JUDGMENT

Brijlal Gupta, J. - This is a Special Appeal under section 202 of the Indian Companies Act, VII of 1913, read with Chapter VIII, rule 5 of the Rules of Court against the decision of the learned Company Judge of this Court.

2. The appellant, which is the Antarim Zila Parishad Deoria, claimed a sum of Rs. 4,000 as circumstances and property tax under the U. P. District Boards Act in respect of the years 1955-56 and 1956-57 from the Jagdish Sugar Mills Ltd., gone into liquidation since, at the rate of Rs. 2,000 per year. To prove its claim the appellant produced the assessment order, annexure 'B', dated 4th February, 1956, for the assessment year 1955-56 and annexure 'A', dated 22nd June, 1956, for the assessment year 1956-57. The liquidator did not admit the claim, whereupon the appellant sought to prove it before the learned Company Judge under section 202 of the Indian Companies Act, 1913.

3. The case of the appellant was that the Company had been paying circumstances and property tax at the rate of Rs. 2,000 per year regularly from the year 1949-50 up to the year 1954-55. For the year 1955-56, a notice was issued to the Company for its assessment to tax on 6th August, 1955, and for the year 1956-57 on 19th May, 1956. No objection was filed to assessment for the year 1956-57, and accordingly by order, dated 22nd June, 1956, the assessment was confirmed and notice of demand for Rs. 2,000 was issued to the Company, and served on it on 29th June, 1956.

4. For the year 1955-56 the Company, by letter, dated 5th September, 1955, asked for 15 days time for filing objections. Time was granted, where after a representative of the Company appeared before the assessing authority, and again asked for time, which was also granted, but no objection was filed according to law, nor any evidence or account books produced by the Company, with the result that the provisional assessment was confirmed by order, dated 4th February, 1956, and a notice of demand for Rs. 2,000 was issued to the Company, and served on it on 7th February, 1956. Thus the total demand due from the Company for the two years in question came to a sum of Rs. 4,000.

5. Subsequently, on 10th March, 1960, the Tax Inspector of the appellant reported to the taxing authority that the mill had been sold, and was being worked by the vendee, and the sale proceeds were in deposit with "some officer" in the High Court. On enquiry it was learnt that the sale proceeds were with the Official Liquidator of the Company, which had since gone into liquidation, whereupon a letter was addressed to the Official Liquidator on 14th October,11960, but in the letter instead of the years 1955-56 and 1956-57 being mentioned, the years 1954-55 and 1955-56 were wrongly mentioned, even though the tax of Rs. 2,000 for the year 1954-55 had already been paid, long before,on 5th February, 1955. The demand for the two years in question was still outstanding on' the date of the claim though a representative of the Official Liquidator had gone to the office of the appellant in November- December 1960, and had verified the liability for the tax from the register of the appellant. It is common ground that the winding-up order was made on 21st February, 1958, that is to say, nearly two years after the dates of the confirmation of the provisional assessment by the final assessment orders, annexures 'A' and 'B'.

6. The Official Liquidator filed a brief objection to the claim, namely that

(i) the entire property of the mills having been sold by the Collector, Deoria, by auction, for realisation of the dues of the State Government, on 10th November, 1955, the ownership of the assets of the company vested in the vendee as from that date, and the vendee became liable for the payment of the tax.

(ii) proper service of notices on the Company was denied.

(iii) liability for tax for 1956-57 was denied in to and liability for 1955-56 was alleged to be reducable in the ratio of 11:7 that is to say to Rs. 1,222.22 nP.

7.