Agent's Retainer and Lien: summary company proceeding can net claims, disallow director-resolved items and order accounting.
A summary proceeding under the Companies Act may be used to determine a liquidator's claim where monies were received by the managing agent in his capacity as agent; accordingly the liquidator's Section 185 application was maintainable. Claims for arrears of salary and the two disputed items were disallowed because they were not pressed or were formally disallowed by directors' resolution. The agent's contractual right of retainer and lien for costs and liabilities may be recognised but require accounting and factual inquiry; therefore accounts should be taken to a proximate date and any balance prima facie payable to the liquidator directed to be paid.
Issues: (i) Whether the Official Liquidator's application under the Companies Act provision for summary adjudication (Section 185) was maintainable in respect of sums alleged to be overdrawn by the Managing Agent; (ii) Whether the Managing Agent was entitled to retain Rs. 2,800 (arrears of salary) and the two sums Rs. 976-0-9 and Rs. 1,083 which had been disallowed by the Directors; (iii) Whether the Managing Agent was entitled to retain monies to meet costs and liabilities of suits brought against him and whether those claims should be considered in the summary proceeding.
Issue (i): Whether the application under Section 185 could be entertained to determine the liquidator's claim against the former Managing Agent.
Analysis: Section 185 contemplates a summary inquiry; the Court has discretion to decide whether particular claims can be conveniently dealt with under that provision. The test is whether the monies in question came into the agent's hands in his character as agent. The appellant did not object to maintainability below.
Conclusion: The application under Section 185 was maintainable and could be used to determine the liquidator's claim.
Issue (ii): Whether the Managing Agent was entitled to retain Rs. 2,800 as arrears of salary and the two disputed items of Rs. 976-0-9 and Rs. 1,083.
Analysis: The arrears claim was not pressed and was rightly disallowed. The two disputed items were considered and disallowed by a formal resolution of the Directors at a meeting; the appearance of earlier figures in a printed report did not prevent the Directors from subsequently disallowing the items, and there is no record of timely objection by the appellant.
Conclusion: The claims for Rs. 2,800 and for Rs. 976-0-9 and Rs. 1,083 are disallowed.
Issue (iii): Whether the Managing Agent may retain monies to meet costs/liabilities of suits against him and whether such claims should be considered in the summary proceeding.
Analysis: The agent has a right of retainer and a lien under contractual terms and articles for certain liabilities and expenses; however, liabilities arising from alleged fraud by directors may not be within the company's obligation to indemnify the agent. Where factual and legal particulars of such claims are material, they should be examined before final payment. It is appropriate in the summary proceeding to consider claims the agent may have against the company so as to avoid forcing separate suits; accounting to a proximate date will permit a fair netting of entitlements.
Conclusion: The Managing Agent may have retention or lien claims in respect of certain suits and expenses, but these require accounting and factual enquiry; accordingly accounts should be taken up to 1st November 1936 and only the balance (prima facie payable to the liquidator) directed to be paid.
Final Conclusion: The liquidator's summary application under Section 185 is maintainable; the specified salary and the two disallowed items are not allowable to the agent, and the agent's claims for retention in respect of suits and related expenses must be determined by taking accounts to 1st November 1936 with payment of the balance prima facie due to the liquidator.
Ratio Decidendi: A summary proceeding under the Companies Act provision for dealing with agents' accounts may be used where monies were received in the agent's capacity as such; directors' formal resolutions disallowing claimed items are operative unless properly impeached; claims of retainer or lien by an agent require accounting and factual enquiry and may be netted in the same summary proceeding.
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