Priority of debts in company winding up is controlled by the Companies Act, not provincial insolvency rules.

In company winding up, questions of priority among debts are governed by section 230 of the Indian Companies Act rather than section 61 of the Provincial Insolvency Act. Section 229 applies bankruptcy rules only so far as they can be adapted, but where the Companies Act specifically regulates a subject, it prevails over the Insolvency Act. Because section 230 directly addresses the ranking of debts, including Crown debts and other priority claims, it is the controlling provision for winding up priorities and excludes resort to section 61.

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Issues: Whether, in the winding up of a company, questions of priority of debts are governed by section 230 of the Indian Companies Act or by section 61 of the Provincial Insolvency Act.

Analysis: Section 229 of the Indian Companies Act makes the rules of bankruptcy applicable to winding up proceedings only as far as may be. Where there is a conflict between the Companies Act and the Insolvency Act, the Companies Act prevails. Section 230 specifically deals with priority among the classes of debts in winding up, including debts due to the Crown and certain other claims, and is framed to regulate the very subject addressed by section 61 of the Provincial Insolvency Act. The proper construction therefore confines all questions of priority in winding up to section 230 and excludes resort to section 61 of the Insolvency Act.

Conclusion: Priority of debts in winding up is governed by section 230 of the Indian Companies Act and not by section 61 of the Provincial Insolvency Act; the appeal fails.

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