Companies Liquidation Account claims depend on whether the claimant's own court application under section 555 is pending.

Section 555 of the Companies Act, 1956 creates alternative routes for a claimant to recover money from the Companies Liquidation Account, and clause (b) applies only where that same claimant has not already pursued the court remedy under clause (a) and no such application is pending. The proviso to clause (a), the requirements in Rule 9(3) of the Companies Liquidation Account Rules, 1965, and the prescribed indemnity bond were read consistently with that scheme. On the facts, the income-tax department did not show that the appellant's own application under clause (a) was pending when the Regional Director made the order, so the order was not a nullity and the challenge succeeded.

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Issues: Whether the Regional Director's order directing payment of the amount from the Companies Liquidation Account was a nullity because an application under section 555(7)(a) was allegedly pending in court; and how section 555(7)(b) is to be construed in relation to the requirement that no application under clause (a) is pending.

Analysis: The scheme of section 555 of the Companies Act, 1956 distinguishes between payment into the Companies Liquidation Account and subsequent claims for payment out of that account. Clause (a) and clause (b) of section 555(7) provide alternative remedies for the person entitled to the money. The proviso to clause (a) requires notice to the Central Government officer if an application is made to court, while clause (b) authorises payment by the Central Government or its delegate only if that claimant has not already pursued the court remedy and no such application is pending. The Court held that this requirement relates to the same claimant's application under clause (a), not to any application by anyone else. Rule 9(3) of the Companies Liquidation Account Rules, 1965 and the prescribed indemnity bond were treated as consistent with that construction. On the facts, the income-tax department had not established that the appellant's own application under clause (a) was pending when the order was made.

Conclusion: The order of the Regional Director was not a nullity. The appellant's challenge succeeded and the revenue's applications failed.

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