9911796707
TMI Blog1970 (2) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... have, the register rectified or the contract entered into by the company with the appellants avoided by means of appropriate proceedings. Even in the application filed by respondent No. 1 in October, 1961, there was no allegation of fraud. The fact stated related more to inadequacy of price or consideration and not to its being illusory or the like. In our judgment the learned single judge was right and the Division Bench was in error in directing an inquiry into the question whether the appellants had paid consideration which was inadequate. Appeal allowed. - 1010 OF 1966 - - - Dated:- 20-2-1970 - J.C. SHAH, K.S. HEGDE AND A.N. GROVER, JJ. S.V. Gupte, N.D. Karkhanis and A.G. Ratnaparkhi for the Appellant. Mohan Behari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 18,000 fully paid shares of Rs. 100 each which were registered in the name of the firm. Respondent No. 1 was originally a director of the company. He made a proposal for advancing debenture loan of Rs. 20 lakhs to the company which proposal was accepted by the board of directors as also at an extraordinary general meeting of the company on September 16, 1946. He was appointed managing agent of the company. On the same date at the meeting the shareholders of the company passed a resolution that out of 6,000 acres of land acquired by the company from the Alote Estate 2,000 acres selected by respondent No. 1 or his representative be returned and retransferred to. the estate. In consideration of such transfer 9,000 shares were to be surren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otment of the shares was approximately Rs. 30. On that basis the Maharaja and the Alote Estate were liable as contributories in the sum of Rs. 16 lakhs as the shares were not fully paid by value in kind. The Maharaja and the Alote Estate in reply took up the position that in the absence of rectification of register by appropriate action they were not liable to pay as contributories because they held shares which were fully paid up. As regards the company's resolution to give up 2,000 acres out of 6,000 acres and reduce the value of shares allotted to Rs. 9 lakhs it was maintained that the same was an independent transaction and its effect could be considered only in appropriate proceedings in accordance with law. The learned company judge b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Alote Estate at a small fraction of value for which it had been sold to the company largely owing to the Maharaja being all powerful in the conduct of its affairs. It was considered that an inquiry would be necessary when there was a prima facie indication that the allottee of the shares had paid only a fraction of the nominal value. Now section 156 of the Act deals with the liability as contributories. Clause ( iv ) of sub-section (1) provides that in the case of a company limited by shares no contribution shall be required from any member exceeding the amount unpaid on the shares in respect of which he is liable as a present or past member. Section 158 defines the term "contributory". It means every person liable to contribute to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration for the allotment of shares may be money or money's worth, e.g., the transfer to the company of property. If a valid contract is made for the acceptance by the company of specified property in payment of shares the court will not whilst the contract stands inquire into the value of the consideration even at the instance of the liquidator. Where, however, the contract is fraudulent or shows on the face of it that the consideration given to the company is illusory or is clearly not equivlent to the nominal value of the shares the shares cannot, to this extent, be treated as fully paid and the shareholder may be held liable to pay for them in full. It is significant that no steps were taken by the liquidators to have, the register ..... X X X X Extracts X X X X X X X X Extracts X X X X
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