JUDGMENT 1. This company petition was filed under section 433(e) of the Companies Act, 1956. The petitioner's case was that the respondent- company was established to manufacture allopathic medicines, dry syrups, tablets, capsules, ointments and oil syrups, etc. The company was indebted to the petitioner in the sum of Rs. 2,22,289.29 with interest thereon at the rate of 18 per cent, per annum with effect from June 1, 1984 for services rendered by the petitioner. The petitioner was engaged to render certain advertising and publicity service in connection with the public issue of the shares of the respondent-company. The petitioner incurred expenses and became entitled to receive a sum of Rs. 2,97,289.23 from the respondent- company. Only a sum of Rs. 75,000 was paid. The petitioner duly forwarded the bills, vouchers and other documents to the company in support of the above amount claimed by it. Vide letters dated April 17, June 14 and June 25, 1984, the petitioner requested the company to make payments. In a letter dated July 3, 1984, the respondent-company confirmed to the petitioner that the bills, etc., forwarded by the petitioner have been checked by them but they requested for certain clarification in respect of certain vouchers. The petitioner satisfied the queries and the clarifications sought and the respondent-company accepted the explanation given by the petitioner. Thereafter, in part payment of the amount due, two cheques for Rs. 50,000 each in favour of the petitioner were issued. Both the cheques, however, were dishonoured on presentation. 2. Thereafter, in spite of request made by and on behalf of the petitioner including the State Bank of India, the merchant bankers, the company failed to pay the above amount. A legal notice under section 434 dated May 14, 1985 was issued to the respondent-company to pay the amount of Rs. 2,22,289.23 with interest at the rate of 18% with effect from June 1, 1984 within 21 days. A reply was received from the respondent-company in which it was pleaded that two cheques for Rs. 50,000 each had been given on the clear understanding that complete details and clarification regarding various bills would be furnished by the petitioner, but since this had not been done, they had stopped payment of the cheques. A reply was received from the respondent-company in which it was pleaded that two cheques for Rs. 50,000 each had been given on the clear understanding that complete details and clarification regarding various bills would be furnished by the petitioner, but since this had not been done, they had stopped payment of the cheques. The respondent-company, in its reply, also stated that it has no hesitation in settling the accounts provided complete details and clarification in accordance with the understanding was furnished. By another letter dated July 7, 1985, petitioner's counsel refuted the allegations in the reply dated June 3, 1985, by the respondent-company and called upon it to make payment as per notice dated May 14, 1985. 3. The petition was presented in this court on August 29, 1985 when the court directed the petitioner to serve the respondent personally and file an affidavit of service within two weeks. Notice was also to be served by registered post acknowledgment due within the same period. A counter-affidavit was filed in this court on December 5, 1985 and a rejoinder-affidavit was filed on March 3, 1986. 4. When the matter came up for consideration as to whether the company petition should be advertised, a plea was taken by the senior counsel, appearing for the respondent-company, that he may be afforded time to examine the vouchers and other papers and in the meantime, he may be permitted to pay a sum of Rs. 1,00,000 through bank draft within a month to prove the bona fides of the respondent-company. On October 20, 1986 a draft in the sum of Rs. 1,00,000 payable on the Punjab National Bank, Parliament Street, New Delhi was handed over to learned counsel for the petitioner. The court directed the matter to come up on December 18, 1986, by which date another bank draft for the balance amount of Rs. 1,22,289.23 be paid. The question of the payment of interest was to be examined on that date. The matter was then listed on December 19, 1986 when a demand draft for the aforesaid amount was handed over to learned counsel for the petitioner. 5. Thus, the only question that remains to be considered in this case is whether the petitioner is entitled to proceed with the winding-up petition for the recovery of interest claimed by it on the principal amount with effect from June 1, 1984. 6. Mr. 5. Thus, the only question that remains to be considered in this case is whether the petitioner is entitled to proceed with the winding-up petition for the recovery of interest claimed by it on the principal amount with effect from June 1, 1984. 