1936 (10) TMI 9 - HC - Companies Law

Meetings and proceedings explanatory statement to be annexed to notice Winding up Delivery of property to liquidator and Prospectus Registration of

Summary

Issues:
1. Interpretation of Section 185 of the Indian Companies Act regarding the applicability of the section to contested matters.
2. Validity of claims made by the Managing Agent for retention of certain amounts.
3. Consideration of the Agent's right of retainer for expenses and claims against the Company.

Analysis:

1. Interpretation of Section 185:
The judgment addressed the objection raised regarding the application of Section 185 of the Companies Act to contested matters. The court rejected the argument that contested issues should not be dealt with under this section. It emphasized that the discretion lies with the court to determine the convenience of handling a particular claim under Section 185. The court cited precedents to support its conclusion that the section allows for such matters to be addressed, especially if the money in question was received by the agent in their capacity as an agent.

2. Validity of Claims by Managing Agent:
The Managing Agent had made claims for retention of certain amounts, including arrears of salary and sums debited against him. The court upheld the decision of the lower court in disallowing these claims. It found that the claim for arrears of salary was rightly rejected, and the sums debited were properly disallowed by the Directors in a meeting. The court dismissed the argument that the inclusion of these items in a report presented to shareholders gave them finality, emphasizing that the Directors had the authority to disallow such claims.

3. Agent's Right of Retainer:
The judgment delved into the Agent's right of retainer for expenses and claims against the Company. It noted that while the Agent may have a right of retainer under certain provisions, the nature of the suits filed against the Agent would determine the validity of such claims. The court highlighted the need to consider the Agent's claims against the Company alongside those made by the Liquidator, ensuring fairness in addressing both parties' claims. It suggested a detailed account examination up to a specified date to determine the amounts payable by the Agent to the Liquidator.

In conclusion, the court partially allowed the appeal by the Managing Agent, directing a comprehensive review of the accounts to determine the final amount payable to the Liquidator. The judgment also addressed the issue of costs, ruling that the Official Liquidator would be entitled to costs out of the estate, considering the partial success of the Managing Agent in the appeal.