The words 'due' and 'due and payable' occurring in section 530(1)(a) of the Companies Act, 1956 mean that the revenue, tax, cess or rate, due from the company to the Central or State Government or to a local authority must be presently payable, that is, that the liability could be enforced as at the relevant date and, secondly, it must have so become presently payable within the twelve months immediately proceeding the relevant date.

JUDGMENT :

B.K. Divan, J.

1. The question of law which arises in both these matters is regarding the preferential claims under section 530(1)(a) of the Companies Act. Under that section, in a winding up, there shall be paid in priority to all other debts, inter alia, 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) of section 530 and having become due and payable within the twelve months next before that date. Company Application No. 26 of 1973 came up for hearing before B. K. Mehta J. on October 11, 1973. In this application priority is claimed by the income-tax department in respect of certain dues. At the same time priority is also claimed in respect of certain sales tax liability of the company in liquidation on behalf of the State Government and in the company application the main question is whether, and if so, to what extent, priority can be recognised for the liabilities for income-tax and sales tax dues. When the matter came up for hearing before B. K. Mehta J. his attention was drawn to the decision of D. A. Desai J. in Company Application No. 94 of 1973 in Company Petition No. 21 of 1966, being the matter of sales Tax Officer, Petlad v. Rajratna Naranbhai Mills Co. Ltd., (1974) 44 Comp Cas 65. B. K. Mehta J. was unable to agree with the conclusions reached by D. A. Desai J. in Rajratna Naranbhai Mills Co.'s. case and hence he referred the matter to a larger Bench so that the entire question may be decided.

2. Before this Company Application No. 26 of 1973 could be taken up for final hearing, appeal filed by the Sales Tax Officer, Petlad, in Rajratna Naranbhai Mills Company's case, being O. J. Appeal No. 2 of 1975, became ripe for hearing and since the question in both the matters is the same, we have heard both these matters together and we are disposing of both these matters by this common judgment.

3. Before we proceed with the specific facts of each case, it will be necessary to set out some of the relevant provisions of the Companies Act. Under section 528 of the Companies Act, 1956, provision is made for admitting to proof claims against a company in winding up proceedings. It provides that in every winding up, all debts payable on a contingency, and all claims against the company, present or future, certain or contingent, ascertained or sounding only in damages, shall be admissible to proof against the company, a just estimate being made, so far as possible, of the value of such debts or claims as may be subject to any contingency, or may sound only in damages, or for some other reason may not bear a certain value. Section 529 provides for application of insolvency rules in winding-up of insolvent companies. But the provision which requires consideration in this case is section 530, sub-section (1) (a), which provides for preferential payments. Section 530(1)(a) is in these terms :

"530. (1) In a winding-up, there shall be paid in priority to all other debts -

(a) all revenues, taxes, cases 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."

4. Under sub-section (8) of section 530, for the purposes of section 530

"(c) the expression 'the relevant date' means -

(i) in the case of a company ordered to be wound up compulsorily, the date of the appointment ..... of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless in either case the company had commenced to be wound up voluntarily before that date; and

(ii) in any case where sub-clause (i) does not apply, the date of the passing of the resolution for the voluntary winding up of the company."

5. The company with which we are concerned in Company Application No. 26 of 1973 was taken into voluntary liquidat