6. Mr. Sudhir Chandra, who appeared for the petitioner, urged that the petitioner is entitled to recover not only the principal amount but also the interest and the interest accruing on the same. Thus, only a part of its claim has been satisfied and a part still remains due. He submitted that the petitioner can certainly press for the recovery of the interest amount particularly when the principal amount has been admitted and paid. Since the interest amount has not been paid, the petitioner could very well claim it under the provisions of section 433(e) read with section 434. Unless the amount was bona fide disputed, the court is not powerless to go into the question even though the principal amount has been paid after the issue of notice. In support of his contention, he stated that even if the interest was not allowed at the rate of 18% per annum, it had to be allowed at the rate moneys are lent or advanced by commercial banks in relation to commercial transactions. 7. Mr. R. K. Agrawal, appearing for the respondent-company, urged that the company totally denied its liability to pay any interest on the amount which has been paid by the company during the proceedings in this court. Secondly, no rate of interest was ever agreed upon or settled. Thirdly, the rate of 18% is unwarranted under any circumstance. Fourthly, the company, having paid more than Rs. 2,22,000 during the pendency of the proceedings in this court, cannot be termed to be insolvent or unable to pay its debt. Lastly, the amount of interest was neither a determined amount nor a decreed amount and the petitioner had a remedy in law by filing a suit for the same in the regular civil court, as the matter could not be determined in summary proceedings and the rate and quantum of interest could not be determined by this court in winding-up proceedings. 8. The present petition for winding up has been made under clause (e) of section 433 which reads as follows : " 433. Circumstances in which a company may be wound up by the court. 8. The present petition for winding up has been made under clause (e) of section 433 which reads as follows : " 433. Circumstances in which a company may be wound up by the court. -(e) if the company is unable to pay its debt." 9. Thus, one of the circumstances in which a company may be wound up by the court is when the company is unable to pay its debt. Therefore, the first requirement would be for the petitioner to establish that the respondent-company is indebted to the former. Unless this is done, the question of proceeding further and investigating whether the respondent-company is unable to pay its debt will not arise. This question has to be decided first. 10. In this case, the alleged debt is the amount of interest from June 1, 1984. It is not a determined amount, but the rate of interest claimed is 18 per cent, per annum. Consequently, the interest claimable will be on the amount which was due on June 1, 1984. That amount is not disclosed in the petitions. This is one aspect of the matter. 11. The second aspect is that the respondent-company seriously disputes the claim for interest. Its stand is that no amount is payable as interest. Secondly, the payment of interest was never agreed upon nor the rate of interest fixed. It was urged on behalf of the respondent that the question of payment of interest was never raised in any of the correspondence at all nor even when the advertisement was duly published and that it was mentioned for.the first time in the notice under section 434 of the Act. In other words, it was stated that the amount of interest was disputed and the dispute was a bona fide one. 12. The law on the subject may be examined. In Halsbury's Laws of England, Fourth edition, Volume 7, paragraph 999 it is stated : "Omission by a company to pay a debt by reason of a genuine dispute does not amount to a neglect to comply with the statutory demand." 13. In Palmer's Company Law, Twenty-third edition, page 1114, paragraph 85-86, the law stated is as under : "if the company bona fide disputes the debt, then it has not neglected to pay within the section," 14. In Palmer's Company Law, Twenty-third edition, page 1114, paragraph 85-86, the law stated is as under : "if the company bona fide disputes the debt, then it has not neglected to pay within the section," 14. In Buckley on the Companies Acts, Fourteenth edition, page 523, the law stated is as under : "A winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. A petition presented ostensibly for a winding-up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court. At one time, petitions founded on a disputed debt were directed to stand over till the debt was established by action. If, however, there was no reason to believe that the debt, if established, would not be paid, the petition was dismissed. The modern practice has been to dismiss such petitions. But, of course, if the debt is not disputed on some substantial ground, the court may decide it on the petition and make the order......If a petition has been presented which the court finds to be an abuse of process, the court may, on motion, stay all proceedings under it or dismiss it." 15. Topam and Iyamy's Company Law, Sixteenth Edition, (at page 373) states as under : "A creditor whose debt is disputed on some substantial ground, cannot generally get a winding up order. In re Iympne Investments Ltd. [1972] 2 All England Reporter 385, it was stated: A winding up petition was presented on the ground that the company had neglected to pay a debt due to the petitioner. The company denied the liability contending that the money had been paid to the company for shares in another company which were to be held by the company in trust for the petitioner. Held, there was a real dispute as to the existence of the debt, and the petition would be dismissed." 