Proof of debt adjudication governs workmen's claims in liquidation; unauthorised payments on unadjudicated claims are refundable.

In company liquidation, a claim could not be treated as a workmen's claim under section 529A unless the Official Liquidator first adjudicated the proof of debt under the prescribed procedure, recorded an order admitting or rejecting the claim, and filed the certified list in court. Payments made to employees in annexure B without such adjudication were therefore unauthorised, particularly where approval had been sought on a materially incorrect footing that those claims had already been accepted as workmen's claims. The irregular disbursement was liable to be refunded, with the claims to be reprocessed through proper adjudication and further inquiry.

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Issues: Whether the claims of employees placed in annexure B could be treated as workmen's claims under section 529A of the Companies Act, 1956 and paid without prior adjudication in accordance with the Companies (Court) Rules, 1959; and whether the payment already made to such employees was unauthorised, requiring refund and further inquiry.

Analysis: The liquidation procedure required the Official Liquidator to scrutinise proofs of debt, record a written order admitting or rejecting each claim, communicate that decision to the concerned creditor, and file the certified list of admitted and rejected claims in court. The record showed that no such adjudication order existed for the employees in annexure B, yet payment was made to them on the basis of affidavits and a dividend process that did not conform to the prescribed procedure. The court also found that the Official Liquidator had sought approval on a materially incorrect footing, representing that the claims of 464 workmen had been accepted under section 529A, while in fact the claims in annexure B had not been so accepted and were separately classifiable under section 530. The payment to annexure B employees was therefore made without jurisdiction and on a misrepresentation of the actual position.

Conclusion: The payment to the employees in annexure B was held to be illegal and unauthorised, and they were directed to refund the amount pending proper adjudication of their claims.

Final Conclusion: The liquidation claims had to be reprocessed in accordance with the statutory proof-of-debt procedure, and the irregular disbursement was set aside with consequential directions for refund, fresh adjudication, and investigation.

Ratio Decidendi: In company liquidation, a claim cannot be paid as a workmen's claim unless it is first adjudicated in accordance with the prescribed procedure, and any disbursement made on an unadjudicated or misrepresented claim is liable to be treated as unauthorised.

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