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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? Issue-wise Detailed Analysis: Point 1: Whether the department is a creditor and the application is maintainable? The application under section 559(1) of the Companies Act can be made by the liquidator of the company or by any other person who appears to the court to be interested. The Income-tax Officer, Companies Circle, is the petitioner and can maintain the application as a creditor, as a creditor is considered a person interested, as per In re Spottiswoode Dixon & Hunting Ltd. [1912] 1 Ch. 410. 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: Whether the application for relief under section 559(1) of the Act is barred by time? The section states that the court may at any time within two years of the date of the dissolution, on application by the liquidator of the company or by any other person who appears to the court to be interested, make an order declaring the dissolution to have been void. The section has been interpreted to mean that only the application should be made within two years, and the court could pass an order at any time thereafter, as per In re Scad Ltd. [1941] 2 All. ER 466, 467. Thus, the relief prayed for under section 559(1) of the Act is not barred by time. Point 3: Whether the company was wound up to defraud the creditors in general and the applicant-department in particular? The special resolution for voluntarily winding up the company was passed on May 16, 1960, due to financial difficulties. The debts owing were Rs. 70,337.37, and the debts realisable were Rs. 58,558.04. Provisional income-tax of Rs. 6,395.15 was paid under section 23B for the year 1958-59 before the company went into voluntary liquidation. No creditor has complained about the voluntary winding up. There is 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. Therefore, this point is held against the petitioner-department. Point 4: Whether the directors have not made any provision for income-tax demand against the company before the company went into voluntary liquidation? The regular assessment for the year 1958-59 was made on March 20, 1963, raising a demand of Rs. 34,804.85, giving credit to the tax already paid. The final account of the winding up was sent by the liquidator to the Registrar of Companies on November 26, 1962, and registered on March 15, 1963. The question of making provision for the income-tax demand for the relevant year before the special resolution for voluntary winding up does not arise. Point 5: Whether the liquidator was evasive and non-cooperative in respect of the pending assessment and acted with a mala fide and fraudulent intention? The argument that adjournments were asked for and obtained with an ulterior motive to make the demand ineffective is not supported by evidence. The Income-tax Officer is presumed to have granted adjournments for good and sufficient reasons. The petitioner has not provided particulars of the adjournments granted. The assessment was made after the final accounts of winding up were registered by the Registrar of Companies, and the dissolution followed under the statutory provision. Therefore, no fraud can be attributed to the liquidator. Point 6: Whether the department was deliberately kept in the dark about the liquidation proceedings? The Registrar of Companies stated that he intimated the fact of the company going into liquidation to the Income-tax Officer, Nalgonda, by letter dated December 17, 1960. The letter was directed to the concerned office and reached the concerned officer on January 23, 1961. Therefore, it is difficult to accept the petitioner's allegation that the department was deliberately kept in the dark about the liquidation proceedings. Point 7: Whether the department-petitioner is entitled to have the dissolution declared void under section 559(1) of the Act? Fraud has to be strictly proved to set aside the dissolution. The fraud alleged has not been proved, as found under point 3. Therefore, the petitioner is not entitled to the relief prayed for. Conclusion: The petition is dismissed without costs.
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