Petition to Wind Up Company Dismissed; Court Allows Pursuit of Unpaid Interest Through Civil Remedies.

The HC dismissed the petitioner's winding-up petition against the respondent company, which had cleared the principal debt during proceedings. The court held that it was not just or equitable to wind up the company solely for unpaid interest. The petitioner was granted liberty to pursue interest recovery through civil remedies, and no costs were awarded.

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Issues:
Petition for winding up of a company due to unpaid liability and interest.

Analysis:
The petitioner, a chemical supplier, filed a petition under Sections 433(e), 434(1)(a) and (c) and 439 of the Companies Act, 1956, seeking winding up of the respondent company for their inability to pay the admitted liability amounting to Rs. 10,08,088 along with interest at 36% p.a. The respondent did not dispute the amount due but raised a plea for strict proof of the claim. The respondent cleared the principal amount during the petition's pendency, but the interest remained unpaid, leading the petitioner to seek winding up. The petitioner relied on the Supreme Court judgment in M/s. Vijay Industries vs. NATL Technologies Limited to support their claim that interest payable on the due amount constitutes a debt under the Companies Act. However, the court noted that winding up can be ordered on an undisputed claim, whether principal or interest, and since the principal amount was paid during the petition, it was not just or equitable to wind up the company solely for the interest component. The court emphasized that a winding-up petition is not a means for debt recovery but granted liberty to the petitioner to pursue interest recovery through civil remedy, ultimately dismissing the company petition without costs.

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