Winding-up proceedings can include an admitted debt creditor's interest claim when the dispute is not bona fide, with a reasonable rate applied.

Where the principal debt is admitted and the objection to interest is not bona fide, the company court in winding-up proceedings may determine liability for interest to avoid multiplicity of litigation. The Court treated the admitted debt, prior demand, absence of denial, and repeated assurances to settle as sufficient to entertain the interest claim, and it fixed a reasonable commercial rate rather than the rates sought by either side. Interest was directed at 12 per cent per annum from the date of demand, with credit for payments already made on the relevant dates.

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Issues: (i) whether a claim for interest, where the principal debt is admitted, can be entertained in winding-up proceedings under section 433(e) of the Companies Act; (ii) what rate of interest should be awarded on the admitted debt.

Issue (i): whether a claim for interest, where the principal debt is admitted, can be entertained in winding-up proceedings under section 433(e) of the Companies Act.

Analysis: The admitted principal liability, the prior demand for interest, the absence of any reply disputing liability, and the repeated assurances to settle the account showed that the objection to interest was not a bona fide dispute. The Court held that where the principal debt is admitted and the company seeks to avoid winding up by clearing the debt, the company court may determine the creditor's entitlement to interest in the same proceedings, so as to avoid multiplicity of litigation. The claim also found support in the Sale of Goods Act, the Interest Act, 1978, and the Code of Civil Procedure, 1908.

Conclusion: The claim for interest was maintainable in the winding-up proceedings, and the respondent was liable to pay interest; this issue was decided against the respondent.

Issue (ii): what rate of interest should be awarded on the admitted debt.

Analysis: The Court rejected the claim for 18 per cent and also declined to limit interest to 6 per cent. Taking into account the commercial nature of the transaction, the statutory framework governing interest, and the equitable character of the winding-up jurisdiction, the Court fixed a uniform rate that it considered just and reasonable. The payments already made were to be given credit on the respective dates, and interest was to run on the balance from the date of demand.

Conclusion: Interest was fixed at 12 per cent per annum from 8 December 1982 until payment, and this issue was decided partly in favour of the appellant and partly against the appellant's higher claim.

Final Conclusion: The appeal by the creditor succeeded only to the extent of securing interest at 12 per cent per annum, while the company's challenge to liability for interest failed.

Ratio Decidendi: Where the principal debt is admitted and the objection to interest is not bona fide, the company court in winding-up proceedings may determine liability for interest and award a reasonable rate having regard to the commercial transaction and the surrounding statutory framework.

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