Company undergoing liquidation not liable to clear property tax, says SC

LEGAL DIGEST

The Supreme Court last week ruled that the buyer of assets of a company in liquidation had no liability to clear the arrears of property tax, setting aside the judgment of the high court in the case, Champdany Industries Ltd vs The Official Liquidator. In this case, Wool-Combers of India Limited went in liquidation.

The firm bought its assets for a consolidated sum of Rs 7 crore. Later, the Bhatpara Municipality claimed arrears of property tax amounting to Rs 47 lakh. The company contended that it had no liability to pay the dues and the same had to be adjusted from the sale proceeds.

The SC agreed and said: “The municipality was an unsecured creditor. In that capacity it cannot stand on a higher footing than an ordinary unsecured creditor who is required to stand in queue with all others similarly situated for the purpose of realisation of their dues from the sale proceeds.”

Nature of work important criterion for considering regularisation: SC

The Supreme Court has set aside the ruling of the Allahabad High Court in the case, Panki Thermal Station vs Vidyut Mazdoor Sangthan, in which contract workers demanded regularisation on the ground that they were doing the same work as done by the unskilled regular workers.

They asked for equal pay, dearness allowance and other benefits. The labour commissioner accepted their arguments and asked the company to pay them equal wages. The tribunal, however, held that they were not entitled to regularisation. The high court accepted the commissioner’s view.

The SC held that crucial issues regarding the employment of the contract workers, like the nature of the work, were not considered and therefore directed the commissioner to review his decision.

Workmen compensation requires causal connection between work, injury

Damages under the Workmen Compensation Act can be claimed only if the death or injury suffered by a person had a casual connection to his employment, the Supreme Court stated in the case, Malikarjuna vs Oriental Insurance Co. Ltd. In this case, the driver of a truck died when he was taking goods and people for the benefit of the owner of the vehicle.

He slipped and drowned while resting at a temple pond during the journey. The commissioner under the law ruled that his wife was entitled to compensation and asked the insurance company to pay Rs 2.2 lakh to her. On appeal, the Karnataka High Court exonerated the insurance company from the liability, but asked the owner of the vehicle to meet the liability.

He appealed to the SC. It held that there was no connection between his employment and his death. Therefore the owner was also not liable to pay the compensation.

SC dismisses Customs Commissioner appeal in Malwa Industries’ case

The Supreme Court has dismissed the appeal of the Commissioner of Customs against the ruling of the appellate tribunal granting duty exemption to Malwa Industries Ltd. The company, which is in the textile manufacturing business, imported certain goods as raw materials.

The revenue authorities charged additional duty in terms of Section 3 of the Customs Tariff Act. The company challenged the additional duty arguing that in view of a notification on March 1, 2006, no duty was payable. The authorities contended that the duty exemption was available only if the raw material was a product of the same factory.

This argument was rejected by the tribunal. On appeal, the SC upheld the tribunal’s view, observing that when the goods are imported, it would not be manufactured in the same factory. It would be absurd to insist that the goods should be manufactured in the same factory in such cases.

SC dismisses appeal by Carpenter Classic Exim Ltd

The Supreme Court has dismissed the appeal of M/s Carpenter Classic Exim (P) Ltd and some of its executives who were charged by the Commissioner of Customs, Chennai, with undervaluation of goods which it had imported. Earlier, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) had upheld the penalty imposed on the company and the officers, who imported goods from Italy by floating a front company.