UNION OF INDIA AND ANR. versus INDIA FISHERIES (P) LTD.

Citation: [1965] 3 S.C.R. 679 · Decided: 09-04-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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UNION OF INDIA AND ANR. 
v. 
INDIA FISHERIES (P) LTD. 
April 9, 1965 
[K. SUBBA RAO, J. C. SHAH AND S. M. SIKRI, JJ.] 
Incqme Tax Act 1922, s. 49E-Department's power to set off r•-
fundable amount against tax remaining due-Whether available in 
respect of tax due from company in liquidation-Whether subject to 
ss. 228 and 229 of the Companies Act, 1913. 
The respondent company was directed to be wound-up and an 
official liquidator appointed by an order of the High Court in October, 
1950. In December, 1950, the respondent was assessed to tax amount-
ing to Rs. 8737 /- for the year 194&-49. A claim made for this tax on 
the official liquidator was adjudged and allowed as an ordinary 
claim and certified as such in April, 1952. The Liquidator declared a 
dividend ol'W annas in the Rupee in August, 1954 and paid a sum 
of Rs. 5188 to the Department, leaving a balance of Rs. 3549. 
In June, 1954, the Department made a demand from the respon-
dent and was paid Rs. 2565 as advance tax for the year 1955-56. On a 
regular assessment being made for that year, only Rs. 1126 Was as-
sessed as payable, so that a sum of Rs. 1460, inclusive of interest, 
became refundable to the respondent. However, the Income Tax 
Officer, purporting to exercise the power available to him under s. 49E 
of the Income Tax Act, 1922, set off this amount against the balance 
of Rs. 3549 due for the year 194&-49. A revision petition filed by res-
pondent in respect of this set off was rejected bv the Commissioner 
of Income Tax. 
· 
Thereafter, a petition under Art. 226 filed by the respondent to 
set aside the orders of the Income Tax Officer and the Commissioner 
was allowed by the High Court, mainly on the ground that the 
demand for Rs. 8737 in respect of 1948-49, being adjudged ~nd certi-
fied came to have all the incidents and character of an unsecured 
debt payable by the liquidator to the Department; it was therefore 
governed by the pcovisions of Company Law and no other remedy 
or method to obtain satisfaction of the claim was available to the 
creditor. 
In the appeal to this Court it was contended on behalf of the 
appellant that s. 49E gave statutory power to Income-tax Officer 
to set off a refundable amount against any tax remaining payable 
and that this power was not subject to any provision of any other 
law. 
HELD: The Income Tax Officer was in error in applying s. 49E 
and 8'tting off the refund due to the respondent. [6B3C-D] 
The effect of ss. 228 and 229 of the Companies Act, 1913, is, inter 
aLia, that an unsecured creditor must prove his debts and all un-
secured debts are to be paid pari passu. Once the claim of the Depert-
ment has to be proved and is proved in liquidation proceedings, it 
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[1965] 3 S.('. lt. 
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cannot~ ,by" eXercising the-\ right. under-· s. .i 49E get: priority -over 'the 
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• other unsecured creditors and thus defeat the very object of ss. 223 . 
<ind 229 of the Companies Act. Furthermore, if_ there is ·arr~apparent~· 
conflict between two independant provisions of lavt, the special pro- -
visioii n1us't prevail. Section 49E is a general. Provision applicable to 
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all a~~essees in all circumstances; ss. 228 and 229 deal with proof 
of cieo.s and their payment in liquidation. Section 49E can be recon-
ciled with ss. 228 and 229 by holding that s . .49E applies when insol- ' B'• . 
pency rules do not apply. [682H-683JJ] 
Civ1i APPELLATE JuR1so1crioN: Civil Appeal No. 
211 of 
1964. 
,T-. 
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'Appeal from. the judgment a~d order dated February 22; 1961 
of the Bombay High Court in Miscellaneous Application No. 352 
C 
of 1959. 
· 
Niren De, Additional Solicitor General, R'. Ganapathy Iyer 
and R. N. Sachthey, for the appellants. 
· A. V. Viswanatha Sastri, T. A. Ramachandran, J. B. Dada-
chanji, 0. C. Mathur and llavinder Narain, for the respondents.. 
D 
The Judgment of the Court was delivered by 
Sikri, J. This· appeal is in pursuant to a certificate ()f 
fitness granted by the High ·Court of Maharashtra at Bombay 
under Art. I 33(1)(c) of the Constitu.tion is directed against the 
judgment of the said High Court in a petition under Art. 226 of E 
the Constitution filed by the respondent. 
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The lndia Fisheries (P) · Ltd. hereinafter called the respon• 
dent was a private limited company and. was directed to be wound-
Dp by an order of the Bombay High Court, dated October II, 1950, 
and a Court Liquidator was appointed as the Official Liquidator 

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