Late proof of debt in winding up may still be admitted if prior dividends remain undisturbed and creditors are not prejudiced.

In company winding up, the time fixed for filing proof of debt is directory for orderly administration and not an absolute bar to a late claim. A creditor who misses the deadline may still be admitted if the delay is satisfactorily explained and no prejudice is caused to other creditors. Relief is available only where prior dividends already declared or paid are not disturbed, and the creditor can participate solely in assets still available for distribution. The operative principle is fairness in distribution, balancing late proof against protection of completed distributions.

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Issues: Whether a creditor who failed to file proof of debt within the time fixed in winding up could be allowed to prove the claim later and receive dividend without disturbing distributions already made.

Analysis: The time fixed by the Court under the company law was treated as directory for the purpose of orderly administration, not as an absolute bar to late proof. The statutory scheme under Sections 191 and 229 of the Indian Companies Act was read with the insolvency principle that a creditor may still come in so long as no prejudice is caused to other creditors and no earlier dividend is disturbed. Rule 91 was construed in that light, and the creditor's explanation of delay was accepted as sufficient for relief. The earlier dividend already declared or paid was protected, and the creditor could only participate in assets remaining available for distribution.

Conclusion: The delay was excused and the creditor's claim was directed to be admitted, with payment of dividend only if it could be done without disturbing prior distributions.

Final Conclusion: Late proof of debt in company winding up may be admitted where relief can be granted consistently with fairness to other creditors and without reopening completed distributions.

Ratio Decidendi: In winding up, a creditor who misses the time for proof is not absolutely barred from admission of the claim; the claim may be received if doing so does not disturb dividends already declared or paid.

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