Case Law Details
Official Liquidator Vs Income Tax (Kerala High Court)
The application was filed by the Official Liquidator seeking various directions in relation to the liquidation proceedings of a company. The reliefs sought included ratification of service of the application on the Standing Counsel for the Income Tax Department, sanction to declare and disburse dividend at the rate of 100 paise in a rupee to four ordinary creditors of the company in liquidation, permission to issue dividend notices in the prescribed form, exemption from newspaper publication requirements, and approval to incur necessary expenses connected with the declaration and payment of dividends.
The Official Liquidator also sought permission to prematurely close a fixed deposit and transfer sufficient funds to the dividend account of the company in liquidation. Further, approval was sought to open a dividend account with Punjab National Bank, M.G. Road, Ernakulam, with an amount of ₹1,50,84,119, and to transfer any unclaimed dividend amount to the Companies Liquidation Account in accordance with Section 555(1) of the Companies Act, 1956.
After considering the averments in the application and hearing the Standing Counsel for the Official Liquidator, the Kerala High Court held that the prayers deserved to be allowed. Accordingly, the application was allowed, and the Official Liquidator was directed to declare the dividend.
Since the period originally proposed had already expired, the Court modified the timeline and directed that disbursement of dividends commence from 01.06.2026, with 30.06.2026 fixed as the last date for payment.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This application has been presented by the Official Liquidator, against the respondent herein, seeking the following reliefs:
“i) ratify the action of the Official Liquidator in serving a copy of this application to the Standing Counsel of the Income Tax Department.
ii. accord sanction to the Official Liquidator to declare and disburse the dividend @ 100 paise in a rupee to the 4 ordinary creditors of the company (in liqn)
iii. permit the Official Liquidator to fix 5.2026 as the date of commencement of disbursement of dividend and 11.6.2026 as the last date of payment of dividend and to transfer the unclaimed amount, if any, into the Companies Liquidation Account after the last date fixed for payment of dividend as required under Section 555(1) of the Companies Act, 1956.
iv. permit the Official Liquidator to issue dividend notice to the creditors entitled to payment of dividend in Form No.138 of the Companies (Court) Rules, 1959 and incur necessary expenses in this regard;
v. permit the Official Liquidator to dispense with the publication of advertisement in newspapers as required under Rule 276 of the Companies (Court) Rules, 1959;
vi. permit the Official Liquidator to close the Fixed Deposit prematurely and transfer the sufficient amount to dividend account of the company (in liqn)
vii. permit the Official Liquidator to open a dividend account with Punjab National Bank, M. G. Road, Ernakulam with a sum of Rs.1,50,84,119/- as provided under Rule 290 of the Companies (Court) Rules, 1959;
viii) permit the Official Liquidator to incur necessary expenses and other incidental expenses in connection with the declaration and payment of dividend from and out of the funds of the company (in liqn);”
Having considered the averments contained in the application, and after hearing the learned Standing Counsel for the Official Liquidator, I am of the opinion that the prayers are only to be allowed. Therefore, this application is allowed, and the Official Liquidator is directed to declare the dividend.
This Court notices that since the time prayed for is already over, the date of commencement of the disbursement of the dividend would be from 01.06.2026, and the last date of payment of dividend will be on 30.06.2026.
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