TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether the appellant, whose name appeared on the register of members, is liable as a contributory under section 156 of the Indian Companies Act despite claiming a nominal/bogus subscription and non-payment; (ii) Whether section 101 (payment of deposit with application) applied to the company and defeated the appellant's liability; (iii) Whether the resolution of 15 June 1947 forfeiting defaulting shares removed the appellant's liability.
Issue (i): Whether presence of the appellant's name on the register with knowledge and delay renders him liable as a contributory under section 156 of the Indian Companies Act despite claims of nominal subscription and absence of payment.
Analysis: The Court examined authorities and text writers establishing that after winding up the liability to contribute under section 156 arises ex lege from the fact of being on the register of members. The Court distinguished cases where persons were unaware of entries and noted that here the appellant had knowledge of the entry and received notices over more than three years. The doctrine of holding out and authorities including Privy Council and High Court rulings were applied to show delay after knowledge is fatal to denying liability.
Conclusion: The appellant is liable as a contributory under section 156 of the Indian Companies Act; the inclusion in the list of contributories was correctly made.
Issue (ii): Whether section 101 (and its sub-sections requiring payment with application) applied to this company and thereby relieved the appellant of liability.
Analysis: The Court held that section 101 applies only to public companies. The articles and the winding-up order showed the company was a private company; therefore the condition in section 101(3) and the related sub-sections did not apply. The Court rejected the contention that subsection (8) implied applicability of sub-sections (1)-(6) to private companies.
Conclusion: Section 101 does not apply to the private company in this case; the appellant cannot avoid liability on that ground.
Issue (iii): Whether the company resolution dated 15 June 1947 forfeiting defaulting shareholders operated to forfeit the appellant's shares and remove his liability.
Analysis: The Court found as a fact that the appellant's shares were not actually forfeited and that the company continued to treat him as a shareholder. Authorities establish that where a person has been held out as a shareholder and delay follows, he cannot later object to inclusion as contributory; prompt application for rectification under section 38 is required but was not made.
Conclusion: The forfeiture resolution did not remove the appellant's liability; he remained liable as a contributory.
Final Conclusion: The substantive legal effect is that the appellant's objections to being treated as a contributory fail on grounds of applicable company law (non-applicability of section 101 to a private company), the doctrine of holding out, and his failure to seek prompt rectification; the Official Receiver's inclusion of the appellant in the list of contributories is upheld.
Ratio Decidendi: Where a person's name appears on the register of members and he has knowledge of that entry but does not seek prompt rectification, winding up invokes section 156 and liability to contribute arises ex lege irrespective of the underlying contractual validity of the allotment; delay after knowledge and being held out as a shareholder estops the person from denying liability.
TaxTMI 
TaxTMI 
