Adjudication of issuance regarding payment of interest on amount due to company under winding up proceeding.

Srinivasan, J.

1. These two appeals arise out of a petition for winding up filed under Section 433(e) of the Companies Act. The appellant in O.S.A. No. 116 of 1987 was the respondent in Company Petition No. 87 of 1985 and the appellant in O.S.A. No. 174 of 1987 was the petitioner in the company petition. The parties will be referred to hereinafter by their rank in the company petition.

2. It is not a matter in dispute that the petitioner supplied skins of sheep and goats to the respondent from January, 1981 to July, 1982, under 17 bills marked as Exs. P 2 to P 18. There was no time limit for payment of the price of the goods nor was there any agreement to pay interest on delayed payments. It is admitted that a sum of Rs. 1,24,752-88 was due to the petitioner and it was making demands on the respondents to pay the same. It issued a notice through a lawyer on 8.12.1982 and the notice is marked as Ex. P45. In that notice, it had not only demanded payment of the principal but also the payment of interest at the rate of 18 per cent per annum. There was no reply to the notice by the respondent. Thereafter, there was correspondence between the parties. On the one hand, the petitioner was demanding payment of money due to it and on the other the respondent was repeatedly assuring the petitioner that it will settle the accounts shortly. Ultimately a telegram was sent by the petitioner on 1.11.1985 demanding payment of principal and interest. Finding that it did not produce the desired result, the petitioner filed the Company Petition as stated above for winding up the respondent company.

3. The respondent while admitting that the principal amount was due, was raising a dispute with regard to its liability to pay the interest thereon. During the pendency of the petition, the respondent was making payments as follows:

1. 7.1.1986 .... Rs. 10,000

2. 6.2.1986 .... Rs. 10,000

3. 19.2.1986 .... Rs. 30,000

4. 19.3.1986 .... Rs. 20,000

5. 2.2.1987 .... Rs. 20,000

6. 17.2.1987 .... Rs. 20,000

Finally it paid the balance due on 29.4.1987.

4. At the time when the petition was heard by the company Court, the respondent contended that the liability to pay interest was in dispute, and, therefore, it fell outside the purview of Section 433 of the Companies Act. The contention on behalf of the petitioner was that the matter of interest was also covered by the provisions of Section 433 of the Companies Act, as the liability to pay the principal amount was not in dispute and as the demand for interest had been made long prior to the filing of the petition.

5. The learned Judge accepted the contention of the petitioner and relying upon the decision of the Punjab and Haryana High Court in Stephen Chemical Ltd. v. Innosearch Ltd. (1986)60 Com. Cas. 702, held that the matter of interest fell within the scope of the company petition. With regard to the rate of interest, the learned Judge directed the respondent to pay interest at the rate of 9 per cent per annum on the principal amount and granted three months time to the respondent to pay the same. The learned Judge directed the petition to be called on 29.7.1987.

6. The petitioner has filed O.S.A. No. 174 of 1987 contending that it will be entitled to interest at the rate of 18 per cent per annum as claimed by it in the notice dt. 8.12.1982. The respondent has filed O.S.A. No. 116 of 1987 contending that it is not liable to pay any interest and, in any event, the question of liability to pay interest cannot be gone into in the proceedings for winding up.

7. Learned Counsel for the petitioner referred to the decision of the Punjab and Haryana High Court in Stephen Chemical Ltd. v. Innosearch Co. Ltd., (1986)60 Com. Cas. 702; and in Delhi Cloth and General Mills Co. v. Stephen Chemicals, (1986)60 Com. Cas. 1046. The proposition laid down in both the cases is that the question of payment of interest is a matter to be considered by the Company Court in the winding up proceedings and the creditor cannot be permitted