Unascertained interest claim cannot sustain winding up proceedings without a definite, admitted debt

A winding up petition cannot rest on a disputed and unliquidated claim for interest where no written interest agreement exists and the principal amount has already been paid. The court noted that provisions under the Sale of Goods Act, the Interest Act and the Code of Civil Procedure only enable interest to be awarded in appropriate recovery proceedings; they do not by themselves create a present, ascertained debt for winding up. Because winding up requires proof of a definite debt and non-payment, an unascertained interest claim is insufficient to establish commercial insolvency. The petition was therefore not maintainable on that basis.

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Issues: Whether a winding up petition can be maintained on the basis of an unascertained claim for interest when the principal amount has been paid during the proceedings.

Analysis: The petition was founded on an alleged liability to pay interest on the price of goods supplied on credit. There was no written agreement for interest, and the claimed interest had not been admitted by the respondent-company. The provisions relating to award of interest under the Sale of Goods Act, the Interest Act and the Code of Civil Procedure confer discretion on a civil court in appropriate proceedings for recovery of money; they do not establish a present, ascertained debt for the purpose of winding up. A winding up court cannot be used to adjudicate or create an unliquidated claim for interest, and a claim of this nature remains disputed and indefinite. Since winding up requires proof of a definite and ascertained debt and failure to pay it, an unascertained interest claim cannot by itself sustain a petition on the ground of commercial insolvency.

Conclusion: The claim for interest was unascertained and could not form the basis of a winding up order; the petition was not maintainable on that ground.

Final Conclusion: The company was not shown to be commercially insolvent on the basis of the alleged interest liability, and the winding up petition failed.

Ratio Decidendi: A winding up petition cannot succeed on the basis of an unascertained or disputed claim for interest, because winding up lies only where the debt is definite and ascertained and the respondent has failed to pay it.

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