1967 (4) TMI 23 - HC - Income Tax

Winding Up - whether the department was deliberately kept in the dark about the liquidation proceedings and was entitled to have the dissolution declared void under s. 559(1) of the Act

Issues Involved:
1. Whether the department is a creditor and the application is maintainable.
2. Whether the application for relief under section 559(1) of the Act is barred by time.
3. Whether the company was wound up to defraud the creditors in general and the applicant-department in particular.
4. Whether the directors have not made any provision for income-tax demand against the company before the company went into voluntary liquidation.
5. Whether the liquidator was evasive and non-cooperative in respect of the pending assessment and acted with a mala fide and fraudulent intention.
6. Whether the department was deliberately kept in the dark about the liquidation proceedings.
7. Whether the department-petitioner is entitled to have the dissolution declared void under section 559(1) of the Act.

Detailed Analysis:

Point 1:
The court held that the Income-tax Officer, Companies Circle, could maintain the application as a creditor since a creditor is a person interested. The regular assessment order for the assessment year 1958-59 was passed on March 20, 1963, and the application was made on June 14, 1965. Therefore, the application is maintainable.

Point 2:
The court interpreted section 559(1) of the Companies Act, 1956, to mean that the application should be made within two years of the date of dissolution, but the court could pass an order at any time thereafter. This interpretation follows the reasoning in the case of In re Scad Ltd. Thus, the relief prayed for under section 559(1) of the Act is not barred by time.

Point 3:
The court examined the special resolution for voluntary winding-up dated May 16, 1960, and found no evidence to support the allegation that the company went into voluntary liquidation to defraud the creditors in general and the income-tax department in particular. The debts and assets of the company were disclosed, and no creditor had complained about the voluntary winding-up. Therefore, the point was held against the petitioner-department.

Point 4:
The regular assessment for the year 1958-59 was made on March 20, 1963, after the final account of the winding-up was registered by the Registrar on March 15, 1963. The court found no omission in noting the income-tax demand and concluded that the question of making provision for the income-tax demand before the special resolution for voluntary winding-up did not arise.

Point 5:
The court rejected the argument that the liquidator acted with an ulterior motive by obtaining adjournments from the Income-tax Officer. The court presumed that the adjournments were granted for good and sufficient reasons and found no evidence of fraudulent intent. The petitioner did not provide particulars of the adjournments granted, and the court noted that the Income-tax Officer was informed about the liquidation proceedings.

Point 6:
The Registrar of Companies stated that he had informed the Income-tax Officer, Nalgonda, about the liquidation by letter dated December 17, 1960. The court found that the letter was directed to the concerned office and reached the officer on January 23, 1961. Therefore, the court did not accept the petitioner's allegation that the department was deliberately kept in the dark about the liquidation proceedings.

Point 7:
The court held that fraud must be strictly proved to set aside the dissolution, as established in cases such as In re Pinto Silver Mining Company and Coxon v. Gorst. Since the fraud alleged by the petitioner was not proved, the petitioner was not entitled to the relief prayed for.

Conclusion:
The petition was dismissed without costs as the petitioner failed to prove the allegations of fraud and other claims.

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