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TMI Blog1979 (1) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... d. v. Addl. CIT [1976] 103 ITR 553 (Mad.)], and that ended against the assessee on April 25, 1975. Meanwhile on August 18, 1964, the liquidator of the company filed in the office of the Registrar of Companies, a statement as required under the provisions of section 555(3) of the Companies Act, 1956 (hereinafter referred to as "the Act"), stating that a sum of Rs. 20,542.50 was payable to one L. A. Lakshmanan Chettiar, whose legal representative is the appellant before us, as surplus assets refundable to him in respect of 250 shares held by him in the bank. On November 30, 1973/the Regional Director of the Company Law Board (hereinafter referred to as the "Regional Director"), passed an order sanctioning payment of Rs. 20,542.50 to the appellant herein. The Union of India represented by the CIT (Recovery), Madras, filed Company Application No. 461/73, purporting to be under section 555(7)( a ) of the Act for payment of a sum of Rs. 10,853.55 from out of the sum of Rs. 20,542.50 which was deposited by the liquidator of the company on August 18, 1964. Simultaneously, another application No. 462/73 was filed to restrain the Regional Director by interim injunction from sanctioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 421/74. In the affidavit filed in support of this application it was stated by the TRO (Headquarters), Madras, that Application No. 461/73 was filed before this court on November 27, 1973, and as on the date of the said application, the application filed by the claimant before the Regional Director was pending and since the deponent of the affidavit was aware of the pendency of the application, he sent his inspector to both the Regional Director and the Registrar of Companies, Madras, to inform them personally of the filing by the department of the Company Application No. 461/73, before this court and the inspector informed them accordingly on the very same day, namely, November 27, 1973, and that the deponent of the affidavit confirmed this by a letter addressed to the Registrar of Companies with a copy marked to the Regional Director bearing the same date, which were despatched on November 28, 1973, by ordinary post and which in the regular course would have reached the 2nd and 3rd respondents (the Registrar of Companies the Regional Director) on the same or the next day and there was no communication in reply from the Regional Director to the information conveyed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as law disputing the right of the department to claim the amount and to claim a declaration that his order dated November 30, 1973, was null and void. With regard to the specific case put forward by the income-tax department, the Regional Director stated in para. 6 of his counter-affidavit as follows: "The petitioner who was made aware of the fact of the 4th respondent's application to me under section 555(7)( b ) of the Companies Act, 1956, had never made any claim to me in respect of this amount and the question of my considering his claim did not arise. In fact, as early as 23rd February, 1973, I caused a detailed letter to be written to the Commissioner of Income-tax, Madras-II, Nungambakkam, Madras-34, the facts about this claim pending before me. This was followed by 2 reminders on 10-4-1973 and 14-6-1973. Far from raising any objections by the income-tax department there was no response at all. I had, therefore, caused another detailed letter dated 30-7-1973, to be written to the Income-tax Officer, Company Circle, Trichy-1. In reply to this letter, the Income-tax Officer, Trichy, sent his letter dated 7-8-1973, to my office in which the attitude was as if the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in the affidavit filed on behalf of the income-tax department was disputed in the counter-affidavit of the Regional Director it was the duty of the income-tax department to make out its case, by examining witnesses or producing documents or summoning the Regional Director to submit himself to cross-examination with reference to the averments contained in the counter-affidavit. None of these things was done before the learned judge. As we have pointed out already, no reply affidavit was also filed on behalf of the department. With regard to the oral information said to have been conveyed through the inspector of the department, the inspector himself had not filed any affidavit and all that the TRO stated in his affidavit was that he sent his inspector to both the Registrar of Companies and the Regional Director to inform them personally of the filing of Company Application No. 461/73 and the inspector informed them accordingly. Company Application No. 461/73 itself was presented to this court on November 27, 1973, and was taken on file and numbered on November 29, 1973, and the court issued notice to the 3rd respondent only on November 30, 1973. Under these circumstances, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to the particulars of unclaimed dividends, the form provides for the number on list of creditor, name of the creditor, last known address of the creditors date of declaration of dividends, rate of dividend, amount of dividend payable, last date when payable and the amount paid into the account. With regard to the particulars of undistributed assets, the form provides for all the above details in respect of a contributory. Sub-section (7) of section 555 is in two parts. Clause ( a ) of that sub-section provides: "Any person claiming to be entitled to any money paid into the Companies