Substantial compliance in notice service and no set-off against calls in winding up; remuneration may be reduced on assessment.

Notices in the settlement of contributories were treated as valid where they were substantially served and no prejudice from the mode of posting was shown. The managing agent's remuneration claim was held provable under the agency agreement, but it was reduced on a fair assessment because the company's business was not carried on during the relevant period. A contributory cannot set off a debt owed by the company against unpaid calls, as call liability is distinct from ordinary debt. The rent claim was accepted, and the calls were either reduced or upheld after taking the reduced remuneration and rejection of set-off into account.

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Issues: (i) Whether the notices issued in the course of settlement of the list of contributories were invalid for want of strict compliance with the prescribed mode of service. (ii) Whether the managing agent's claim for remuneration was provable and, if so, to what extent it was payable. (iii) Whether the amount claimed by the managing agent could be set off against his liability to pay calls as a contributory. (iv) Whether the claims for rent and the calls made on the contributories were justified.

Issue (i): Whether the notices issued in the course of settlement of the list of contributories were invalid for want of strict compliance with the prescribed mode of service.

Analysis: The notices for settlement of the provisional and final lists were in substance served on the contributories, and there was no evidence that any respondent had in fact failed to receive notice. The defect, if any, lay only in the mode of posting and not in the absence of notice altogether. The prescribed procedure was therefore treated as having been substantially complied with.

Conclusion: The challenge to the list of contributories failed.

Issue (ii): Whether the managing agent's claim for remuneration was provable and, if so, to what extent it was payable.

Analysis: The managing agency agreement supported the claim, and the debt was not confined to proof by affidavit alone. The provisions governing managerial remuneration did not create an absolute bar to payment, even where the company had made no profits. At the same time, because the company's business had not been carried on during the period in question, the claimed remuneration required reduction on a fair assessment of the circumstances.

Conclusion: The claim was accepted in principle but reduced to Rs. 175 per mensem instead of Rs. 350 per mensem.

Issue (iii): Whether the amount claimed by the managing agent could be set off against his liability to pay calls as a contributory.

Analysis: A debt due from the company to a contributory cannot be set off against unpaid calls, whether the winding up is voluntary or otherwise. The liability for calls is distinct from an ordinary commercial debt, and the authorities relied upon establish that no such adjustment is permissible against calls payable to the liquidator.

Conclusion: The claimed set-off was disallowed.

Issue (iv): Whether the claims for rent and the calls made on the contributories were justified.

Analysis: The rent claim was proved and was not defeated by the absence of a formal rent deed or by allegations of delay in vacating the premises. In fixing the calls, the reduced remuneration claim and the rejection of set-off were taken into account. On that basis, a lower call in one matter was justified, while the second call remained justified.

Conclusion: The rent claim was accepted, the call in one petition was reduced, and the call in the connected petition was upheld.

Final Conclusion: The petitions were disposed of on merits with substantial relief to the petitioner, including acceptance of the proved claims, reduction of one remuneration claim, rejection of set-off against calls, and confirmation or adjustment of the calls payable by contributories.

Ratio Decidendi: In a winding up, a contributory cannot set off a debt due from the company against unpaid calls, and procedural irregularity in notice will not vitiate the settlement of contributories where there is substantial compliance and no prejudice is shown.

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