Company Liable for Interest on Principal in Winding-Up Petition

The court held that the respondent company was liable to pay interest on the principal amount stated in the winding-up petition. Despite the absence of a written contract specifying interest, the court found that the amount was refundable due to non-issuance of shares, constituting a debt under the Companies Act. The appellant was entitled to interest by way of restitution, and the court directed the respondent to pay interest at a rate of 6% per annum from the filing of the petition until depositing the principal amount in court. Failure to comply would result in the revival of the winding-up petition.

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Issues:
1. Liability for interest on the principal amount in a winding-up petition.

Analysis:
The appellant challenged the order allowing the winding-up petition filed by them against the respondent company for non-payment of a debt of Rs.50,00,000. The appellant claimed interest on the principal amount, while the respondent argued that the amount was part payment towards share application money. The Company Judge declined to find any liability for interest due to the absence of a written contract specifying interest payable.

Upon hearing both counsels, the court noted that the disputed questions of fact could not be adjudicated in a winding-up jurisdiction. However, since the respondent company admitted that the amount was refundable due to non-issuance of shares, the court held that the money was still owed. The court referred to the Vijay Industries case, stating that failure to pay agreed or statutory interest constitutes a debt under the Companies Act.

The court emphasized that the appellant was entitled to interest by way of restitution, even if the principal amount was not in dispute. It was held that the respondent company wrongly denied the debt, leading to the six-year legal battle. Citing previous judgments, the court ruled that the creditor need not initiate a separate suit for interest recovery, as it can be determined in winding-up proceedings.

Regarding the timeline of the debt demand, the court found the appellant not entitled to interest until the filing of the winding-up petition in 2006. Considering the circumstances, the court directed the respondent company to pay interest at a rate of 6% per annum from the petition filing date until depositing the principal amount in court, ensuring justice and restitution.

In conclusion, the court disposed of the appeal, directing the respondent company to deposit the calculated amount within ten weeks. Failure to comply would revive the winding-up petition. Once deposited, the appellant could withdraw the sum, with no order as to costs issued.

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