D.A.DESAI - (1.)This appeal by Judges summons is preferred by the Petlad Nagarpalika against the decision of the Official Liquidator of Rajratna Naranbhai Mills Company Limited (in liquidation) (hereinafter referred to as the Company) dated 14th August 1972 rejecting the claim for priority in payment claimed by the petitioner in respect of an amount of Rs. 4 141 P. Petitioner claimed the aforementioned amount from the company. The Liquidator admitted the claim against the company but declined to give priority in payment as claimed by the petitioner under sec. 530(1)(a) of the Companies Act. Aggrieved by the latter part of the order refusing priority in payment the petitioner has taken out this Judges summons under rule 164 of the Companies (Court) Rules challenging the order of the Liquidator. Priority in payment was claimed on the allegation that the petitioner is a local authority and the amount represents the revenue payable by the Company to the local authority. Petitioner is also a licensee for the supply of electricity and the company was the consumer. Petitioner presented the bill for the energy consumed by the company for the months of April May and June 1967 in the aggregate amount of Rs. 4148-69 P. and this amount was outstanding at the relevant date. The company had two independent connections namely ordinary consumer connection and connection for motive power. The break-up of the amount was as under :-
Motive power. Rs. 2278-74 P. Rs. 178-93 Electricity duty.

Lights and fans. Rs. 1862-95 P. Rs. 450-90 Electricity duty.
The amount of electricity duty payable by the licensee to the Government and to be collected from the consumer was Rs. 629-83. One Ramchandra Ganesh Padhye Electrical Engineer Petlad Nagar Palika filed his affidavit in proof of the claim and claimed priority in payment. The liquidator accepted the claim but rejected the claim for priority in payment for the whole or any part of the amount therein. However at the hearing of this summons it was conceded and very rightly that out of the total claim the amount of Rs. 629-83 being the amount of electricity duty payable to the State Government under sec. 4 of the Bombay Electricity Duty Act 1858 would be a tax payable by the consumer through the licensee to the State Government and as that amount was outstanding and had become due and payable within 12 months next before the relevant date therefor it would be entitled to priority in payment The liquidator also conceded again in my opinion rightly that notice charges payable in the amount of Rs. 4/to the State Government would be entitled to priority in payment. Therefore it was conceded that out of the total claim an amount of Rs. 633-83 P. would be entitled to priority in payment. The liquidator contested the priority for the balance of the amount.
(2.)The company was ordered to be wound up by an order made on 26 June 1967. The liquidator after obtaining directions of the Court invited the creditors of the company to prove their debts or claims and simultaneously to establish any title they may have to priority under sec. 530.
(3.)Mr. M. 1. Patel learned Advocate who appeared for the petitioner urged that Petlad Nagar Palika is a local authority and the amount payable to the local authority would be revenue of the local authority and as the amount was outstanding on the relevant date and had become due and payable within 12 months next before the relevant date therefore it would be entitled to priority in payment. Sec. 530(1)(a) reads as under :-
530(1) Preferential payments. In a winding up there shall be paid in priority to all other debts

(a) all revenues taxes cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in clause (c) of sub-sec. (8) and having become due and payable within the twelve months next before the date;
Clause (c) of sub-sec. (8) of sec. 530 defines the relevant date to mean in the case of a company ordered to be would up compulsorily the date of the appointment (or first appointment) of a provisional liquidator or if no such appointment was made the date of the winding up order unless in either case the company had commenced to be wound up voluntarily before that date. Therefore the relevant date for the purpose of present inquiry would be the date on which winding up order was made namely 26 June 1967. In order to claim priority by invoking clause (8) of sub-sec. (1) of sec. 530 it must be shown that revenues taxes cesses and rates due from the company to the local authority were due from the company at the relevant date and had become due and payable within 12 months next before that date. Now there is no dispute in this case that the amount claimed by the petitioner was due at the relevant date and there is equally no dispute in this case that it had become due and payable within 12 months next before the relevant date.
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