In Brief
A sick industrial company (IISCO Ujjain Pipe and Foundry Company Limited) was wound up in 1997, and its assets were sold in 2003 for Rs 20.50 crore. The Official Liquidator admitted pre-liquidation property and water tax claims but rejected Rs 4.63 crore in property tax and Rs 11.12 lakh in water tax for the post-liquidation period (1997–2003). The Supreme Court held that such post-liquidation municipal taxes constitute 'expenses for preserving and realising' company assets under the Companies (Court) Rules, 1959, and must be paid by the Official Liquidator as costs of winding up. The Court found the sale notice and conditions inadequately warned the auction purchaser about these statutory liabilities, and therefore the purchaser could not be held liable. The appeals of the Official Liquidator were dismissed.
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