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TMI Blog1956 (9) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... a copy is R. 2. The principal term of this agreement was that the Goela Electric Company, which virtually meant A. N. Goela himself, was to be the managing agent of the company at a monthly salary of Rs. 125 together with a commission of 10% on the net annual profits. This agreement was to continue in force for a period of 25 years, i.e., it was to expire on the 28th of April, 1959. The licence granted by the Punjab Government was in the first place for 15 years with the option thereafter for the purchase of the electrical undertaking by the Government. The Government exercised this option and took over the undertaking in 1949. About this period disputes arose between A.N. Goela and his nominee directors (who were in the minority) and the remainder of the board of directors. There may have been other causes, but apparently the principal cause of dissension was the future policy of the company which during the existence of the licence had entirely confined its business to the undertaking for the supply of electric power to the town of Karnal, although the memorandum of association provided for its venturing into other kinds of business. Not unnaturally, in view of the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g counsel etc . for the purpose of opposing the winding up petition filed by Raja Ram etc ., the notice of which was served on A.N. Goela in the name of the company. Item No. ( 4 ). Rs. 13,310-8-0 claimed by A.N. Goela as his allowance at Rs. 125 per mensem as managing agent for the period from the 1st of September, 1950, to the 15th of July, 1959, i.e., the balance of the period of twenty-five years of the agreement by which A.N. Goela and Company were the managing agents of the company in consideration for their making over the electric licence to the company. Item No. (5). Whatever is due to A.N. Goela as 10 per cent. share of the profits of the company for the remaining period of the contract. In his statement of claim filed with the liquidator he had estimated that the profits of the company for the 10 years after the Government took over the electrical undertaking would average Rs. 20,000 per annum and at 10 per cent. i.e., Rs. 2,000 per annum, he claimed Rs. 20,000 on this account. The claim has, however, now been given up in this form and instead it is claimed on his behalf that whatever surplus remains in the hands of the official liquidator after all the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting his policy A.N. Goela was largely actuated by motives of self-preservation and the desire to continue in enjoyment of the managing agent's allowance and a commission on the profits for the remaining period of 10 years, which under his agreement with the company still had to run, and it may also equally be that the majority group of directors wanted to wind up the company not so much in the interest of the shareholders as because they had fallen out with or lost confidence in A.N. Goela for other reasons such as his suspected complicity with the absconding employee. One thing at least can be said with certainty that by no means all the companies which started off in business as suppliers of electricity have gone into liquidation on the taking over of their electrical undertakings by the Government and some of them have embarked on other fields of business. In the circumstances even if it can be suspected that A.N. Goela acted largely in self-interest in taking the steps to prevent the winding up of the company by instituting a suit and first opposing the winding up petition, the motives of the majority of the board of directors also appear to me to be open to some suspicion, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidator, it being stated by Raja Ram that he had spent the remaining about Rs. 2,100 in the form of about Rs. 1,500 in connection with the winding up petition, Rs. 300 in defending the suit instituted by A.N. Goela and Rs. 300 on the salary of the secretary of the company who had been dismissed by A.N. Goela and whose services were considered necessary by Raja Ram in connection with the company affairs. The liquidator placed this matter before Harnam Singh J. for directions and, after he had been satisfied that the money had actually been expended in this way by Raja Ram, Harnam Singh J. ordered that he need not be made to refund it. This order was challenged in a petition by A.N. Goela, which, after considering the circumstances, I dismissed, and A.N. Goela went so far as to file a Letters Patent Appeal against my order which was dismissed by my Lord the Chief Justice and Khosla J. It is in the light of these circumstances that the question whether A.N. Goela should be allowed the expenses incurred by him in connection with his suit and his initial opposition to the winding up petition has to be considered. Although it was held, in connection with the matter discussed above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, this was not because it was a losing concern but because it was otherwise just and equitable. Thus as far as the agreement itself is concerned, it would appear that the termination of the agreement by winding up leaves open the question of damages. Indeed, in the case of Fowler v. Commercial Timber Co. Ltd. [1930] 2 K.B. 1 , it has been held by the Court of Appeal consisting of Scrutton, Greer and Slesser, L.JJ., in a case in which the plaintiff had been appointed managing director of the defendant company for five years and before the expiry of five years the company had gone into voluntary liquidation by a resolution supported by the plaintiff himself, that a term could not be implied in the agreement that, if the company went into voluntary liquidation with the assent or approval of the plaintiff he should lose all right to recover damages for the breach of the agreement, and it was held that he was entitled to damages for that breach. The correctness of this proposition has not been disputed on behalf of the liquidator. It has, however, been strenuously contended that in no case can A.N. Goela claim either anything like his salary as managing agent for the remaining 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial, or of any employment likely to be obtained before the contract would have expired. It is the servant's duty to minimise the damages, and, for this purpose, to seek and accept suitable employment. But he is not expected to accept an engagement in a lower status, though it may be reasonable for him, in the state of the labour market, to accept a lower salary; and this will be taken into consideration in the calculation of the damages. *** From the above considerations it follows that the loss incurred may be less than the wages for the unexpired period of service, where other employment may be easily obtained, and that it will vanish where the plaintiff has immediately passed into another employment on equally good terms. Where, on a yearly hiring, the plaintiff is dismissed before the termination of the engagement, he has often been awarded his salary up to the end of the current year. Where the contract was for two years, with a fixed salary and half profits, and the plaintiff was dismissed at the end of four months and a half, the jury gave him a year's salary, and his share of the profits for twelve months, which was held not to be excessive. But each case necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o any event which may happen since the winding up of the company was ordered, and in fact the amount of the surplus appears to depend on the amount already paid by the Government as the price of the electrical undertaking together with any further sum which may be received from the Government as a result of the company's further claim which I understand is the subject of a pending reference to arbitration. In the circumstances it may be assumed that any surplus which may eventually result will be due to the successful working of the company while it was carrying on business of supplying electric energy under A.N. Goela's management. On behalf of the liquidator it was argued that A.N. Goela was not entitled to claim any portion of this surplus since his contract strictly only entitled him to 10 per cent. commission on the annual net profits of the company and if the company was no longer working there were no longer any annual profits on which commission could be calculated. It seems to me, however, that if the surplus left in the hands of the liquidator can be deemed to be profit, then 10 per cent. of such amount would be the measure of damages to which A.N. Goela would be entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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