1946 (3) TMI 16 - HC - Companies Law

Summary

Issues:
1. Entitlement of creditors to interest in winding-up proceedings.
2. Rate of payment to the contributories.
3. Costs allocation for the application.

Entitlement of Creditors to Interest:
The judgment concerns an application by the Official Receiver as Official Liquidator seeking directions on the payment of interest to the company's creditors. The main issue revolves around whether creditors whose debts do not carry interest are entitled to receive interest in winding-up proceedings. Section 228 of the Companies Act is highlighted, stating that all claims against a company, present or future, shall be admissible to proof, subject to the law of insolvency. The judgment emphasizes that in the case of a solvent company, the rights of a creditor are governed by Section 228, and their proof of debt will be determined as if it were a regular debt due to them. The judgment references a case where it was held that creditors without interest-bearing debts are entitled to receive interest, but the judge disagrees with this view. Citing past decisions, the judgment concludes that only creditors with interest-bearing debts are entitled to interest until the date of payment, while those without such debts are not entitled to interest.

Rate of Payment to the Contributories:
The second issue addressed in the judgment pertains to the rate of payment to the contributories. The Official Receiver indicates a proposed rate of return of capital to the contributories at 0-2-9 in the rupee, subject to the directions given on the first issue. The judgment directs the Official Receiver to make a return to the contributories at the specified rate or at a different rate based on final calculations.

Costs Allocation for the Application:
Regarding costs, the judgment determines that the Official Receiver can charge the company for the costs incurred in the application. Additionally, the judgment deems it appropriate for the creditor who appeared in response to the notice to have their costs covered by the company's assets. The costs for the creditor are fixed at Rs. 17-8-0. The judgment concludes that there is no requirement for the Official Liquidator to include a schedule or list in the order as per the Companies rules.

In summary, the judgment clarifies the entitlement of creditors to interest in winding-up proceedings, specifies the rate of payment to the contributories, and allocates costs for the application, providing detailed legal analysis and referencing relevant sections of the Companies Act and past judicial decisions to support the conclusions reached.