2012 (5) TMI 773 - HC - Companies Law

Entitlement to interest till the filing of the winding up petition - Held that - Though the amount of ₹ 50 Lakhs was advanced by the appellant to the respondent company in the Year 1994 but the same was demanded from the respondent company only in the year 2002 and the winding up petition was filed only in the year 2006. Therefore we find ourselves unable to find the appellant entitled to any interest till the filing of the winding up petition. Rate of interest - Considering all the facts and circumstances of the case, we are of the opinion that direction for payment of interest at the rate of 6% per annum from the date of filing of the petition for winding up and till deposit of the principal amount of ₹ 50 lakhs by the respondent company in the Court would sub-serve the interest of justice and restitution.

Summary

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.