K.A. Mohamed Shafi, J. 1. In this case, the claimant has claimed Rs. 10,343 being the balance kuri instalments of Rs. 6,500 with interest thereon at 12 per cent. per annum from April 11, 1992, to February 10, 1997, amounting to Rs. 3,768.
2. In the objections filed by the respondent, though the kuri transaction alleged in the claim has been admitted, it is contended that as per an agreement between the respondent and the claimant-company, the respondent had deposited Rs. 5,000 with the claimant with the specific understanding that the amount of deposit with interest thereon at 14 per cent. per annum will wipe off the entire amount due from the respondent to the claimant towards his kuri by the termination of the kuri in August, 1996. The respondent also contended that Rs. 6,500 claimed as principal amount in this case was not due from the respondent as on April 11, 1992, and after setting off the balance principal amount of Rs. 4,602 with interest thereon at 14 per cent. per annum till August 11, 1996, an amount of Rs. 882.09 is due from the claimant to the respondent.
3. The fact that Rs. 5,000 is deposited by the respondent in this kuri transaction on May 21, 1991, as evidenced by exhibit A-2 copy of the kuri security trust money ledger is admitted by the claimant. PW-1 who was the manager-cum-director of the claimant-company has deposed that Rs. 5,000 is deposited by the respondent and the claimant is liable to pay interest at 14 per cent. per annum on that deposit amount to the respondent. According to him, the interest due up to April 21, 1992, is paid to the respondent. Though in examination-in-chief PW-1 has deposed that the respondent was not absolved from payment of future instalments in the kuri, and as per the agreement the interest accrued on the deposit amount will be transferred to the account of the subscriber and if that amount is insufficient to discharge the instalments, amount from the principal will be deducted to make up the instalments. In cross-examination PW-1 has deposed that there was an oral agreement between the company and the respondent that the amount of Rs. 5,000 deposited by her with interest thereon at 14 per cent. per annum will discharge the entire subsequent kuri instalments due from the respondent. According to him, as on August 11, 1996, the deposit amount with interest accrued thereon at 14 per cent. per annum will discharge the entire instalments.
4. On the basis of the above evidence, counsel for the respondent submitted that as per the concluded contract between the claimant and the respondent, by the deposit of Rs. 5,000 with interest thereon at 14 per cent. per annum the entire balance kuri instalments due from the respondent will be wiped off and no amount is payable by the respondent towards the above kuri transaction.
5. But counsel for the claimant submitted that the above contention of the respondent would have been accepted if the kuri continued till its natural termination and in view of the fact that the company went into liquidation and the winding up proceedings of the company started on April 6, 1993, the claimant-company under liquidation is not liable to pay any interest to any of its creditors or the subscribers who have made security deposit including the respondent and, therefore, the respondent is entitled to claim interest on the balance amount of deposit only till the date of commencement of the winding up proceedings. Therefore, the claimant has contended by filing a statement that the balance amount of Rs. 4,602 out of the kuri security deposit as on June 6, 1992, with interest thereon at 12 per cent. per annum from June 6, 1992, to April 6, 1993, amounting to Rs. 460 the respondent is entitled to a total amount of Rs. 5,062 and after setting off that amount towards the principal amount of Rs. 6,500 and interest thereon at 12, per cent. per annum from August 11, 1992, to April 6, 1993, totalling Rs. 7,009, a balance amount of Rs. 1,947 is due from the respondent and by adding interest to that amount at 12 per cent. from April 7, 1993, to February 10, 1997, a total amount of Rs. 2,845 is due from the respondent to the claimant,
6. The crucial question to be considered is whether the deposit amount of Rs. 5,000 with interest thereon at 14 per cent, per annum will absolve the entire liability of the respondent to pay the kuri instalments in this case as per the agreement entered into between the claimant and the respondent or the claimant is entitled to the balance amount as contended by them. The fact that if the kuri transaction continued till its natural termination in August, 1996, the entire kuri instalments due from the respondent to the claimant would have been wiped off by the amount of that deposit with interest accrued thereon, is not disputed. The contention of the claimant is that due to the intervention of the winding up proceedings in the meanwhile the respondent is not entitled to claim interest on the balance deposit amount from the date of commencement of the winding up proceeding, and, therefore, by setting off of that principal amount towards the kuri instalments and interest thereon the respondent is liable to pay the balance amount.
7. Counsel for the respondent vehemently argued that since there is a concluded contract between the claimant and the respondent much prior to the commencement of the winding up proceedings and there was nothing to be done by the parties towards the execution of the contract except the claimant to adjust the interest as well as the deficit amount to make up the kuri instalments out of the deposit made by her towards future instalments due under the kuri, and, therefore, that being a concluded and executed contract between the claimant and the respondent, the intervention of winding up proceedings in the meanwhile has absolutely no effect on this transaction, and, therefore, the respondent is absolved from any liability to pay any portion of the amount claimed in this case.
8. In the decision in J.K. (Bombay) P. Ltd. v. New Kaiser-I-Hind Spg. and Wvg. Co. Ltd. [1970] 40 Comp Cas 689, the Supreme Court has observed as follows (page 714) :
"It is thus well established that once a winding-up order is passed the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay, from out of the sale-proceeds, its creditors. Such creditors acquire on such order being passed the right to have the assets realised and distributed among them pari passu. No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditors' right to have the proceeds of the assets distributed among them pari passu."