16. In the above case, Megarry, J. said (at page 389) : "The Companies Court must not be used as a debt-collecting agency, nor as a means of bringing improper pressure to bear on a company. Held, there was a real dispute as to the existence of the debt, and the petition would be dismissed." 16. In the above case, Megarry, J. said (at page 389) : "The Companies Court must not be used as a debt-collecting agency, nor as a means of bringing improper pressure to bear on a company. The effects on a company of the presentation of a winding-up petition against it are such that it would be wrong to allow tie machinery designed for such petitions to be used as a means of resolving disputes which ought to be settled in ordinary litigation, or to be kept in suspense over the company's head while that litigation is fought out." 17. I may now notice some of the decisions by the High Courts in India. In the case of East Kajoria Collieries Private Lld., In re [1965] 35 Comp Cas 180, a single judge of the Calcutta High Court held (p. 186): " If the machinery of winding-up is sought to be set in motion for purposes other than to secure a winding up of the company, and if the real object is something other than winding up, and the claim for winding up is the ostensible but not the real object of the petition, this court will not lend its aid to the petitioning creditor by making an order for the winding up of the company. " 18. In the case of Nawabzada Captain Syed Murtasa All Khan v. Siressed Concrete Constructions Private Ltd., [1961] 31 Comp Cas 84, Ramaswami J. observed (p. 88) : " Where a petition against a company is presented ostensibly for a winding up order, but really for another purpose, such as putting pressure on the company, the court has an inherent jurisdiction to prevent such an abuse of process, and will do so, by restraining the advertisement or the petition, and staying all proceedings upon it. A creditor of a solvent company, whose debt is bona fide disputed, will be restrained from presenting a petition for winding up the company. Winding up proceedings are not to be had recourse to for the purpose of recovering a debt which is bona fide disputed, especially when the company appears to be solvent, but the court must see that the dispute is based on a substantial ground......" 19. Winding up proceedings are not to be had recourse to for the purpose of recovering a debt which is bona fide disputed, especially when the company appears to be solvent, but the court must see that the dispute is based on a substantial ground......" 19. The Supreme Court in the case of Amalgamated Commercial Traders (P.) Ltd. v. A. C. K. Krishnaswami, [1965] 35 Comp Cas 456, considered the grounds for winding up. The court observed (at pp. 463, 464) : " We are satisfied that the debt in respect of which notice was given under section 434 was bona fide disputed by the appellant-company. The appellant-company had received legal advice and it had acted on it. On the facts it seems to us clear that the appellant-company did not dispute the debt in order to hide its inability to pay debts......... If the debt was bona fide disputed, as we hold it was, there cannot be neglect to pay within section 434(1)(a) of the Companies Act. If there is no neglect, the deeming provision does not come into play and the ground of winding up, namely, that the company is unable to pay its debts is not substantiated. " 20. In the present case, the material on the record does not show that there was any reference to a claim of interest or any statement regarding interest in the earlier correspondence, prior to the notice under section 454 of the Companies Act. It was stated for the first time there that the company was liable to pay interest from June 1, 1984, at the rate of 18 per cent, per annum. The respondent-company has very clearly stated that it has never been indicated at any stage prior to the notice that the unpaid amount carried interest or at a particular rate. Since the advertisement had been got done thorough a financial corporation, nothing had been stated about interest, It is therefore apparent that the respondent-company had not been told about the interest. The material on the record and the circumstances of the case lead me to conclude that the claim regarding interest is bona fide disputed. 21. The words used in section 433 of the Companies Act are, "a company may be wound up by the court." It means that the court may, if it thinks fit, refuse to admit the petition. The material on the record and the circumstances of the case lead me to conclude that the claim regarding interest is bona fide disputed. 