Interest on workers' dues in liquidation is payable only under Rule 179 and only from surplus funds after admitted claims are paid.

In company liquidation, workers' dues carry pari passu status with secured creditors under sections 529 and 529A of the Companies Act, 1956, while preferential payments remain governed by section 530. Interest on admitted claims after the winding up order is not available as a general power; it can be awarded only under Rule 179 of the Companies (Court) Rules, 1959. That rule permits subsequent interest only after admitted claims are paid in full and a surplus remains, making surplus funds a condition precedent. Resort to section 35 of the Civil Procedure Code was rejected as inconsistent with Rule 179.

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Issues: Whether the Court has power to award interest on workers' dues from the date of the winding up order, and if so, whether such power is confined by Rule 179 of the Companies (Court) Rules, 1959.

Analysis: Sections 529 and 529A of the Companies Act, 1956 give workmen pari passu rights with secured creditors, while section 530 governs preferential payments. Rule 6 and Rule 9 of the Companies (Court) Rules, 1959 do not enlarge the power to award interest independently of the Rules. Rule 179 specifically deals with payment of subsequent interest and permits interest only where, after payment in full of admitted claims, a surplus remains. The existence of surplus funds is therefore a condition precedent to any award of interest after the winding up order. The earlier approach treating the absence of a specific rule as permitting resort to section 35 of the Civil Procedure Code, 1908 was found to be incorrect in view of Rule 179.

Conclusion: The Court answered the reference by holding that interest on workers' dues can be awarded only strictly in accordance with Rule 179 of the Companies (Court) Rules, 1959, and only where surplus funds are available.

Ratio Decidendi: In company liquidation, interest on admitted claims after the winding up order is payable only under Rule 179 and only out of surplus remaining after full payment of admitted claims.

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