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of <h1>Court allows claims for pursuing absconding employee, legal expenses, managing agent's salary, and liquidation surplus.</h1> <h3>Karnal Electric Supply Co., Ltd., In re</h3> Karnal Electric Supply Co., Ltd., In re - [1956] 26 COMP. CAS. 387 (PUNJ.) Issues Involved:1. Claim for expenses incurred in pursuit of an absconding employee.2. Claim for legal expenses incurred in a suit to restrain directors and in opposing the winding-up petition.3. Claim for managing agent's salary for the remaining period of the contract.4. Claim for 10% share of the profits or surplus remaining after liquidation.Analysis:Item No. 1: Claim for Expenses Incurred in Pursuit of an Absconding EmployeeThe court acknowledged that A.N. Goela incurred Rs. 431-2-0 in pursuing an absconding employee, Naranjan Das, who embezzled over Rs. 19,000. The official liquidator opposed the claim of Rs. 206-2-0, alleging Goela's connivance in the embezzlement. However, since Dulat J. ruled in favor of Goela in related misfeasance proceedings, and no new evidence was presented, the court allowed the claim.Item No. 2 and 3: Claim for Legal ExpensesItems 2 and 3, comprising legal expenses of Rs. 462-7-0 and Rs. 942-4-0 respectively, were considered together. These expenses were incurred by Goela in filing a suit to restrain directors from interfering with his management and opposing the winding-up petition. The court noted the personal animosity between Goela and the majority directors, who sought to wind up the company, possibly to remove Goela. Despite Goela's self-interest, the court found the directors' motives equally suspicious. Consequently, the court allowed these claims, emphasizing that costs incurred in defending a winding-up petition are typically paid from the company's funds.Item No. 4: Claim for Managing Agent's SalaryGoela claimed Rs. 13,310-8-0 for his salary as managing agent for the period from September 1, 1950, to July 15, 1959. The court dismissed the liquidator's argument that the contract was invalid due to lack of shareholder approval, as this requirement was not retroactive to the 1934 agreement. The court also rejected the frustration of contract argument, noting that the company's memorandum allowed for other business ventures post-Government takeover of the electrical undertaking. Considering Goela's age and his role as the company's founder, the court found it unreasonable to award merely nominal damages. Instead, the court awarded salary for 4 1/2 years, amounting to Rs. 6,750, as a fair compensation.Item No. 5: Claim for 10% Share of ProfitsGoela initially claimed Rs. 20,000 based on estimated annual profits but later sought 10% of any surplus remaining after liquidation. The court referenced the English case, *In re Spanish Prospecting Company, Limited*, which defined profits in liquidation as the increase in total assets. The court agreed that any surplus post-liquidation, resulting from the company's successful operation under Goela's management, constituted profit. Thus, Goela was entitled to 10% of this surplus.Conclusion:The court upheld almost the entirety of A.N. Goela's claim, awarding him the expenses for pursuing the absconding employee, legal expenses, a portion of his managing agent's salary, and 10% of the liquidation surplus. Costs were awarded to Goela, with a counsel fee of Rs. 250.
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