Legal principle

In a winding-up, an Official Liquidator cannot refuse to receive a creditor's belated or supplementary proof of debt and delay in lodging it will not stand in the creditor's way, but the claim can actually be considered only if and when assets come into the Official Liquidator's hands and claims are invited, with the creditor free to pursue other lawful remedies where assets are held by a secured creditor.

Court decision

The Court disposed of the application with clarifications, effectively in the department's favour on procedure but deferring actual adjudication: if and when the Official Liquidator invites and considers claims of secured and unsecured creditors, the delay in lodging the claim, including any supplementary claim, will not stand in the applicant's way; the Official Liquidator will not refuse to receive the claim; the claim will be considered along with other claims in accordance with law only when claims are invited and assets are available; the applicant may lodge a supplementary, amended, or fresh composite claim within six weeks; and it is open to the applicant to take any other lawful steps to enforce its claim against the company in liquidation. The Court did not decide the Section 142A first-charge question on merits.

Facts

The Commissioner of Customs (Preventive) claimed that M/s. Ishaan Overseals Ltd. (formerly Asheema Fashions P. Ltd.), a company in liquidation since Company Petition 1996, owed customs duty and penalty of Rs. 31.5409 crores plus applicable interest (the goods involved are not identified in the extract). The department had lodged a proof-of-debt claim of Rs. 23,39,42,438 before the Official Liquidator by letter dated 19.04.2011, but the balance of Rs. 8,14,66,678 was inadvertently left out. It therefore filed Company Application No. 87 of 2013 under Rule 177 of the Company (Court) Rules, 1956 seeking condonation of delay in filing an affidavit of proof of debt for the balance amount, asserting a first charge over the company's assets under Section 142A of the Customs Act, 1962. The Official Liquidator reported that no assets or funds were available, claims under Sections 529, 529-A and 530 of the Companies Act, 1956 had not been invited, and secured creditor Punjab National Bank had taken possession of most assets and sold them.

Key provisions

• Section 142A, Customs Act, 1962 — Liability under Act to be first charge