1930 (6) TMI 7 - HC - Companies Law

Summary

Issues: Priority of claim by Telegraph Department in liquidation proceedings.

In this judgment, the High Court of Allahabad addressed the issue of the priority of a claim by the Telegraph Department in the liquidation of a company. The Official Liquidators submitted a list of creditors for approval, including a claim by the Telegraph Department for various expenses. The claim included amounts for moving telephone lines, rent of telephone lines, and telephone bills. The Telegraph Department argued that this claim should be paid in priority to other debts of the company. The Court considered Section 230 of the Indian Companies Act, which prioritizes certain debts in winding up proceedings. The section specifies that revenue, taxes, cesses, and rates due from the company within twelve months before the winding up order must be paid first.

The Court analyzed the nature of the claim by the Telegraph Department to determine if it falls within the scope of Section 230. It was noted that a portion of the claim was clearly outside the scope as it became due over twelve months before the winding up order. The Court further examined the specific items in the claim, such as the rent of telephone lines and trunk call charges. The Court interpreted the term 'revenue' in Section 230, emphasizing that it should be understood as income. Referring to legal dictionaries, the Court concluded that the rent of Government Telephone lines and charges for trunk calls constitute revenue for the Government and should be considered 'revenue' under Section 230(a) of the Indian Companies Act.

Ultimately, the Court ruled that the amount of Rs. 481-5 for rent of telephone lines and trunk call charges should be given priority in the winding up of the company. The Court also noted that the issue raised regarding the claim by the Telegraph Department was largely academic, as there were sufficient funds to meet all debts of the company, regardless of priority. Therefore, the entire claim by the Telegraph Department would eventually be settled.