1933 (12) TMI 24 - HC - Companies Law

Issues Involved:
1. Crown's claim as a creditor for income tax under Schedule D.
2. Liquidator's obligation to pay income tax from available funds.
3. Priority of income tax as an expense in the liquidation process.
4. Applicability of Companies (Consolidation) Act, 1908 and Companies Winding-up Rules, 1909.
5. Liquidator's remuneration and expenses in the context of insufficient assets.
6. Responsibilities and liabilities of the liquidator in voluntary liquidation.
7. The impact of external factors (e.g., French currency fluctuations, general strike) on the liquidation process.

Issue-wise Detailed Analysis:

1. Crown's claim as a creditor for income tax under Schedule D:
The Crown, represented by His Majesty's Attorney-General, claims to be a creditor for income tax under Schedule D for three respective sums: lb58 12s. for 1926-27, lb20 for 1929-30, and lb487 16s. for 1930-31. These taxes are for profits earned by the company during liquidation.

2. Liquidator's obligation to pay income tax from available funds:
The Crown asserts that the liquidator should pay these sums from the moneys in his hands. However, the liquidator is currently overdrawn by lb890 at the bank. The Crown suggests that the liquidator's retained remuneration and travel expenses be adjusted to cover the tax liabilities, although these funds may be subject to claims by the National Provincial Bank, Ltd.

3. Priority of income tax as an expense in the liquidation process:
The judgment considers whether income tax incurred by the liquidator in carrying on the business post-liquidation is an expense of the liquidation. It is determined that income tax is not strictly within "fees and actual expenses incurred in realising or getting in the assets" but may be considered "the liquidator's necessary disbursements."

4. Applicability of Companies (Consolidation) Act, 1908 and Companies Winding-up Rules, 1909:
Sections 171 and 196 of the Companies (Consolidation) Act, 1908, and Rule 187 of the Companies Winding-up Rules, 1909, are examined. Section 171 allows the Court to order payment of costs, charges, and expenses in a winding-up, while Section 196 prioritizes these payments in a voluntary winding-up. Rule 187, though not directly applicable, provides an analogy for prioritizing payments.

5. Liquidator's remuneration and expenses in the context of insufficient assets:
The liquidator's remuneration and expenses, including income tax, are considered part of the expenses of the liquidation. The judgment emphasizes that the liquidator's remuneration should not take precedence over other expenses incurred during the winding-up process.

6. Responsibilities and liabilities of the liquidator in voluntary liquidation:
The liquidator, appointed by shareholders, is not in the same position as a Court-appointed officer. The judgment clarifies that the liquidator's remuneration should be subordinate to the payment of other winding-up expenses.

7. The impact of external factors (e.g., French currency fluctuations, general strike) on the liquidation process:
The company's difficulties were exacerbated by external factors such as French currency fluctuations and the 1926 general strike in Great Britain. These events hindered the transfer of business to French companies and affected the liquidation process, leading to a deficit and the current financial predicament.

Conclusion:
The Court concludes that the income tax liabilities are part of the expenses of the liquidation. The liquidator's remuneration paid before December 8, 1930, will not be disturbed. An inquiry is directed to determine the appropriate remuneration for the liquidator post-December 8, 1930, for necessary services rendered. The judgment balances the liquidator's remuneration against the need to cover all expenses incurred during the winding-up process.

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