Statutory contributory liability on winding up overrides earlier share contract disputes for registered shareholders.

Liability on winding up attaches statutorily to a person whose name stands on the register of shareholders at commencement of the winding up. Once the appellants were entered as holders with their knowledge and assent, their liability as contributories arose ex lege under the Indian Companies Act, 1913, and did not depend on the original share contract. Any antecedent dispute, including the alleged illegality of the share arrangement, could not displace that statutory liability. The appellants therefore remained liable as contributories and were not entitled to have their names removed from the register or to recover the share application and allotment money on the ground advanced.

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Issues: Whether the appellants, whose names stood on the register of shareholders at the commencement of winding up, remained liable as contributories and were entitled to have their names removed and the share application money repaid on the footing that the underlying share arrangement was void or illegal.

Analysis: The liability of a shareholder on winding up depends on the statutory position existing at the commencement of the winding up. Once the appellants were entered on the register as holders of the shares with their knowledge and assent, section 156 of the Indian Companies Act, 1913 operated on the winding up. Their liability in respect of those shares arose by force of the statute and not from the original contract. Any antecedent contractual controversy, including the alleged illegality of the arrangement, did not displace the statutory liability attaching to a registered shareholder at the commencement of winding up.

Conclusion: The appellants remained liable as contributories and were not entitled to removal from the register or repayment of the share application and allotment money on the ground urged.

Final Conclusion: The appeal failed because winding-up liability under the Companies Act attached to the appellants as registered shareholders, irrespective of the earlier contractual dispute.

Ratio Decidendi: On the commencement of winding up, liability of a person whose name stands on the register as holder of shares is statutory and arises ex lege under the Companies Act, so antecedent contractual objections do not avoid contributory liability.

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