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TMI Blog2023 (11) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... ern Electronics Ltd.) and claims that he also represents other workmen. The appellant has filed the present appeal impugning an order dated 17.02.2023 (hereafter 'the impugned order') passed by the Company Court in Co. Appl. No. 114/2023 in Co. Pet. No. 368/2001. 2. The appellant had filed the said application (Co.Appl.114/2023) for directions under Section 529A of the Companies Act, 1956 (hereafter 'the Act') read with Rule 9 of the Companies (Court) Rules, 1959 (hereafter 'the Rules'). The appellant claims that he represents five ex-workers of the company in liquidation. The claims of the said workmen amounted to Rs.34,09,525/-. However, the funds available with the Official Liquidator were limited. The Report dated 24.07.2019 submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt, the appellant did not press any objection regarding payment of sums transferred to the Establishment Account. He confined the application to the payment of commission to the Government. The learned Company Court held that the Government Commission (Official Liquidator's fees) as contemplated under Section 451(2) of the Act was not a "debt obligation" of the company in liquidation, to be disbursed in the order of priority under Section 529A of the Act. The payment of such fees is triggered only after the winding up petition is admitted and the Official Liquidator is appointed as a Provisional Liquidator or as a Liquidator, which is in contrast with the debts covered under Section 529A of the Act. 5. The learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... becomes or acts as a Liquidator. It is clear that the said fee is payable to the Official Liquidator for discharge of the function of liquidating the company. It is obvious that funds from liquidating the assets of the company would be available only on liquidation of such assets. Thus, the expenses and charges for liquidating the assets would necessarily have to be incurred in order to make available the funds, which may be utilised for the payment of dividends. 9. Sections 529A and 530 of the Act refer to the disbursement of the net funds as may be available with the Official Liquidator. To illustrate the point further, an immovable property of the company may be sold to pay its debts. The expenses for sale of such a property, such as fe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to act as such. The nature of the fees is clearly, in the nature of an expense for liquidating the assets and winding up the company. This is not covered under Sections 529, 529A and 530 of the Act, which refer to the order of priority for payment of dividends on liquidation of a company. 12. In IISCO Ujjain Pipe and Foundry Company Limited. v. Ujjain Nagar Palika Nigam & Ors.: (2023) 8 SCC 138, the Supreme Court held that Sections 529A and 530 of the Act would have no relevance in the context of a claim of an auction purchaser regarding the arears of tax under the Madhya Pradesh Municipal Corporation Act, 1956. The said principle is equally applicable in this case. The relevant extract of the said decision reads as under: "70. The submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the High Court that on the facts and in the circumstances of the present case, arrears of property tax and water tax until the date of confirmation of sale i.e. 4-7-2003, would qualify as the expenses for "preserving, realising or getting in" the assets of the company and thus, shall have to be paid in priority by the appellant OL." [emphasis added] 13. It is also relevant to refer to Rule 338 of the Rules, which reads as under: "338. Cost and expenses payable out of the assets in a winding up by the Court.-(1) The assets of a company in a winding-up by the Court remaining after payment of the fees and expenses properly incurred in preserving, realising or getting in the assets including, where the company has previously commenced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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