9. From the above observations made by the Supreme Court it is clear that after the passing of the winding up order no new rights can be created and no uncompleted rights can be completed. In this case, even though there was a contract between the claimant and the respondent that the amount of deposit with interest will wipe off the entire instalments due and the claimant can adjust the interest accrued on the deposit amount outstanding along with a portion of the deposit amount, if interest is found to be insufficient to discharge the instalments, on the passing of the winding up order the portion of the contract which was not completed by appropriation has come to an end and that portion cannot be enforced once the winding up order is passed against the company. If in fact, there was an agreement between the petitioner and the respondent that on the deposit of Rs. 5,000 bearing interest at 14 per cent. per annum with the claimant her entire liability to pay the instalments is discharged then and there, the respondent could have been absolved from the liability to pay any future instalments and there was no necessity to adjust the future instalments by the interest accrued and portion of the principal amount to make up the instalments on every instalment. Therefore, the contention of the respondent that there was a concluded contract at the time of deposit of the amount absolving her from the liability to pay future instalments, cannot be accepted and, there was in fact, a continuing contract between the respondent and the claimant which came to an end and the amount due to the respondent crystallised by the commencement of the winding up proceedings since it is well settled that though the winding up order is passed later it relates back to the date of commencement of the winding up proceedings. Therefore, this contention of the respondent that as there was a concluded contract between the claimant and the respondent the winding up proceedings and the winding up order passed by this court have no impact upon the facts and circumstances of the case, is not sustain-able.
10. Counsel for the claimant contended that from the commencement of the winding up proceedings the respondent is not entitled to claim any interest on the amount deposited by her with the claimant and the respondent is only entitled to the balance principal amount which was available with the claimant on the date of commencement of the winding up proceedings. In support of this contention, counsel for the claimant relied upon the decision in U.P. Oil Mills Agency v. Saraswati Soap and Oil Mills Ltd. [1954] 24 Comp Cas 450 ; AIR 1954 All 129, wherein a single judge of the Allahabad High Court has held that interest will run up to the date of the presentation of the petition in an insolvency case and up to the date of presentation of winding up petition in the case of an insolvent company and, therefore, interest can accrue up to the date of presentation of the winding up petition and not afterwards.
11. A Division Bench of this court in Bombay Cotton (P.) Ltd. v. Ramachandran Iyer [1963] KLT 268 has approved the above principle laid down by the Allahabad High Court and held that the order of adjudication shall relate back to and take effect from the date of presentation of the petition and interest would run only up to the date of presentation of the winding up petition in the case of an insolvent company.
12. In the subsequent decision in Kerala Financial Corporation v. Official Liquidator, High Court of Kerala [1996] 87 Comp Cas 183, a single judge of this court also held that interest is payable only up to the date of presentation of the petition in an insolvency case and up to the date of presentation of the winding up petition in the case of an insolvent company. Therefore, it is clear that it is well established that as against an insolvent company interest can be claimed only up to the date of presentation of the winding up petition and no interest can be claimed after the commencement of the winding up proceedings.
13. Counsel for the respondent submitted that the above decisions relate to the claims made by various parties for interest against a company under liquidation and in this case the respondent has not claimed any interest against the claimant-company under liquidation and she has only claimed set off of the amount due from the company as per the agreement. This argument advanced by counsel for the respondent is not sustainable.
14. The question whether the respondent has claimed interest to be paid to her or to be set off towards the amount due from her to the company in liquidation is of no difference. When once it is found that interest cannot be paid to any creditors from the date of commencement of the winding up proceedings, they are not entitled to interest from the company under liquidation either to be paid to them or to be set off towards the claim made by the company under liquidation against them. There fore, this contention of the respondent is also not sustainable.
15. The fact that the balance amount of Rs. 4,602 out of Rs. 5,000 deposited by the respondent was available on June 6, 1992, and the interest due prior to that date is credited by the claimant to the account of the respondent are not disputed. Therefore, the respondent is entitled to set off the amount of Rs. 4,602 and Rs. 537 being interest thereon from June 6, 1992, to April 6, 1993, the date of commencement of the winding up proceedings, towards the principal amount claimed in this case. Therefore, a total amount of Rs. 5,139 has to be set off towards the principal amount of Rs. 6,500. The amount of Rs. 460 mentioned as interest due on Rs. 4,602 from June 6, 1992, to April 6, 1993, at 12 per cent. per annum in the calculation statement filed by the claimant is incorrect. Since the amount deposited was already available with the respondent to set off towards the future instalments, the claimant is not entitled to interest on the principal amount as claimed in the calculation statement. Hence, the contention that the claimant is entitled to a total amount of Rs. 7,009 inclusive of interest at 12 per cent. per annum on Rs. 6,500 from August 11, 1992, to April 6, 1993, and after setting off the amount due to the respondent a balance amount of Rs. 1,947 with interest thereon at 12 per cent. per annum from April 7, 1993, is due to the claimant is not sustainable. After setting off the amount of Rs. 5,139 towards the principal amount of Rs. 6,500 the claimant is entitled to the balance amount of Rs. 1,361. The claimant is also entitled to interest at 12 per cent. per annum on that amount from December 11, 1995, the date of default onwards.
16. In view of what is stated above, a decree for Rs. 1,361 with interest thereon at 12 per cent. per annum from April 7, 1993, is passed in favour of the claimant and against the respondent.