Disputed interest cannot justify winding-up pressure when the principal debt is admitted and bona fide defence exists.

A disputed interest claim cannot, by itself, be used to force payment through winding-up proceedings when the principal debt has been substantially admitted and paid. Where the debtor raises a bona fide defence on interest and the dispute is not sham, the company court should not make avoidance of admission or publication contingent solely on payment of that disputed amount. Interest may form part of a debt and, where the contract is silent, the Interest Act, 1978 may be relevant, but winding-up is not a coercive recovery tool absent a clear finding of inability to pay or commercial insolvency. The condition imposed for payment of disputed interest was unsustainable, and the creditor was left to pursue independent recovery proceedings.

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Issues: Whether a company court can direct payment of disputed interest as a condition for avoiding admission and further publication in winding-up proceedings, and whether non-payment of such interest can by itself justify winding up.

Analysis: The debt for the principal amount stood substantially admitted and had been paid, but the interest component remained disputed. Interest may, in an appropriate case, form part of the debt, and where the contract is silent, the court may consider the statutory framework under the Interest Act, 1978. However, a winding-up petition is not meant to operate as a coercive device for recovery of a disputed interest claim. Where the debtor has a bona fide defence on the interest component and the dispute is not a sham, further winding-up steps cannot be made contingent solely on payment of that disputed interest without a definitive finding of commercial insolvency or inability to pay the debt.

Conclusion: The condition imposed by the company court requiring payment of disputed interest as a precondition to avoid winding-up proceedings was unsustainable, and the appeal succeeded.

Final Conclusion: The order admitting further winding-up consequences for non-payment of disputed interest was set aside, leaving the creditor free to pursue independent recovery proceedings.

Ratio Decidendi: A disputed claim for interest, by itself and absent a clear finding of inability to pay, cannot be used to trigger or continue winding-up proceedings as a means of debt recovery.

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