Post-liquidation municipal taxes are liquidation expenses, and an auction purchaser is not liable absent clear notice shifting the burden.

Municipal property tax and water tax accruing after a winding-up order, while the company's assets remain in liquidation, are treated as liquidation expenses when they are incurred for preserving or realising the estate. Such post-liquidation dues rank in priority and may be paid out of the liquidation estate. An auction purchaser is not automatically liable for those arrears under an "as is where is whatever there is" clause unless the sale notice clearly shifts that burden or expressly requires the bidder to take the assets subject to encumbrances and municipal claims. In the absence of such clear notice, the liability remains with the Official Liquidator.

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Issues: (i) whether property tax and water tax accruing after the winding-up order but before confirmation of sale were recoverable from the Official Liquidator as expenses of liquidation; and (ii) whether the auction purchaser could be fastened with those dues on the basis of the sale notice and the "as is where is whatever there is" stipulation.

Issue (i): Whether property tax and water tax accruing after the winding-up order but before confirmation of sale were recoverable from the Official Liquidator as expenses of liquidation.

Analysis: The liability in question arose during the period when the company remained in liquidation and the assets continued in custodia legis. Section 530 of the Companies Act, 1956 governs preferential payments for pre-liquidation dues and does not exclude or exhaust post-liquidation expenses. On the facts, the taxes claimed for the interregnum were treated as expenses incurred for preserving, realising or getting in the assets. Rule 338 of the Companies (Court) Rules, 1959 was applied to hold that such expenses rank in priority and are payable out of the liquidation estate.

Conclusion: The post-liquidation municipal tax liability was payable by the Official Liquidator and not rejected merely because it arose after the winding-up order.

Issue (ii): Whether the auction purchaser could be fastened with those dues on the basis of the sale notice and the "as is where is whatever there is" stipulation.

Analysis: The sale notice protected the Official Liquidator only as to the quality, quantity and specification of the assets and did not clearly warn bidders that they would take the assets subject to arrears of municipal taxes and other encumbrances. The Court distinguished precedents where the purchaser had been expressly required to satisfy himself about title, encumbrances and claims. It also noted the effect of Section 185 of the Madhya Pradesh Municipal Corporation Act, 1956, under which arrears were not recoverable from an occupier who was not the owner for the relevant period. In the absence of a clear stipulation shifting the burden, the purchaser could not be saddled with the arrears.

Conclusion: The auction purchaser was not liable for the disputed arrears and the burden remained on the Official Liquidator.

Final Conclusion: The claims for property tax and water tax for the post-liquidation period were held to be liquidation expenses payable from the company estate, and the appeals challenging that view were rejected.

Ratio Decidendi: Where municipal taxes accrue after a winding-up order while the company's assets remain under liquidation, and the sale notice does not clearly shift liability to the purchaser, such dues are treated as expenses of preserving and realising the assets and are payable by the Official Liquidator in priority.

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