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2016 (2) TMI 857 - GUJARAT HIGH COURT

2016 (2) TMI 857 - GUJARAT HIGH COURT - TMI - Company in liquidation - interpretation of the words used in condition No.7 i.e. “the taxes in relation to property” and whether the said words include the sales tax liability of the company in liquidation or not - whether purchaser is required to pay all the taxes in relation to the property including all outstanding dues? - Held that:- Merely because this Court has observed in condition No.7 of the terms and conditions that the purchaser is require .....

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aforesaid order, the purchaser is required to pay all the taxes in relation to property and sales-tax is not the taxes in relation to the property.

The sales tax dues of the company in liquidation for the year 1988 cannot be termed as the taxes in relation to the property. Further, when the respondent No.2 has already lodged its claim before the respondent No.1 – Official Liquidator in the year 1995, the same would be considered by the Official Liquidator as per the provision of Secti .....

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venue to ensure that the applicant No.1 gets free and clear marketable title qua the property of the company in liquidation purchased vide order dated 06.05.2004 passed in O.L.R. No. 22 of 2004 - COMPANY APPLICATION NO. 193 of 2014, OFFICIAL LIQUDATOR REPORT NO. 22 of 2004 - Dated:- 29-7-2015 - MR. VIPUL M. PANCHOLI, J. FOR THE APPLICANT : MR ASHOK L SHAH, ADVOCATE FOR THE RESPONDENT : MRS VS PATHAK, AGP, MR BHARGAV HASURKAR, ADVOCATE, OFFICIAL LIQUIDATOR ORAL JUDGMENT 1. The applicants have tak .....

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authorities noted in the land revenue records in respect of lands bearing Survey No.422/p, 423/1p, 423/2p and 524 situated at Village Karamsad, Taluka Anand in Registration District and Sub- District Anand. (c) That such other and further directions may be given as the Hon ble Court may deem necessary and expedient. (d) Costs of this Application be provided for. 2. Heard learned advocate Mr. Ashok L. Shah for the applicants, learned Assistant Government Pleader Mrs. V.S.Pathak for respondent No .....

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n O.L.R. No. 41 of 2003, whereby a sale committee was appointed for the sale of the assets and properties of the company in liquidation. Different parcels of freehold land of the company in liquidation were put to sale, the details of which are given in para 2 of the affidavit in support of the Judge s Summons. The sale committee invited offers for the purchase of land, building and other structures, plant and machineries and other movable properties of the company in liquidation. 4. Learned adv .....

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After referring to the said order, learned advocate submitted that the sale of the assets and properties of the company in liquidation was as is where is and whatever there is basis. He submitted that condition No.7 of the said order provides that the purchaser shall pay all the taxes in relation to property levied/leviable by the State Government or any local authority in relation to the company in liquidation. It is hereby abundantly clear that such dues shall include all the outstanding dues .....

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submitted that after the execution of the deed of conveyance, the applicant No.1 applied to the Mamlatdar, Anand in the year 2008 to enter the name of applicant No.1 as the owner of the said lands pursuant to the deed of conveyance. The concerned officer of the office of Mamlatdar, Anand, by his note dated 05.11.2008, rejected the application of applicant No.1 observing that the application of the applicant is rejected because there is a charge noted in favour of sales tax. Learned advocate ref .....

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ion was given to the office of Mamlatdar for getting the said lands transferred in the name of applicant No.1 pursuant to the deed of conveyance dated 29.10.2004. However, the said application was rejected on 06.08.2011. 7. Learned advocate Mr. A.L.Shah for the applicants contended that the applicants are not liable to pay the sales tax dues of the company in liquidation in respect of the period prior to the date of liquidation. He contended that the lands were sold and conveyed to the applicant .....

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the company in liquidation. He further contended that there are several judgments and orders of this Court wherein it has been held that the purchaser of property of a company in liquidation in court auction is not liable to pay the past sales tax dues of the company in liquidation. 8. Learned advocate Mr. Shah thereafter contended that if the sales tax authorities have any claim against the company in liquidation in respect of sales tax dues, they have to prefer their claim before the responden .....

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extract in respect of their claim against the company in liquidation and issue no due certificate to the applicants. Learned advocate vehemently contended that the sales tax is not a charge and does not create a charge on the lands of the person who is liable to pay the sales tax. Such dues does not create any charge on the land of the company in liquidation. The same is to be dealt with as per the provisions of Section 530 and other relevant provisions of the Companies Act, 1956. Hence, the app .....

