The judgment emphasizes the need to consider the managing agent's entitlement to retain certain amounts and expenses for suits filed against him in connection with the company.

Varadachariar, J.

1. In the course of the winding up of the South Indian Film Corporation, Limited, the Official Liquidator took out an application under Section 185 of the Indian Companies Act, for a direction to the managing agent Mr. P.S. Venkatarama Aiyar that he should pay up immediately a sum of Rs. 5,400 odd representing the amount overdrawn by him from the company while he was in charge as managing agent. The managing agent by his counter-affidavit claimed (1) that he was entitled to retain a sum of Rs. 2,800 towards arrears of salary due to himself; (2) that he was also entitled to two sums of Rs. 976-0-9 and Rs. 1,083 which were according to him improperly debited against him on the 15th November, 1935; and (3) that he was entitled to retain moneys which might be required to enable him to meet the expenses of certain suits filed against him as managing agent. The learned Judge has disallowed these claims and given a direction for payment as asked for by the liquidator. Hence this appeal by the managing agent.

2. An Objection was taken before us on behalf of the appellant that the case is not one that can be dealt with under Section 185 of the Companies Act, as it is not the intention of the Legislature that matters in respect of which there is a contest should be dealt with under that section. Stress was laid upon the use of the words "prima facie" in the section and reference was made to certain observations in In re Palace Restaurants, Limited (1914) 1 Ch. 492 , and to a concession said to have been made by counsel in Billimoria v. Mrs. DeSousa I.L.R.(1926) 8 Lah. 549 . A point was also made of the fact that the appellant has ceased to be the agent of the company from November, 1935, i.e., even before the date of the commencement of the liquidation proceedings. We are not satisfied that these considerations exclude the application of Section 185 to the case cf. Haribans Prasad v. National Sugar Mills, Ltd I.L.R.(1932)14 Lah. 68 (In Liquidation). It is true, the section does not contemplate an elaborate enquiry but the discretion must be left to the Court to decide whether any particular claim can or cannot be conveniently dealt under that section. The observation in In re Palace Restaurants, Limited (1914) 1 Ch. 492 , itself lends some support to this conclusion, because the learned Judge in that case actually held that as the counter claimant had submitted to the jurisdiction of the Court it was not open to him to take exception to the proceedings at a later stage. In the same way, we may point out in this case also, the appellant did not take exception to the maintainability of the application under Section 185 in the lower Court, but was only anxious, and we dare say rightly anxious, that his claims to credit under various heads should be considered. We do not also think that the mere fact of his having ceased to be an agent before the commencement of the liquidation proceedings excludes action under Section 185. It seems to us the test is whether the money now claimed came into his hands in his character as agent or not. It is not denied in the present case that the money did so come into his hands.

3. Proceeding now to the items of credit claimed by the appellant, the claim for Rs. 2,800 under the head of arrears of salary has in our opinion been rightly disallowed by the learned Judge and the same has not been seriously pressed before us. The second head of claim, viz., that relating to the two sums of Rs. 976-0-9 and Rs. 1,083 seems to us to be equally untenable. It has not been disputed that at a meeting of the Directors held on 9-4-1935, these items were disallowed after discussion and the resolutions recorded on that date give the reasons for the disallowance. The argument advanced by the appellants counsel in this connection is that a sum inclusive of these two items had been shown in the report presented to the statutory meeting on that day and that therefore under Section 77 (Clause 8) of the Comp