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TMI Blog2008 (9) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the petitioners. The company denied its liability to pay interest but the learned judge while disposing of the petitions passed orders thus : "11. Now it is admitted by both the parties that after filing of the above company petition the principal outstanding amount alone was paid by the respondent-company and the interest accrued on the principal amount is still due and payable by the respondent-company. 12. The letter dated April 11, 2001, sent by M/s. Tolin Rubber P. Ltd., to the respondent-company and the letter dated April 16, 2001, sent by the respondent-company will make it very clear that the respondent has to make the payments within 90 days from the date of receipt of the materials and in such circumstances, though the interest portion is disputed by the respondent-company, I am of the considered view that the respondent-company is liable to pay the interest also. Further, it is settled law that the company court can also go into the question of payment of interest. 13. Therefore, considering the fact that the transactions are purely commercial in nature. I direct the respondent-company in both the company petitions to pay the interest calculated at 18 per cent, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supplies effected, the petitioners had issued notices on April 11, 2001 arid April 16, 2001, requiring the company to make the payments within 90 days (emphasis1 supplied) from the date of receipt of materials. He relied on a Division Bench decision of the Calcutta High Court in Rydak Syndicate Ltd. v. Roshanlal Agarwal [2007] 139 Comp Cas 814 where the company court had admitted a winding up petition and directed the payment of principal with interest from the date of service of statutory notice. According to him, the non-payment of interest was unjustified and the company court had jurisdiction to award such interest also as a condition to ward off further proceedings for winding up. V. The court's power to award interest : 5. The power of the court to award interest, while determining the existence of a debt cannot be doubted. The debt may include the interest component also. Where the contract specifies payment of interest, there is no difficulty in immediately arriving at the answer. However only in cases, where the written contract itself does not contain a stipulation of interest the answer could be secured by reference to the provisions of the Interest Act, 1978. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (ii)the provisions of rule 2 of Order II of the First Schedule to the Code of Civil Procedure, 1908 ; (c)shall empower the court to award interest upon interest." 6. Although the interest could well be a part of liability and hence included in the debt, the Act makes a dichotomy between a "debt" and so called "interest" for the purpose of the Act. The reading of the section (particularly, section 3(3)) makes it clear that the section is not attracted in relation to a debt where interest is payable as of right or in cases where there is an express bar under a particular agreement to pay interest. This is so because, in such a case, it is the express provision of the agreement between the parties that governs the issue of interest. If the circumstances in section 3(3) are not attracted, the next question is to examine; as laid down under section 3(1) : (i) if there has been a demand for interest for the debt or damages in the proceedings, or (ii) if in respect of the debt or damages already paid, a claim for interest is made. The court may, if it thinks fit, allow interest to the person entitled to the debt or to the person making such claim (where the debt is paid already) fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invoices do not refer to any date before which the amount shall be paid or whether the interest will be collected. Therefore, it is the second contingency that arises of a situation when the liability is cast by a demand, which is not expressly barred by the agreement. Admittedly, the notice had been issued, referring to the time for payment for the goods supplied to arise within 60 days and more importantly demanding interest at 18 per cent, per annum. The fact that the original invoice does not stipulate interest is irrelevant. If it does, there is no question of invoking the provisions of the Interest Act, 1978. Again, there is no question of the fact that the invoice does not stipulate when the payment is to be made. All that is necessary to solidify the liability is a demand for the same stipulating a period. The demand could be not merely of the debt but also of the interest. Again the proceeding could be not merely of the debt (that is the principal already paid) but also of the interest. As we have already pointed out, there is such a demand for payment of interest both in the statutory notices and in the petitions. The problem here is that the petition itself is not a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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