TaxTMI 
TaxTMI 
2018 (5) TMI 2173
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..... Reliance is placed on the judgment of the Supreme Court in Maharashtra State Co-operative Bank Ltd. v. The Assistant P.F. Commissioner, AIR 2010 SC 868 to plead that dues of the applicants have priority over all other dues. 3. A reply has been filed by the OL wherein it has been pointed out that the OL was appointed as the provisional liquidator of the respondent company on 01.10.2002. Subsequently, a winding up order was passed on 23.09.2004. The OL invited claims on 23.01.2004. Last date for filing of claims was 23.02.2004. The applicant never filed any claim pursuant to the said publication. By 27.09.2005 claims of secured creditors and workmen were settled and sanctioned by the court on the basis of a total sum of Rs.3.86 crores available at that time. In 2006, payment of all the workmen, except those who remained untraceable, was made. Additional claims of workmen were scrutinized from time to time. After distribution of the dividends, in 2010 the OL was left with balance of Rs.5,76,162.65 which this court had directed to be transferred to the Public Account of India. 4. Based on the above, it is pleaded relying upon section 474 of the Companies Act, 1956 (hereinafter refe....
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....given to the payment of any amount due from an employer will operate against all types of debts. ....... 47. Section 11 gives statutory priority to the amount due from the employer vis-`-vis all other debts. Clause (a) of sub-section (1) of Section 11 is applicable to cases where an employer is adjudicated insolvent or, being a company, an order of its winding up is made. In that situation, the amount due from the employer in relation to an establishment to which any Scheme or the Insurance Scheme applies in respect of any contribution payable to the Fund or, as the case may be, the Insurance Fund, damages recoverable under Section 14B, accumulations required to be transferred under Section 15(2) or any other charges payable by him under any other provision of this Act or of any provision of the Scheme or the Insurance Scheme. Clause (b) is applicable to cases where the amount is due from the employer in relation to exempted establishment in respect of any contribution to the provident fund or any insurance fund in so far it relates to exempted employees under the rules of provident fund or any insurance fund, any contribution payable by him towards the Pension Fund under Secti....
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....e it to the amount determined under Section 7A or the contribution payable under Section 8. If interest payable by the employer under Section 7Q and damages leviable under Section 14 are excluded from the ambit of expression "any amount due from an employer", every employer will conveniently refrain from paying contribution to the Fund and other dues and resist the efforts of the concerned authorities to recover the dues as arrears of land revenue by contending that the movable or immovable property of the establishment is subject to other debts. Any such interpretation would frustrate the object of introducing the deeming provision and non obstante clause in Section 11(2). Therefore, it is not possible to agree with the learned senior counsel for the appellant- bank that the amount of interest payable under Section 7Q and damages leviable under Section 14B do not form part of the amount due from an employer for the purpose of Section 11(2) of the Act. " 6. Hence, there can be no dispute on the contention of the learned counsel for the applicant that the dues of the applicant have priority against the statutory as well non-statutory secured and non-secured debts including on asset....
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....e entitled to disturb the distribution of any dividend declared before the proof of his debt by reason of the fact that he did not participate in it. He is however, entitled to be paid out of any money for the time being in the hands of the Liquidator available for distribution of dividend The scheme of the law therefore does not prescribe any other penalty in the case of a belated claim. I am fortified in this view by the decision in In re General Rolling Stock Company 1871 (7) Ch. App 646. There the winding up order was made in February 1865 and the certificate of debts and claims was made in December 1870 A dividend was paid on the established debts in January, 1871. In March 1871, the holder of some bills of exchange to a large amount, which had become payable in February, 1865, gave the first notice of his claim and applied for leave to prove, not disturbing the previous dividends. It was held on appeal that he was entitled to do so without disturbing the previous dividends. I am in respectful agreement with that view. A similar point arose for consideration in In re Metcalfe 1879 (13) Ch. D. 236 and it was held that a creditor may come in as long as there are undistributed as....
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....e that an application for excusing delay in filing proof of a claim should be allowed, and so long as justice can be done to a creditor without disturbing the dividend already declared or paid, there is no reason why he should be prevented from getting his dividend. In re, General Rolling Stock Discount Co's Claim. (1872) 7 Ch A 646 at p. 649 Mellish, L. J. explains thus the principle that should be observed in a case of this description:-- "..... The Legislature intended us to follow the analogy of other cases where the assets of a debtor are to be divided amongst his creditors, whether in bankruptcy or insolvency, or under a trust far creditors or under a decree of the Court of Chancery in an administration suit. In those cases the rule is that everybody who had a subsisting claim at the time of the adjudication, the insolvency, the creation of the trust for creditors, or the administration decree, as the case may be, is entitled to participate in the assets and that the statute of limitation does not run against this claim, but as long 3S assets remain unadministered he is at liberty to come in and prove his claim, not disturbing any former dividend." In view of the princi....
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....e rule is that everybody who had a subsisting claim at the time of the adjudication, the insolvency, the creation of the trust for creditors, or the administration decree, as the case may be, is entitled to participate in the assets, and that the Statute of Limitations does not run against this claim, but, as long as assets remains unadministered he is at liberty to come in and prove his claim, not disturbing any former dividend. Therefore so long as justice can be done to a creditor without disturbing the dividend already declared or paid, there is no reason why he should be prevented from getting his dividend. In the present case it would seem to me that the applicant would come within the meaning of Rule 91 and I am therefore prepared to excuse the delay. I therefore direct the Official Liquidator to admit the applicant's claim without further proof and pay her the dividend due to her if he can do so without disturbing the previous dividend and if he has funds enough in his hands......" 13. Reference may also be had to A.Ramaiya "Guide to Companies Act," Seventeenth Edition, where in respect of Section 474 of the Companies Act, the learned Author notes: "The object of t....
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....laims only under these two heads and his submission is that in order to ensure the timely and early payment to the workers, he does not dispute the calculations given by them under other heads. Same is the stand adopted by Mr.Luthra, learned counsel for the OL. Therefore, we have to consider the admissibility of the workers' claims under the aforesaid two heads." xxx "........... Making calculations in this manner, the total claims of the workers would to the tune of Rs.3.40 crores. There are claims of three secured creditors, namely, Canara Bank, HFC and Essenda Finanze Pvt.Ltd. which are for Rs.374 lacs, Rs.120 lacs and Rs.4 lacs respectively. The funds available with the OL, as indicated in the report by the OL, are Rs.3.86 crores. On distributing the aforesaid funds to the secured creditors and workers, on pari passu basis, keeping in view the provisions of Sections 529 and 529 A of the Companies Act, 1956, dividend to be distributed to the secured creditors and the workers would be in the following manner: Canara Bank = Rs.172.27 lacs - 44.63% HFC = Rs. 55.28 lacs - 14.32% Essenda Finanze Pvt.Ltd. = Rs.1.82 lacs - .48% Workers = Rs. 156.60 lacs - 44.57%" 16.....