OFFICIAL LIQUIDATOR GANNON DUNKERLEY AND COMPANY MADRAS LIMITED Vs. ASSISTANT COMMISSIONER URBAN LAND TAX

JUDGEMENT

(1.) THIS writ petition has been filed seeking for a writ of certiorari to call for and quash the proceedings of the first respondent dated May 14, 1977, and that of the second respondent-Tribunal dated January 7, 1982. The order of the first respondent is one made under the provisions of section 11 read with sections 5C and 40A of the Tamil Nadu Urban Land Tax Act, 1966 (hereinafter referred to as "the Act"), whereunder the first respondent assessed the writ petitioner who is the official liquidator of Gannon Dunkerley and Co. (Madras) Ltd. to a tax of Rs. 47, 112.50 for each Fasli commencing from Fasli 1385, in respect of urban lands measuring about 276.0662 sq. ft. and 80, 170 sq. ft. in T. S. Nos. 34 and 3756/1 of block 74 of Sembiam and Mylapore villages, which stand registered in the name of the said Gannon Dunkerley and Co. (Madras) Ltd., which is at present under liquidation. Aggrieved against the said order of assessment, the writ petitioner has preferred an appeal before the second respondent-Tribunal and, by an order dated dated January 7, 1982, the second respondent-Tribunal confirmed the order of the first respondent and rejected the appeal. Thereupon, this writ petition has been filed.

(2.) MR. M. S. Sundararajan, learned counsel for the petitioner, raised the following contentions before me at the time of hearing of the writ petition. (1) The company in question is under liquidation and is in the custody of the official liquidator. Such a company under liquidation has no juristic personality and, after the orders of winding up, the company cannot be considered to be the owner of the lands and, consequently, the assessment of the properties of the company in the hands of the liquidator is without the authority of law ; (2) The assets of the company under liquidation belong to the entirety of the shareholders and contributories and even assuming without admitting that the properties in question can be the assets of the company, under the Act, there cannot be a single assessment as though the properties still belong to the company and, if at all, the liability has to be determined only with reference to the number of persons who are entitled to the assets of the company. According to learned counsel, the proceedings are vitiated in this regard also.(3) The provisions of section 2(10) of the Act, which defines 'owner' do not refer specifically to a 'company under liquidation' and, consequently, the petitioner cannot be subjected to the levy under the Act ; (4) The properties in question are also the subject-matter of proceedings under the Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978, and, if the lands are ultimately to vest with the Government, there is no justification to saddle the company with the liability for tax under the Act in respect of the very same properties ; and (5) Regarding the market value fixed, the authorities have not taken into account the offer made by the Government to take the properties at the rate of Rs. 6, 000 per ground. According to learned counsel for the petitioner, the value now arrived at cannot be sustained in the light of the said offer, made by the Government itself.

(3.) THOUGH the submission that a company under liquidation cannot be assessed to tax under the Act has not been raised in that form before the authorities below, having regard to the nature of the issue raised, I do not consider it necessary to reject it on that ground alone. Learned counsel for the petitioner, in respect of his first point, placed reliance upon the decision of this court in Authorised Officer, Land Reforms v. Damodaraswami Naidu 1975 (1) MLJ 432, wherein Ramaprasada Rao J. (as he then was), in respect of a question arising under the Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961, held that, under the Companies Act, no shareholder can say what extent of interest he has in the assets of the company and the shareholding cannot be the foundation for evaluating such an interest in the company itself. While coming to such a conclusion and considering the decision of the Supreme Court in Bacha F. Guzdar v. CIT 1955 (1) SCR 876, 1955 AIR(SC) 74, 1955 SCJ 68, 1955 (25) CC 1, 1955 (27) ITR 1, 1955 (1) MLJ 27, 57 BomLR 617, 1955 (1) MLJ(SC) 27, 1955 (1) MLJ 27 ; 1955 (1) SCR 876, 1955 AIR(SC) 74, 1955 SCJ 68, 1955 (25) CC 1, 1955 (27) ITR 1, 1955 (1) MLJ 27, 57 BomLR 617, 1955 (1) MLJ(SC) 27, 1955 (1) MLJ 27 ; the learned judge expressed the view that there is no assumption that a shareholder who buys shares buys any interest in the property of the company and that the true position of a shareholder is that, on buying shares, he becomes entitled to participate in the profits of the company in which he holds the shares, as and when such dividends were declared, and his right to participate in the assets of the company would arise only after the company is wound up. Relying upon the said observation, learned counsel for the petitioner sought to substantiate the proposition that once there has been winding up, the shareholders will become joint owners of the properties and the properties of the company which were under liquidation can no longer be said to belong to the company. I am afraid that neither on the basis of the judgment of this court nor of the Supreme Court, could such a stand of learned counsel for the petitioner be countenanced.