Interest can accrue up to the date of the presentation of the winding up petition and not afterwards, as per the Indian Companies Act, 1913 and relevant case law.

1. These appeals, ten in number, are by some of the creditors of the Sitaram Spinning and Weaving Mills Limited, Trichur an insolvent company against a common order of the District Judge of Trichur dated 16 91958. The controversy relates to the date till which interest is admissible under the Indian Companies Act, 1913.

2. According to the appellants the date till which interest is admissible is the date of the order for the winding up of the company which in this case was 411954. According to the Official Liquidators and the order under appeal the relevant date is the date of the presentation of the petition for the winding up of the company which in this case was 14 71953.

3. The only basis for the contention of the appellants is the wording of R.159 of the Indian Company Rules, Travancore-Cochin, 1952. That rule reads as follows:

"The value of all debts and claims against the company shall, as far as is possible, be estimated according to the value thereof at the date of the order of the winding up of the company."

4. There was a similar reference to the date of the winding up order in the rule that obtained in England at the time the decision in (1929) 2 Ch. 261 was rendered. That rule R. 97 of the Companies(Winding up) Rules, 1909, provided that the creditor may prove for interest at a rate not exceeding four per cent per annum from the time when the debt was payable to the date of the winding up order. None-the-less Maugham, J., had no hesitation in holding that the interest should be computed not to the date of the winding up order but only to the date of the commencement of the winding up.

5. Under S.168 of the Indian Companies Act, 1913, "a winding up of a company by the Court shall be deemed to commence at the time of the presentation of the petition for the winding up." S.229 of that Act deals with the application of the insolvency rules in the winding up of insolvent companies. It says:

"In the winding up of an insolvent company the same rules shall prevail and be observed with regard to the respective rights of secured and unsecured creditors and to debts provable and to the valuation of annuities and future and contingent liabilities as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent, and all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company may come in under the winding up, and make such claims against the company as they respectively are entitled to by virtue of this section."

6. Under S.48 of the Provincial Insolvency Act, 1920, the date to which a creditor may prove for interest on his debtor being adjudged an insolvent is the date of such adjudication. S.28(7) of that Act says that "an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made".

7. AIR. 1954 Allahabad 129 is a direct authority against the contention raised by the appellants. In that case the Court said:

"It is obvious that the interest cannot be paid after adjudication and it is not possible to maintain that it should run right up to the date of payment in the case of an insolvent company. It however remains to determine as to what is meant by the date of adjudication. S.28 (7), Provincial Insolvency Act, lays down that:

'An order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made'.

This means that interest should run up to the date of the presentation of the petition in an insolvency case and up to the date of presentation of winding up petition in the case of an insolvent company."

The judgment then quoted with approval the following passage from the judgment of Page, C. J., in AIR. 1931 Rangoon 334:

"S. 229 is only applicable to an insolvent company and in the winding up of an insolvent company interest accruing after the commencement of the liquidation is not a p