| Case ID |
038a35cd-6d38-4161-a718-76681a9bd856 |
| Body |
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| Case Number |
D-2741 of 1946 |
| Decision Date |
Nov 13, 1946 |
| Hearing Date |
Sep 21, 1944 |
| Decision |
The appeal was allowed and the order of the High Court was set aside. The Federal Court held that the Crown was not entitled to any prerogative, priority, or preferential rights or treatment, save those expressly conferred and limited by the Act itself. The court concluded that the income-tax authorities had acted without the necessary leave of the winding-up court under Section 171 of the Indian Companies Act, 1913. The High Court's order restraining the recovery of income-tax was declared ultra vires and void due to Section 226(1) of the Government of India Act, 1935, which deprived the High Court of jurisdiction in matters concerning revenue collection. The decision emphasized the importance of adherence to legal procedures and the limitations on the Crown's priority in liquidation cases. |
| Summary |
In the case of Shiromani Sugar Mills Ltd. (In Liquidation) v. Governor-General In Council, the Federal Court of Pakistan addressed significant issues regarding the recovery of income-tax from a company in liquidation. The court examined the applicability of Section 171 of the Indian Companies Act, which mandates that no legal proceeding can be initiated against a company in liquidation without the court's permission. The court ruled that the income-tax authorities had failed to obtain the necessary leave before attempting to collect tax as arrears of land revenue. This case highlights the complexities of tax recovery in the context of corporate liquidation and the limitations placed on governmental authority in such scenarios. The court's decision reinforces the principle that the Crown cannot claim preferential treatment over other creditors unless explicitly provided by law. This case is crucial for understanding the intersection of tax law and corporate insolvency within the legal framework of the time. |
| Court |
Federal Court, Pakistan
|
| Entities Involved |
Shiromani Sugar Mills Ltd.,
Governor-General In Council
|
| Judges |
Sir Patrick Spens, C.J.,
Sir Srinivasa Varadachariar,
Sir Muhammad Zafrulla Khan, JJ.
|
| Lawyers |
M.C. Setalvad,
G. N. Joshi,
Dr. K.N. Katju,
S.S. Dhawan
|
| Petitioners |
Not available
|
| Respondents |
Shiromani Sugar Mills Ltd. (In Liquidation)
|
| Citations |
1946 SLD 67,
(1946) 14 ITR 248
|
| Other Citations |
Alcock, Ashdown & Co. Ltd. v. CRA AIR 1923 PC 138,
Bank of Bihar Ltd. v. Secretary of State [1932] AIR 1932 Pat. 1,
Best & Co. Ltd. v. Collector of Madras [1918] 1 ITC 18,
CIT v. Official Liquidators, Agra Spinning & Weaving Mills Co. AIR 1934 All. 170,
Damagoria Coal Co. Ltd. [1931] 1 Comp. Cas. 240 Cal.,
Dewarkhand Cement Co. Ltd. v. Secretary of State AIR 1939 Bom. 215,
Food Controller v. Cork [1923] AC 647,
Governor-General in Council v. Sargodha Trading Co. Ltd. [1943] 11 ITR 368 Lah.,
Govindarajulu Naidu v. Secretary of State AIR 1927 Mad. 689,
Hansraj Gupta v. Dehra Dun Mussoorie Electric Tramways Co. Ltd. [1933] AIR 1933 PC 63,
Northern Bengal Co. Ltd. (In Liquidation) [1936] 7 Comp. Cas. 470,
Secretary of State v. Punjab Industrial Bank Ltd. AIR 1931 Lah. 351,
Shukantla v. The Peoples' Bank of Northern India Ltd. (In Liquidation) AIR 1941 Lah. 392,
Spooner v. Juddow [1846-50] (4 Moore's IA 353; 6 Moo. PC 257),
Webb & Co. [1922] 2 Ch. 369,
West Laikdih Coal Co. Ltd. [1925] AIR 1926 Cal. 781
|
| Laws Involved |
Income-tax Act, 1961,
Indian Companies Act, 1913,
Government of India Act, 1935
|
| Sections |
222,
46(2),
171,
230,
232,
226
|