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TMI Blog2008 (1) TMI 610X X X X Extracts X X X X X X X X Extracts X X X X ..... arge or encumbrance of the sales tax liabilities and execute the sale deed accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions of the order confirming the sale in favour of the applicant, the applicant has deposited Rs. 65 lakhs and Rs. 67.5 lakhs being the 25 per cent. of the purchase consideration of Rs. 260 lakhs and Rs. 270 lakhs for lot No. I and lot No. III-C, respectively. Since the applicant wanted to avail financial assistant to pay the balance amount of 75 per cent., the applicant approached Allahabad Bank which in turn insisted to inspect the premises as also the Revenue records in respect of the subject land. The applicant made an application being Company Applications Nos. 478 and 479 of 2007 seeking permission to inspect the assets sold to the applicant. This court vide its order dated October 18, 2007, has not entertained the said application and recorded that the applicant shall be at liberty to have inspection after making full payment of sale consideration. Being aggrieved by the said order dated October 18, 2007, passed by this court in Company Applications Nos. 478 and 479 of 2007, the applicant filed O.J. Appeals Nos. 238 and 239 of 2007 before the Division Bench of this court and the Division Bench vide its order dated October 25, 2007, allowed the said appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o pay all statutory dues payable on the properties of the company in liquidation for the period after the date of winding up order but the applicant reasonably apprehends and in fact is informed by the local authorities that even after the payment of liabilities from the date of the order of the winding up, as mentioned in clause 15 of the tender document, the land will not be free of charge unless payment of dues for the pre-winding up period is made and in case the land is not free of charge on payment of the balance consideration money as well as the liabilities mentioned in clause 15 of the said tender document from the date of passing of the winding up order then and in such event, the applicant will not be in a position to use the land in a manner whatsoever far less in setting up of project. He has, therefore, submitted that the applicant should not be held up for non payment of pre-winding up dues of subject. He has further submitted that the applicant needs to create charge on the said land after payment of the aforesaid sum in order to set up the factory but no bank and/or financial institution will render any financial assistance to the applicant in case the charge menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Greater Bombay [2005] 10 LJSOFT (URC) 6 ; [2006] 132 Comp Cas 689, wherein it is held that the petitioners' liabilities would arise only on purchase. Under section 457 of the Act, the liquidator has power to sell the movable and immovable properties. Under section 528 all debts payable on a contingency, and all claims against the company, present or future, are admissible to proof against the company. By virtue of section 529 the same rules are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent would be applicable. Various other provisions give certain priority to secured creditors and other unsecured creditors, preferential payment in section 530 of the Act. Since the respondent-Corporation in that case is one of the creditors of the company in winding up and as a creditor it has to file a claim with the liquidator. Once the liquidator sells the properties from the realisation of the assets of the company to be paid to the creditors in order of preference. The court further held that the purchaser of the property from a liquidator of the company in winding up is not liable to pay the taxes for the period previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to be given priority and since there is an attachment over the property sold to the applicant, unless and until the dues are paid, the applicant will not get the clear title. Mr. Mehta has relied on the decision of the Bombay High Court in the case of Balmukund Jagjivan Gujarathi v. Collector, Ahmednagar, AIR 1935 Bom 25, wherein it is held that section 137, which confers priority upon the Crown for land revenue over other debts of the person liable for land revenue, cannot be said to provide a method or be a rule for the recovery of arrears of land revenue within section 26 of the Code. The provisions of sections 137 and 151 giving priority in respect of Government claims for the land revenue relate to matters of title, whilst section 26 makes applicable to public money due by a Revenue Officer only to the machinery for the recovery of arrears of land revenue. He further relied on the decision of the Bombay High Court in the case of Secretary of State v. Vedavyas Venkatesh Bhatta, AIR 1936 Bom 213, wherein it is held that section 137 gives priority to the claims of the Government, which is more extensive than the common law prerogative, since it creates a right to priority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery of debts but also extends its applicability over private debts forming the subject-matter of mortgage, judgment-decree, execution or attachment and the like. It is further held therein that the effect of section 190 is to make the procedure for recovery of arrears of land revenue applicable for recovery of sales tax arrears. The effect of section 158 is to accord primacy to all the moneys recoverable under Chapter XIV, which will include sales tax arrears. Based on the aforesaid judgments and the statutory provisions, Mr. Mehta has strongly urged that the declaration sought for by the applicants cannot be granted in these two applications and the applicants are liable to discharge their liabilities for payment of sales tax dues as well as land revenues which are attached with the property purchased by them. Having heard learned advocates appearing for the respective parties and having gone through the relevant statutory provisions and decided case law on the subject as well as the terms and conditions of the tender document, the court is of the view that this is a case where the court has to show its indulgence even at this stage. As far as payment of land revenue charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax authority. This court has held in the case of Ananta Mills Ltd. ( in liquidation) v. City Deputy Collector, Ahmedabad [1972] 42 Comp Cas 476 , that attachments of company's assets by the Employees State Insurance Corporation, Payment of Wages Authority, Regional Provident Fund Commissioner and others are ineffective against the liquidator. It is held in the case of State of Madhya Pradesh v. Dewas Biscuit Factory, AIR 1963 MP 201, that an unsecured creditor who has obtained a decree prior to winding up, a statutory authority levying attachment to recover arrears of land revenue, a State which has obtained a decree for costs and unsecured creditors who have not obtained a decree are similarly placed. The decision of the apex court in the case of Dena Bank v. Bhikhabhai Prabhudas Parekh and Co. [2000] 5 SCC 694 ; [2001] 107 Comp Cas 157, relied on by Mr. Mehta is altogether in a different context. Firstly, there is specific provision under the Karnataka Sales Tax Act. Secondly, it was not a case of the company in liquidation. The present case is governed by the provisions contained in the Companies Act, 1956, and priorities are to be decided in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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