Validation of director acts confirms contributory liability; objection to allotment overruled and payment ordered, with installment relief for one contributory.

Validation of acts by irregularly qualified directors under the company framework confirmed the validity of share allotments and thus established contributory liability; accordingly, objections to inclusion on the contributories list were overruled and payment orders were made. The court applied the statutory principle validating acts of persons as directors despite qualification defects, relied on company articles to support board action, treated board proceedings as confirmed by the chairman, and accepted that imperfect liquidator calculations did not negate prima facie liability. One contributory was permitted staged monthly payments; liquidator's costs to be paid from company assets and objectors to bear their own costs.

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Issues: Whether the persons placed on the list of contributories were validly allotted shares and therefore liable to be ordered to pay unpaid calls by the liquidator.

Analysis: The application under Section 186 read with Section 215 of the Indian Companies Act sought payment orders against named contributories. The primary objection contested the validity of the allotments on the ground that the three directors who purported to allot shares at the board meeting of 16 February 1931 lacked the requisite share qualification. Section 86 of the Indian Companies Act applies to validate acts done by persons as directors notwithstanding irregularity in their qualification. The company articles (para. 134) support the validity of actions taken. Authorities treating objections to allotment after a company has gone into liquidation as not open to objectors were treated as applicable. The board proceedings were treated as confirmed by the chairman, and the liquidator's calculations, though conceded to be imperfect in amount, did not defeat the prima facie legal liability of the contributories.

Conclusion: The objection to the inclusion of the persons on the contributories list is overruled; the contributories were properly placed on the list and are ordered to pay the sums noted against their respective names. Lala Shiv Dayal is permitted to pay Rs. 1,600 by eleven monthly instalments as specified. Liquidator's costs to be paid out of company assets and objectors to bear their own costs.

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