2007 (6) TMI 289 - HC - Companies Law

Summary

Issues Involved:
1. Entitlement to recover the principal amount.
2. Determination of the rate of interest on the principal amount.
3. Maintainability of the petition u/s 433 and 439 for realizing interest.

Summary:

1. Entitlement to Recover the Principal Amount:
The petitioner-firm filed a petition u/s 439 read with u/s 433 of the Companies Act, 1956, for winding up the respondent-company, claiming an outstanding amount of Rs. 17,33,082.34, including interest calculated as on September 30, 1999. The respondent-company acknowledged the principal amount of Rs. 10,14,486.92, which was paid in April 2006. The court found that the principal amount was indeed outstanding as of March 31, 1998, and had been paid, leaving the question of interest to be determined.

2. Determination of the Rate of Interest on the Principal Amount:
The petitioner-firm argued for an agreed rate of interest based on a communication dated February 28, 1995, stipulating interest rates of Rs. 1.50 per hundred per month after 30 days and Rs. 1.60 per hundred per month after 60 days. The court examined various documents, including bank statements, balance-sheets, and TDS forms, to substantiate the claim. However, it concluded that there was no conclusive evidence of a mutually agreed rate of interest as per the letter dated February 28, 1995. The court, considering the sudden deaths of key directors and the financial losses of the respondent-company, deemed it appropriate to award interest at 12% per annum from April 1, 1998, to March 31, 2006.

3. Maintainability of the Petition u/s 433 and 439 for Realizing Interest:
The respondent-company argued that a petition under sections 433 and 439 for realizing interest was not maintainable. The court rejected this argument, citing that once the company judge is seized of the matter regarding payment of dues and winding up, it is a proper forum for determining the creditor's entitlement to interest. The court relied on precedents, including the Division Bench judgment in Stephen Chemical Ltd. v. Innosearch Ltd. and the Delhi High Court's decision in Devendra Kumar Jain v. Polar Forgings and Tools Ltd., to support its view.

Conclusion:
The petition succeeded, and the court directed that interest at 12% per annum be calculated from April 1, 1998, to March 31, 2006, on the principal amount of Rs. 10,14,486.92. The respondent-company was ordered to pay the calculated interest within two months from the date of receipt of the order, failing which it would be presumed unable to pay, leading to its winding up. The petition was disposed of accordingly.