1989 (10) TMI 208 - HC - Companies Law

Former management's claim for unclaimed dividends of Rs. 2 lakhs dismissed under Companies Act.

The court dismissed the former management's application for a refund of unclaimed dividend amounting to Rs. 2 lakhs, holding that under section 555 of the ... Winding up - Unpaid dividends and undistributed liquidation account Issues:- Dispute over unclaimed dividend amount of Rs. 2 lakhs held by Registrar of Joint Stock Companies.- Claim by former management of deliquidated company for refund of unclaimed dividend.- Legal entitlement to unclaimed dividend under section 555 of the Companies Act, 1956.- Interpretation of whether unclaimed dividend belongs to creditors or former company management.- Application for refund of unclaimed dividend by former management contested by official liquidator and Central Government.Analysis:The judgment concerns a dispute regarding an unclaimed dividend amount of Rs. 2 lakhs held by the Registrar of Joint Stock Companies. The company in question was ordered to be wound up, and the official liquidator paid the dividends into the Companies Liquidation Account as per the Companies Act, 1956. A Company Petition was filed by the former management seeking a refund of the unclaimed dividend after the company was deliquidated and possession of assets handed over. The applicants claimed entitlement to the amount based on the deliquidation order. However, the official liquidator and Central Government contended that the unclaimed dividend belongs to the creditors as per the Act, and the company's status as in liquidation was relevant. The Act stipulates that unpaid dividends paid into the Companies Liquidation Account are for creditors' benefit, and any claimant must follow the prescribed procedure under section 555.The court analyzed the provisions of section 555 of the Act, emphasizing that unclaimed dividends cannot be returned to the company even after deliquidation. The amount is deemed payable to the creditors, and only they have the right to claim it. The Act allows any person entitled to money in the Companies Liquidation Account to apply for payment, subject to court approval. Additionally, unclaimed amounts after fifteen years are transferred to the Central Government's revenue account. The court cited a previous case to clarify that the term 'any person' in the Act includes the company itself but does not grant entitlement to the unclaimed dividend. The court concluded that the former management lacked the legal right to claim the refund under the Act, dismissing their application.In summary, the judgment highlights the strict legal framework governing unclaimed dividends under the Companies Act, emphasizing the rights of creditors over such amounts. The court's decision underscores the importance of following statutory procedures and upholding the rights of stakeholders as defined by the law.