21. The words used in section 433 of the Companies Act are, "a company may be wound up by the court." It means that the court may, if it thinks fit, refuse to admit the petition. The use of the word "may" makes it clear that the power conferred is a discretionary one. It is open to the court to order or not to order the winding up of the company even when it is proved that the company is unable to pay its debt. See Dwarkadas Agarwalla v. Dharam Chand Jain, [1954] 24 Comp Cas 283 (Cal). The court has discretion in making an order under this section. It is not imperative that the court should pass a winding up order. See Virendra Singh Bhandari v. Vandlal Bisandariand Sons Ltd., [1982] 52 Comp Cas 36 (MP), European Life Assurance Society [1869] LR 9 Eq 122, at p. 126. 22. In Madhusudan Gordhandas & Co. v. Madhu Woollen Industries Ltd., [1972] 42 Comp Cas 125 (SC), Mr. Justice Ray observed : "As regards the duty of the court in dealing with the petition for winding up, it is not a proper principle to encourage hasty petitions for winding-up without first attempting to sort out the dispute and controversy between the members in the domestic forum in conformity with the articles of association......" 23. The courts in India have also taken the view that it is necessary for the court to take note of the interests of the creditors and concerned public. In some cases, the court has taken the view that where a petition was presented not with a bona fide view of collecting the debt but out of malice for the purpose of ruining the company, the court will dismiss the petition with costs. 24. In W.T. Henley's Telegraph Works Co. In some cases, the court has taken the view that where a petition was presented not with a bona fide view of collecting the debt but out of malice for the purpose of ruining the company, the court will dismiss the petition with costs. 24. In W.T. Henley's Telegraph Works Co. Ltd. v. Gorakhpur Electric Supply Co., AIR 1936 Allahabad 840, Iqbal Ahmad J., observed (at page 845) : " If a company is solvent and there is a genuine dispute about an alleged debt, the resort by the creditor to the summary proceeding of serving on the company a notice under (old) section 162, and following the same by petition for winding-up, is ordinarily referable to a desire on the part of the creditor to bring pressure on the company in order to induce the company to pay the debt, without having the dispute settled by the civil court, by which court the dispute ought to be ordinarily settled. To make an order for winding up in such a case would deprive the company of its right to have the question between it and the petitioning creditor decided in the normal way by the civil court constituted for the purpose, and this would be opposed to public policy. An application for winding up in such a case must, therefore, be regarded as a vehicle of oppression and an abuse of the process of the court and be dismissed." 25. This principle is fully applicable in the present case. 26. In the present case, the respondent-company has paid more than Rs. two lakhs twenty two thousand. It cannot, therefore, be said that the company is insolvent. In re : London and Paris Banking Corporation [1875] 19 Eq 444, Jessel M.R. observed as follows (at page 448) : "...........I should be bound by authority (even if I entertained & different opinion, which I do not) to hold that if the debt is bona fide contested, and there is no evidence other than non-compliance with the statutory notice to show that the company is insolvent, and the company denies its insolvency (as this company does), I ought to dismiss the petition." 27. Learned counsel has raised another argument regarding the rate of interest. Learned counsel has raised another argument regarding the rate of interest. He argued that if there was no agreement to pay interest at a certain rate, the proviso to section 34 of the Code of Civil Procedure would be attracted which says: in the absence of an agreed rate of interest, the rate at which moneys are lent or advanced by commercial banks in relation to commercial transactions will be applicable. It was not urged and was not disputed that the maximum interest allowed by banks on fixed deposits is 11% and therefore that would be the maximum rate of interest, Whether that would be the maximum rate of interest or not will be a matter for the court determining the question of the rate and quantum of interest, but suffice it to say that the winding-up court cannot investigate into this matter. Unless it is well established that the amount claimed is either agreed upon or admitted or decreed by a competent court, the amount does not become a debt. 28. In view of the above, I hold that the amount claimed as interest has yet to be established as a debt; secondly, even if it is a debt, it is bona fide disputed ; thirdly, the company is not insolvent and fourthly, the company has not mala fide refused to pay the amount claimed. Consequently, the winding-up petition must fail. 29. In the result, the company petition fails and is dismissed with costs.