Winding-up proceedings may cover disputed interest on an admitted debt, without requiring a separate civil suit.

Where a winding-up petition concerns an admitted principal debt that has been paid, the company court may determine the surviving claim for interest as an ancillary issue, instead of requiring the creditor to file a separate civil suit. The principle that winding-up proceedings cannot be used to recover a debt that is bona fide disputed on liability does not apply where the principal liability is admitted and only interest remains contested. The note also states that the relevant High Court rules contemplate company appeals being placed before a Division Bench for admission, and that a meritless appeal may be dismissed in limine.

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Issues: Whether, in a winding-up petition where the principal debt was admitted and paid but interest alone was disputed, the company judge could determine entitlement to interest and whether the appeal against the order directing payment of interest was liable to be entertained.

Analysis: The principal debt was not in dispute and had been paid after the winding-up proceedings commenced. The only surviving controversy related to interest on that admitted liability. In such a situation, the company judge, being already seized of the winding-up matter, was held to be the proper forum to determine whether interest was payable, rather than driving the creditor to a separate civil suit. The earlier principle that a winding-up petition cannot be used to enforce a debt bona fide disputed on liability was held inapplicable because there was no bona fide dispute about the principal amount. The appellate court also held that the relevant High Court rules envisaged company appeals being placed before a Division Bench for admission, and that the appeal could be dismissed if it disclosed no merit.

Conclusion: The company judge was competent to decide the claim for interest, and the appeal was dismissed in limine.

Ratio Decidendi: Where the principal debt is admitted and paid in winding-up proceedings, the company court may determine the ancillary claim for interest, and a separate civil action need not be insisted upon merely because the interest component is disputed.

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