In Re: Venad Pharmaceuticals and Chemicals Ltd. (In Liquidation) - Court Judgment

Excerpt:
- code of civil procedure, 1908.[c.a. no. 5/1908]. order 9, rule 4: [v.k. bali, cj, kurian koseph & k. balakrishnan nair, jj] restoration of petition for enhancement of maintenance dismissed for default held, application under order 9, rule 4 c.p.c., is not maintainable. reason being while exercising powers under section 7(2)(a) and entertaining maintenance petition under section 125 of cr.p.c., family court cannot be deemed or treated as civil court. proceedings for maintenance before the family court under section &(2)(a) is criminal in nature. [kunhimohammammed v nafeesa, 2003 (1) klt 364; 2004 cri lj 1000 (ker) overruled]. reference to full bench; held, single judge cannot refer the case to full bench. he can refer the case to division bench. power to refer to full bench is expressly reserved to division bench. merely because a single judge/division bench entertains another view or merely because another view is possible, the judgment shall not be distinguished. - 4. to me, it appears that capital gains is part of the incidence of the sale effected by the official liquidator of the property belonging to the company just like a liability for stamp duty, registration charges or the like. so the decision of the division bench that capital gains tax must be taken as part of the winding up expenses still holds good.k.v. sankaranarayanan, j.1. by these three reports, the official liquidator has sought directions as regards the liability for capital gains tax as regards sales of properties of the companies under liquidation, effected by the official liquidator. he has also sought directions for payment of advance tax.2. notice has been given to learned central government standing counsel representing the income-tax department. i have heard learned counsel for the official liquidator and counsel representing the income-tax department.3. learned standing counsel for the income-tax department has pointed out that a division bench of this court in income-tax officer v. official liquidator, swaraj motors (p.) ltd. [1978] 48 comp cas 11 has held that capital gains tax will be part of the cost charges and expenses incurred inthe winding up and must be paid on a preferential basis. however, in the reports learned counsel for the official liquidator has pointed out a number of instances where the company court has held that the department will not have any priority for the liability for the capital gains tax.4. to me, it appears that capital gains is part of the incidence of the sale effected by the official liquidator of the property belonging to the company just like a liability for stamp duty, registration charges or the like. it is not a debt due by the company as on the date of commencement of winding up or the order for winding up. the decision of the division bench cited above is also a binding precedent. however, it is pointed out by learned counsel for the official liquidator that a learned single judge of the bombay high court has in syndicate bank v. official liquidator, wester works engineers ltd, [1999] 98 comp cas 487 distinguished the division bench judgment of this court and preferred to follow the single bench decision reported in giovanola binny ltd. (in liquidation), in re [1990] 67 comp cas 441 (ker). in the above decisions, the learned judges have relied on the new provision in section 529a of the companies act, 1956, added in 1985 which was not available when the division bench judgment was rendered. but section 529a only puts the claims of workmen pari passu with the secured creditors. it can only be as regards the assets that are available for distribution which naturally must be after providing for the expenses in connection with the winding up. so the decision of the division bench that capital gains tax must be taken as part of the winding up expenses still holds good. however, in the light of the later decision in giovanola binny ltd., in re [1990] 67 comp cas 441 (ker) and also other instances pointed out by the official liquidator, it is considered necessary to have an authoritative decision by a division bench. so the matter has to be placed before a division bench for decision.5. the registrar will place the matter before the chief justice for appropriate orders.