TaxTMI 
TaxTMI 
2010 (8) TMI 170
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....e Official Liquidator. On 29-4-2009, the Official Liquidator adjudicated the applicant's claim in the sum of Rs. 9,40,06,139 and rejected the claim to the extent of Rs. 68,55,885 on the ground that it was not proved. The applicants received the sum of Rs. 9,40,06,139 on 23-9-2009 from the Debts Recovery Tribunal without prejudice to their rights to adopt appropriate proceedings for the balance amount. The Official Liquidator, thereafter, on 8-3-2010 readjudicated the applicant's claim and admitted the same even to the extent of the said sum of Rs. 68,55,885 which was earlier rejected. By an order dated 19-3-2010, S.J. Kathawalla, J. directed the Official Liquidator to make payment of the principal amount to the applicant as per the provisio....
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....1956, the dues of the applicant qua a company- in-liquidation cannot take priority over those of the secured creditors and workmen. Sections 529(1), 529A and 530(1)(a) read as under :- "529. Application of insolvency rules in winding up of insolvent companies.-(1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to- ( a)debts provable; ( b)the valuation of annuities and future and contingent liabilities; and ( c)the respective rights of secured and unsecured creditors; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent : Provided that the security of every secured creditor shall be deemed to be subject to a....
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....priority to all other debts- ( a)all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date;" 6. I must decide this question only on precedent as I find it covered by the judgment of the Supreme Court in the case of Central Bank of India v. State of Kerala [2009] 4 SCC 94. 7. The question in that case was whether the provisions of section 38C of the Bombay Sales Tax Act, 1959 and section 26B of the Kerala General Sales Tax Act, 1963 and similar provisions contained in other State legislations by which a first charge has been cr....
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....paragraphs 126, 129, 130 and 131 of the judgment, the Supreme Court held as under :- "126. While enacting the DRT Act and Securitisation Act, Parliament was aware of the law laid down by this Court wherein priority of the State dues was recognized. If Parliament intended to create first charge in favour of banks, financial institutions or other secured creditors on the property of the borrower, then it would have incorporated a provision like section 529A of the Companies Act or section 11(2) of the EPF Act and ensured that notwithstanding series of judicial pronouncements, dues of banks, financial institutions and other secured creditors should have priority over the State's statutory first charge in the matter of recovery of the dues o....
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....nd section 35 of the Securitisation Act cannot be invoked for declaring that the first charge created under the State legislation will not operate qua or affect the proceedings initiated by banks, financial institutions and other secured creditors for recovery of their dues or enforcement of security interest, as the case may be. 131. The Court could have given effect to the non obstante clauses contained in section 34(1) of the DRT Act and section 35 of the Securitisation Act vis-a- vis section 38C of the Bombay Act and section 26B of the Kerala Act and similar other State legislations only if there was a specific provision in the two enactments creating first charge in favour of the banks, financial institutions and other secured credi....