Liquidation Account (whether paid in pursuance of this section or under the provisions of any previous companies law) may apply to the court for an order for payment thereof, and the court, if satisfied that the person claiming is entitled, may make an order for the payment to that person of the sum due : Provided that before making such an order, the court shall cause a notice to be served on such officer as the Central Government may appoint in this behalf, calling on the officer to show cause within one month from the date of the service of the notice why the order should not be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received a letter from the ITO, Tiruchirapalli, on August 7, 1973, in which the attitude was as if the income-tax department never objected to the payment of the money to the claimant. Even according to the income-tax department there was no application pending before the court under section 555(7)( a ) except Application No. 461/73 which the department presented before this court on November 27, 1973, which was numbered and taken on file on November 29, 1973, and we have already dealt with the controversy whether the Regional Director has notice of the same or not, when he passed the order in question, on November 30, 1973. Under these circumstances, it cannot be contended that the Regional Director acted in violation of the requirements of section 555(7)( b ). Mr. A. N. Rangaswami, the learned counsel for the income-tax department, contended that it was the duty of the Regional Director to have ascertained from this court whether any application was pending on the file of this court or not. However, to a specific question put by us, the learned counsel had to admit that the statute itself had not imposed any such obligation on the Regional Director but stated that prudence wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reached a finality." We are of the opinion that the above statement contained in the counter-affidavit of the claimant did not in any way affect the order of the Regional Director dated November 30, 1973. Section 555(7)( b ) states that the Central Government can be satisfied either "on a certificate by the liquidator or the official liquidator or otherwise" thereby making it clear that the satisfaction of the Central Government need not necessarily be on the basis of a certificate to be granted by the liquidator and can be "otherwise" also. From the extract in the counter-affidavit of the appellant all that could be stated was that the liquidator refused to give a certificate on the ground that the income-tax liability had not yet been finally determined. That may merely put the Regional Director on notice of an income-tax liability remaining outstanding, if at all, but certainly that cannot prevent the Regional Director from satisfying himself that the particular amount in question was due to the appellant. Mr. Rangaswami repeatedly contended that in view of his reference to the income-tax proceeding it was the duty of the Regional Director to have written to the income-tax dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is only against this background, we have to find out what was contemplated by the expression in section 555(7)( b ), namely, "no application made in pursuance of clause ( a ) is pending in the court". The question for consideration is whether that expression refers to any application made by anybody to the court or it refers to an application made to the court by the person who has made the application to the Central Government. Simply, as a matter of understanding, the purpose for which the above provision has been made, we do not see any purpose being served in holding that the expression refers to "any application by anybody made to a court under section 555(7)( a )". On the other hand, the object of this provision is that the same person simultaneously should not pursue two remedies one before the court under section 555(7)( a ) and the other before the Central Government under section 555(7)( b ). It must be remembered that the amounts paid into the companies liquidation account represent unclaimed dividends and undistributed assets, that is, amounts already declared payable to particular persons as dividends and amounts already became refundable as assets to particular con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur opinion, this rule correctly gives effect to the intention of Parliament as contained in section 555(7)( b ). There is another form which also leads to the same conclusion. It would be seen that under section 555(7)( b ) there is a provision for the Central Government taking such security from the claimant as it may think fit. Pro forma of an indemnity bond in this behalf has been prescribed by the Central Government and one of the recitals therein states : "And whereas the principal party or any other person on his behalf has not made an application in any court for any order for payment of the said sum of Rs..........and no such application is pending in any court of law in the Union of India." From all these circumstances, we are clearly of the opinion that the duty cast upon the Regional Director under section 555(7)( b ) of the Act in this case was to satisfy himself that at the time when he passed the order on November 30, 1973, no application preferred by the appellant to a court under section 555(7)( a ) was pending. In this case, it was nobody's case that the appellant had filed any application under section 555(7)( a ) before any court for payment of the amount i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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