Statutory notice and affidavit evidence in winding up proceedings upheld; interest reduced under the Interest Act.

Compliance with statutory notice for winding up was treated as established where receipt of the notice was not effectively denied, so the maintainability objection failed. The court also held that the affidavit and supporting claim documents, including received and encashed demand drafts, provided an adequate evidentiary foundation for the petition, so the challenge to affidavit sufficiency was rejected. On interest, in the absence of a contractual rate, section 2(b) of the Interest Act, 1978 was applied and the award was reduced from 18% to 9% per annum from the date of demand by reference to the relevant current fixed deposit rate.

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Issues: (i) Whether the winding up petition was not maintainable for alleged -service or non-compliance with the statutory notice requirement under section 434 of the Companies Act, 1956; (ii) whether the affidavit evidence was insufficient to support the winding up petition; (iii) whether the rate of interest fixed by the learned judge required modification and, if so, at what rate interest should be calculated under the Interest Act, 1978.

Issue (i): Whether the winding up petition was not maintainable for alleged non-service or non-compliance with the statutory notice requirement under section 434 of the Companies Act, 1956.

Analysis: The notice was found to have been received, and there was no effective denial of receipt. The objection went only to the contents of the notice. In the circumstances, compliance with the statutory requirement was treated as established and the challenge to maintainability failed.

Conclusion: The objection based on alleged non-service of statutory notice was rejected, against the appellant.

Issue (ii): Whether the affidavit evidence was insufficient to support the winding up petition.

Analysis: Since the claim documents, including the demand drafts, were shown to have been received and encashed, the evidentiary foundation was held to be adequate. The challenge that affidavit evidence alone was insufficient was not accepted.

Conclusion: The objection as to insufficiency of affidavit evidence was rejected, against the appellant.

Issue (iii): Whether the rate of interest fixed by the learned judge required modification and, if so, at what rate interest should be calculated under the Interest Act, 1978.

Analysis: No agreement on interest was shown. The Court applied section 2(b) of the Interest Act, 1978 and held that interest should be linked to the relevant current fixed deposit rate for the period concerned. On that basis, the rate awarded at 18% was modified, and interest from the date of demand was directed at 9% per annum.

Conclusion: The interest component was modified in favour of the appellant.

Final Conclusion: The winding up order was maintained, but the interest award was reduced, so the appeal succeeded only to the limited extent of the rate of interest.

Ratio Decidendi: Compliance with statutory notice for winding up is not defeated where receipt is not denied, and in the absence of a contractual rate, interest under the Interest Act, 1978 is to be determined by reference to the applicable current rate of interest.

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