Liquidation sale dues cannot be forced on the Official Liquidator outside the statutory distribution scheme; purchaser's remedy lies in contract.

In liquidation, the Official Liquidator cannot be compelled at a purchaser's instance to pay arrears of property tax and electricity dues from sale proceeds contrary to the statutory distribution scheme under the Companies Act. A sale on an as-is-where-is basis does not permit the purchaser to fasten such liabilities on the liquidation estate merely because the assets were sold during winding-up. Any enforceable covenant relating to clearance of dues lies, if at all, against the secured creditor or other party that executed the sale deed. The request to direct payment from the sale proceeds was rejected, leaving the purchaser to pursue any contractual remedies separately.

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Issues: Whether the Official Liquidator could be directed, at the instance of the purchaser, to pay arrears of property tax and electricity dues out of the sale proceeds of the company under liquidation, and whether such liabilities could be fastened on the liquidation estate despite the sale having been effected by the secured creditor.

Analysis: The property had been sold in the context of liquidation proceedings, with the secured creditor acting under its rights in respect of the assets and the sale being treated as one on an as is where is basis. The liability of a company under liquidation cannot be met by a direction to the Official Liquidator at the instance of a purchaser in preference to the statutory scheme of distribution. The Official Liquidator is bound to realise the assets and distribute the proceeds in accordance with the order of priority under the Companies Act and cannot give assurances that liabilities attached to the property will be cleared for the purchaser. Any covenant in the sale deed, if enforceable, was a matter between the purchaser and the secured creditor who executed the sale deed.

Conclusion: The request to direct the Official Liquidator to make payment of the dues out of the sale proceeds was rejected. The applicant was left at liberty to work out any contractual or other rights against the secured creditor.

Ratio Decidendi: In liquidation, the Official Liquidator cannot be compelled at a purchaser's instance to satisfy liabilities attached to sold assets outside the statutory scheme of distribution, and a purchaser's remedy for any covenant in the sale lies against the party who executed the sale deed.

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