TMI Blog1975 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... red that a sum of Rs. 20,542.50 was payable to one L. A. Lakshmanan Chettiar as surplus assets refundable to him in respect of 250 shares held by him in the bank. It also appears that the liquidator has deposited the sum as a part of Rs. 75,730.74 as amounts not claimed and unpaid to the contributories. On November 30, 1973, the Regional Director of the Company Law Board, the third respondent, passed an order sanctioning the payment of Rs. 20,542.50 to the 4th respondent. Claiming the sum of Rs. 20,542.50 in deposit, in the company's liquidation account, as an asset of the company, the applicant (The Commissioner of Income-tax (Recovery), Madras) seeks the payment of Rs. 10,853.55. It is further claimed that no amount could be earmarked for a contributory and, as such, the claim of the income-tax department has to be satisfied first before the payment could be claimed by the 4th respondent. Company Application No. 461 of 1973 is for such payment out. Application No. 462 of 1973 is for injunction restraining the third respondent from sanctioning the payment. Application No. 421 of 1974 is for a declaration that the order of the third respondent, dated November 30, 1973, is a nul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of administrative prudence only. Any claim under section 555(7)(b) of the Companies Act, 1956, is determined on the basis of evidence produced by the claimants to prove their title and on the basis of statements filed by the liquidator with the Registrar of Companies under section 555(3) of the Companies Act, 1956. I further submit that under section 555(7)(b) of the Companies Act, 1956, a person claiming the amount instead of applying to the court may apply to the Central Government for payment of the money not claimed earlier when it was distributed by the liquidator." The 4th respondent claims the amount under a will of one Lakshmanan Chettiar. He states in his counter as follows : " On November 21, 1970, the 2nd respondent sent another reminder to the liquidator of the 1st respondent-bank that settlement of my claims is pending and the liquidator may furnish the necessary certificate for payment out from the company's liquidation account. On November 25, 1970, the liquidator sent a reply stating that the appeal proceedings in respect of income-tax relating to the bank was still pending and hence he was unable to comply with the direction. After several reminders, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regional Director of the Company Law Board, is that he went by the statement filed by the liquidator and he was otherwise satisfied even without a certificate that the 4th respondent was entitled to the same as the legatee of the original contributory, and, therefore, the order was passed in favour of the 4th respondent on 30th of November, 1973, and no exception could be taken to the same. It is not correct to contend that these amounts are still the assets of the company since in the statement filed under section 555(3) it has been specifically earmarked for that contributory. In the absence of any specific claim by the income-tax department, it would be open to the Company Law Board to make an order sanctioning the payment. I will now take up the first question whether the amount of Rs. 20,542.50 is still an asset of the company. The relevant sections may briefly be referred to. Section 511 of the Act speaks of the distribution of all the property of the company. Section 512(3) requires the liquidator to pay the dues of the company and to adjust the rights of the contributories among themselves. Section 555 requires the liquidator to deposit the unclaimed dividends and undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany in liquidation is situated : Provided that in respect of the amounts paid under sub-section (2) of section 17 of the Deposit Insurance Corporation Act. 1961 (XLVII of 1961), and any provision for unpaid amounts made under section 20 of that Act by the Deposit Insurance Corporation, the liquidator shall make payment to the Corporation as required by clause (a) of sub-section (2) of section 21 of the Act. 9. Claims for payment through Central Government--(1) Any person applying to the Central Government under clause (b) of sub-section (7) of section 555 of the Act shall make such application under his own signature or through a power of attorney-holder, giving details of the amount and name of the company from which the amount is due to him. (2) Every such application shall be accompanied by a treasury chalan in token of payment of fees chargeable for the amount of the claims in terms of the Companies (Fees on Applications) Rules, 1961. Such fee shall be deposited into the Government Treasury under the head 'XXI--Miscellaneous Department--Miscellaneous--Registration of Joint Stock Companies'. (3) The application received by the Central Government shall be sent to the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted assets, the liquidator will have to deposit them into the company's liquidation account. But the question is, when such deposit is made and statement is filed, as required under section 555(3), does it cease to be an asset of the company ? It is, in this connection, the case law will have to be examined. In Spence v. Coleman [1901] 2 KB 199 (CA) the Court of Appeal, while considering the proportion of the surplus assets of a company in liquidation belonging to a shareholder who could not be found was, in compliance with sub-section (3) of section 15 of the Companies (Winding-up) Act, 1890, paid by the liquidator, to the " company's liquidation account " with the Bank of England, held that the sum so paid in was not a " debt " due to the shareholder, and that it could not be attached by his judgment creditor by means of a garnishee order under Order XLV, rule 1, of the Rules of the Supreme Court. In re Aidall Ltd. [1933] Ch 323 (CA) is very much relied on, because in that case, a shareholder received moneys from the liquidator, upon a distribution of surplus assets with notice that the liquidator had not provided for payment of a debt and, therefore, he was directed to repay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly constitute the asset of the company. No doubt, as per rule 9 of the Company's Liquidation Account Rules, 1965, it has to be deposited into the company's liquidation account. But, while making the payment into the public account, the liquidator has also to file a statement in the prescribed form setting forth in respect of the sums included in such payment, the nature of the sum and the persons entitled to participate therein, the amount to which he is entitled and the nature of the claim thereto. This is the enabling provision by which the officer appointed under the Central Government can come to a conclusion about the claims and the nature of the claims. On a careful consideration, I am of the view that the respective stands of the applicant and respondents are extreme. Merely because the statement is filed showing the nature of the claim and the claimant is entitled to the amount, it does not cease to be an asset of the company and is earmarked for the contributory. It can only mean that the contributory is prima facie entitled to the said sum and that entitlement can be defeated by the preferential claims like the arrears of revenue to the State. Equally, it cannot be h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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