant.

Summary

Issues:
Application by Central Excise Authorities challenging official liquidator's decision on claim acceptance.

Analysis:
The judgment pertains to a belated application by the Central Excise Authorities contesting the decision of the official liquidator regarding the acceptance of their claim. The official liquidator has already disbursed funds to secured creditors and other entitled parties under Section 529A of the Companies Act, 1956. It is noted that only a portion of the secured creditors' dues has been paid, with workers receiving 70% of their admitted claims. Additionally, the official liquidator has approximately Rs. 7 lakh remaining, which may not suffice to fulfill all payment obligations to the creditors covered by Section 529A.

Furthermore, it is highlighted that although the Excise Authorities hold the status of preferred creditors, they fall under Section 530 of the Act and are required to wait in line after the claims of creditors covered by Section 529A are settled. Given that all assets of the company in liquidation have been sold, the court deems it unnecessary to entertain the application for further consideration.

Consequently, the Court disposes of the application by instructing the official liquidator to make payment to the Excise Authorities only if there are remaining funds after settling the claims of creditors covered by Section 529A of the Act. The judgment concludes by stating that there will be no order as to costs and directs the provision of urgent certified photocopies of the order to the concerned parties upon request and compliance with formalities.