Respondent Ordered to Pay 12% Interest on Unpaid Dividend

The court found the respondent liable to pay interest at 12% per annum on the unpaid dividend for failing to comply with statutory requirements, admitting the winding-up petition. The respondent was given time to make the interest payment in instalments by a specified date.

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Issues:
Petition for winding up under sections 433(e) and (f) of the Companies Act, 1956 based on non-payment of declared dividend and interest thereon.

Analysis:

Issue 1: Non-payment of Declared Dividend
The petitioner, a trust set up by the State Bank of India, filed a petition seeking winding up of the respondent-company, a public limited company, for failing to remit the declared dividend of Rs. 35,52,882.50. The respondent admitted to the non-payment but made partial payments during the pendency of the petition. The remaining dispute was regarding the liability to pay interest on the unpaid amount as per section 205A of the Act, which mandates payment of dividend within 30 days of declaration and interest at 12% per annum for default. The petitioner argued that interest is due for the period the dividend remained unpaid.

Issue 2: Legal Precedents and Arguments
The petitioner relied on legal precedents like Stephen Chemical Ltd. v. Innosearch Ltd. and Stephen Chemicals Ltd. v. Delhi Cloth & General Mills Co. Ltd. to support their claim for interest on the unpaid dividend. On the other hand, the respondent cited General Assurance Society Ltd. v. LIC of India to argue that the declaration of dividend creates a debt, justifying the petition for winding up. However, the respondent's reliance on other cases like Shakti Prakash Metal Finishers (P.) Ltd. v. Hindustan Machine Tools Ltd. was deemed inapplicable to the present case due to the respondent's failure to comply with section 205A requirements.

Issue 3: Decision and Order
The court found that the respondent had not disputed the liability to pay the dividend and had failed to comply with the statutory requirements for depositing the unpaid amount as per section 205A. Consequently, the court held that the respondent was liable to pay interest at 12% per annum on the unpaid dividend. The court admitted the petition for winding up and allowed the respondent time to make the interest payment, with the petitioner to communicate the interest calculation. The respondent undertook to make the interest payment by a specified date in instalments, leading to an adjournment for further orders.

In conclusion, the judgment addressed the non-payment of declared dividend, the legal arguments regarding interest on unpaid amounts, and the decision to admit the winding-up petition based on the respondent's failure to comply with statutory obligations.

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