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he company in liquidation for which the applicants are purchasers. Hence, the respondent No.2 be directed to issue no objection certificate in favour of the applicants with further direction to respondent No.2 to remove or withdraw their noting made in the revenue record. 9. Learned advocate Mr. Shah has placed reliance upon the decision rendered by the Hon ble Supreme Court in the case of Rajratna Naranbhai Mills Co. Ltd. v. Sales Tax Officer, Petlad [1991 (3) SCC 283] and order dated 28.01.201 .....

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the Deputy Sales Tax Commissioner, Anand on 22nd September 2014 requesting them to file their claim in the office of the Official Liquidator but the reply from the Deputy Sales Tax Commissioner was not received till the filing of the report. He further contended that the claim of sales tax would be considered by the Official Liquidator under Section 530 of the Companies Act after making the payment to the workers and secured creditors in full. 11. Learned Assistant Government Pleader Mrs. V.S.P .....

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shall have to pay all the taxes in relation to the property. She, therefore, submitted that levy of tax/Government taxes and local authorities taxes are required to be paid by the purchaser including the outstanding dues. She, further submitted that as per the said conditions, the applicants have not paid the sales tax dues and therefore charge on the aforesaid lands was not removed. She, therefore, requested that the present application be dismissed. 12. I have considered the arguments canvasse .....

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, Taluka Anand. This Court constituted a sale committee for the sale of the assets and properties of the company in liquidation. Said committee invited offers for the purchase of the land, building and other structure, plant, machineries and other movable properties of the company in liquidation. Applicant No.2 gave his offer for the purchase of the assets and properties of the company in liquidation. The said offer was accepted and the sale was confirmed in favour of applicant No.2 by order dat .....

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equested the revenue authorities for mutation of their names in the revenue record, it was refused on the ground that charge of the Sales Tax Department (respondent No.2) has been recorded in the revenue record and there is a claim of the sales tax authorities against the company in liquidation. 14. In view of the aforesaid broad facts of the present case, the only contention which is taken by the learned Assistant Government Pleader on behalf of respondent No.2 is that as per condition Nos. 7 a .....

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thority in relation to the company in liquidation. It is hereby made abundantly clear that such dues shall include all outstanding dues. [8] The purchaser shall bear the cost of shifting of the records of the company as Official Liquidator directs. 15. Thus, the only question which is required to be considered by this Court is with regard to interpretation of the words used in condition No.7 i.e. the taxes in relation to property and whether the said words include the sales tax liability of the .....

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y all the taxes relating to the property of the company in liquidation and sales tax cannot be said to be the taxes in relation to property. Moreover, as observed earlier, the applicants have paid full consideration of the property. 16. Now, it would be appropriate to consider the relevant provisions of the Companies Act, 1956. Clause (a) of sub-section (1) of Section 530 of the Companies Act provides that: 530. Preferential payments.- (1) In a winding up [subject to the provisions of section 52 .....

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ority at the relevant date and having become due and payable within the twelve months next before that date shall be paid in priority to all other dues in a winding up proceedings subject to provisions of Section 529A of the Act and the same shall be paid in priority to all other dues. Clause (c) of sub-section (8) of Section 530 provides that: (c) the expression the relevant date means- (i) in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appoi .....

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words, it can be said that the State has priority over debts, liability and obligation of which was borne within the time frame of those 12 months and as such due and becoming due and payable within those 12 months next before the relevant date, ascertainable it necessary later, if not already ascertained. The words having become due and payable within 12 months next before the relevant date need to be understood to mean putting a restriction or cordoning of the amount for which priority is clai .....

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x Department has already lodged the claim before the Official Liquidator in the year 1995. The Official Liquidator would consider the same in accordance with the provisions of Section 530 of the Companies Act. 19. Thus, merely because this Court has observed in condition No.7 of the terms and conditions that the purchaser is required to pay all the taxes in relation to the property levied/leviable by the State Government or any local authority in relation to the company in liquidation, it does n .....

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de order dated 28.01.2010 in Company Application No.464 of 2009, observed and held in para 4, 5 and 6 as under: 4. Learned Assistant Government Pleader vehemently contested the application to submit that the dues of the State Government are crown debts and are required to be discharged prior in point of time before any Secured Creditor is paid off. Learned Assistant Government Pleader further submits that the dues in the present question relate to 1998-99 and various recovery notices have been i .....

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and should not be applied to the present case. 5. It is an accepted position that the Company was ordered to be wound up by the High Court on 22.2.2002 made in Company Petition No. 354 of 1999 whereas, as already recorded, the assessment was framed on 30.6.2003. In the circumstances, any demand raised pursuant to such assessment after the order of winding up cannot claim priority in light of provisions of sections 529A and 530 of the Companies Act, 1956 read together. As already laid down by th .....

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