Court, they are all being disposed of by this Common Order.
2. For ease of reference, the prayer set out in one of the
For the reasons stated in the accompanying
affidavit, it is prayed that this Hon'ble court may be
pleased to allow the appeal duly setting aside the
order dt.23.11.2004 of the respondent in
proceedings RCC No.9/2002/04/510 to the extent
of treating the claim of the appellant as unsecured
debt and direct the respondent to admit the claim of
the appellant for a sum of Rs.49,66,252/- as
secured debt having precedence over all the secured
debt and pass such other order......
......praying the Hon'ble court may be pleased to
direct the Official Liquidator to give the status of the
claim of the applicant at par with dues to the
workers and other secured creditors pursuant to
Section 529(A) & 530 of the Companies Act and
based on Section 16(C) of APGST Act and
consequently direct the Official Liquidator to pay the
same, if such determination is accepted by the
applicant, as and when the amounts are disbursed
to the secured creditors and pass such other order or
orders as this Hon'ble Court may deem fit and
proper in the circumstances of the case"
3. Heard learned Special Government Pleader for State Tax
appearing for appellants/petitioners and Sri Santhosh Jadhav,
learned counsel for Official Liquidator and Sri
P.V.Markandeyulu, learned counsel appearing for respective
respondents, in all these matters, and perused the record.
4. All these Company Appeals and Company Applications
are preferred by the concerned Commercial Tax Officials of the
State against the Companies-in-Liquidation claiming that the
tax dues of the Companies-in-Liquidation are to be given
priority over the sums due to the other creditors of the
Companies-in-Liquidation by treating the said dues on par with
the dues payable to the workers and secured creditors.
5. The case of the appellants/applicants is that on account
of Section 16-C of the Andhra Pradesh General Sales Tax Act,
1957 (for short 'Act') the tax dues takes precedent over the other
dues, and thus, sought for a direction being issued to the
Official Liquidator to record their preferential claim.
6. The appellants, in some of the cases applicants, have
assailed the action of the Official Liquidator in registering the
claim of the petitioners only in respect of dues that have fallen
due within 12 months before the order of the winding up passed
by this Court, as the same not being in consonance with Section
16-C of the Act, which provides for treating the eligibility under
the Act to be first charge on the property of the dealer or such
person.
7. Though on behalf of the appellants/applications it has
been contended that on account of insertion of Section 16-C in
the Act, any amount of tax due, government loan extended to
the dealer due to treating the deferred tax as deemed to have
been paid, penalty, interest, and in any other sum if any,
payable to be the first charge on the property of dealer or such
person, it is to be noted that though Section 16-C of the Act
begins with non-abstinence clause, by the use of the word
'notwithstanding anything to the contrary contained in any law',
the said overriding effect is in relation to any other dues under
the statutes of the State.
8. On the other hand, Section 529A of the Companies Act,
1956 (for short 'Act 1956'), provides for overriding power with
regard to preferential payments, as inserted by Act 35 of 1985
w.e.f., 24.05.1985.
9. Further, as regards the issue as to whether the tax dues
under the State enactments are to be given preferential
treatment, by considering charge over the property of the
Company-in-liquidation, though on behalf of the
appellants/applicants reliance is placed on the decision
rendered in the case of State Bank of Travancore v. Recovery
Officer 1, Dena Bank v. Bhikhabhai Prabhudas Parekh &
Co. 2, and Central Bank of India v. State of Kerala 3, it is to
be noted that the said issue is no longer res integra in view of
the recent decision of the Hon'ble Apex Court in the case of
Industrial Development Bank of India vs. Superintendent
of Central Excise and Customs and Others 4, wherein the
scope of Section 529A and also Section 530 of the Act, 1956 vis-
à-vis the provisions of the other Statutes has been explained in
detail.
2007 SCC Online Ker 314
(2000) 5 SCC 694
(2009) 4 SCC 94
2023 INSC 746
10. The Apex Court in the aforesaid judgment had held that
the provisions contained in any other statute do not in any
manner indicate or override the statutory preferences in terms
of Section 529A of the Act, 1956, which treats secured creditors
and workmen dues as overriding preferential payments. The
Supreme Cout also held that government 'dues' limited to debts
'due and payable' in the twelve months next before the relevant
date, are to be treated as preferential payments under Section
530 of the Act, 1956, but are ranked below overriding
preferential payments and have to be paid after the payment
has been made in terms of Section 529 and 529A of the Act,
1956.
11. The Apex Court by referring to the judgment in Rajratha
Naranbhai Mills. Co. Ltd vs. Sales Tax Officer, Petlad 5 had
also explained as to when the tax may become due and though
become due, but would become 'due and payable' only when the
returns were filed in terms of the Statue.
12. The Apex Court further held that the dues prior to 12
months next to the relevant date viz., the date of winding up of
the Company-in-Liquidation, can only be considered as
(1991) 3 SCC 283
preferential payment under Clause (a) of sub-Section (1) of
Section 530 of the Act, 1956, but are ranked below the
overriding preferential payments and have to be paid only after
affecting the payments in terms of Section 529 and 529A of the
Act, 1956, and thus, the prior secured creditors are entitled to
enforce their charge, notwithstanding the government dues
payable.
13. In the aforesaid authoritative pronouncement of the Apex
Court clarifying the position of law on Section 529A and 530
vis-à-vis charge being claimed by the petitioners/appellants
under the said enactment over the property of the dealer or any
such person, this Court is of the view that the claim of the
petitioners/appellants in the present appeals/applications
cannot be acceded to by giving preferential treatment under
Section 529A of the Act, 1956, except for a period of 12 months
prior to the relevant date i.e., date of winding up of the
Companies-in-Liquidation for the purpose of preferential
payment in terms of Section 530(1)(a) of the Act, 1956.
14. Accordingly, the Official Liquidator is directed to consider
the claim of the petitioners/appellants for a period of 12 months
prior to the relevant date viz., date of winding up of the
Companies-in-Liquidation, respectively, for the purpose of
preferential payment in terms of Section 530(1)(a) of the Act,
1956 and make necessary payment after paying the workmen
dues and debts due to secured creditors, which have an
overriding preferential payment as per Section 529A of the Act,
1956, from and out of the sale proceeds of the Companies-in-
Liquidation.
15. Subject to the above direction, all these Company Appeals
and Company Applications are disposed of. No costs.
_____________________
T. VINOD KUMAR, J
31st January, 2025.
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